How much money will you save on your federal student loans?
Earlier this month, President Trump signed the CARES Act which included benefits for federal student loans! I thought this picture was appropriate because it’s like I got a box of chocolates and champagne all in one news article!
For federal student loans:
1. 0.00% interest rate on federal student loans from March 13, 2020 to September 30, 2020
This interest rate will be retroactively applied on our account starting March 13, 2020, the day the announcement was made. According to Great Lakes (my loan servicer) it may take up to four weeks for this interest rate reduction to be reflected on the account.
2. Ability to pause payments until September 30, 2020
Some articles say payments will be paused and will still count toward loan forgiveness programs, including public service loan forgiveness (PSLF). When I went to Great Lakes website, the first message stated it would NOT count these payments for IDR or PSLF, however, on the most recent update they acknowledged the CARES Act and said they would post updates soon.
If you are thinking PSLF then I would pay close attention to this update and would go to your specific servicer for more information. It is unclear from Great Lakes website if you have to request for payments to be paused or if they are paused automatically. For Braden and I (because we filed our taxes in fourth year) our IDR payments are $0 so regardless our payments don’t change.
3. You can request forbearance during this time, and loans which are past due will automatically enter forbearance
Forbearance is where you can lose a lot of money. At the end of forbearance, your accrued interest capitalizes (gets added to your principal) and your interest rate remains the same. This means after a period of forbearance you pay more in interest overall. I would not plan for this unless I had no other option.
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There are so many more fun things to say about this topic! Stay tuned for our next post where we talk about how this changes our student loan game plan!
More details in the links below!
What are questions you have? How much will you save with an interest rate of 0%?
Couple of Surgeons 