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Ask Matt - How the new CARES Act affects your student loans

Question:
“How will the new CARES Act impact my student loans?”

Answer:
You’ve probably heard about the new law that was just enacted to offer financial relief in the wake of COVID-19. Though not the sole purpose of the law, it’s designed to offer relief for student loan debt. But like many things regarding student loans, it isn’t exactly straightforward. Let’s break it down to help you understand how the bill may affect you.

On March 27, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a bipartisan stimulus bill in response to COVID-19 and its effect on the economy, was enacted.

If you’re an educator working toward Public Service Loan Forgiveness (PSLF), here’s what you need to know.

  • All borrowers’ federal student loans will be automatically suspended until Sept. 30, 2020, which means no payments are due during this time.
  • Federal student loans will not accrue any interest for six months - until Sept. 30, 2020. (Good news!)
  • You’ll still get credit toward PSLF as long as you are on a qualifying repayment plan, such as an income-driven repayment plan. Basically, this means each person working toward PSLF gets six months of zero-dollar qualified payments. (Very good news!)
  • For anyone that has federal loans in default, and where there is an involuntary collection (such as wage garnishment), these payments have been placed on hold until Sept. 30, 2020.

OK, even when we break it down, that’s still a lot of info. The most important takeaway for educators with federal student loans working toward PSLF: For the next six months, you don’t have to make any payments, your interest will not increase, and you will still be credited for making qualified payments (if you’re in the right repayment plan).

To find out if you are in a qualifying student loan repayment plan, take our no-cost student loan assessment. Additionally, we can give you suggestions about how you may be able to reduce or remove student loan payments when the CARES Act expires.

Still have questions? That’s why we’re here! We’ve been serving educators for 75 years. Visit us at horacemann.com to see how else we can help.

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The information provided here is for general informational purposes only and should not be considered an individualized recommendation. Horace Mann is a private company not affiliated with the Department of Education or the federal government. Horace Mann does not negotiate, adjust or settle debts. No assistance provided by Horace Mann constitutes official action for purposes of the PSLF program or guaranteed results.

This information reflects a summary of our current understanding of certain provisions in the CARES Act. There are other significant changes in the CARES Act that may impact your long-term financial planning. As with any new law, the CARES Act’s meaning is subject to further clarification and change, as many questions are yet to be answered. You should consult with your tax, legal and financial advisors regarding your specific situation.



WBTL-0818 (Mar. 20)

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