5 Things to Know About Current Repayment Flexibilities and Your Federal Student Loans

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On Jan. 20, 2021, the 0% student loan interest rate and suspension of payments on federal student loans owned by the Department of Education (ED) were extended through at least Sept. 30, 2021. These relief measures began on March 13, 2020, and below you’ll find a recap of the resulting repayment flexibilities for student loan borrowers and relevant considerations. 

Check out StudentAid.gov/coronavirus for the latest updates.  

1

Your Monthly Payments Are Suspended for ED-Owned Loans

ED placed your ED-owned student loans in a temporary payment suspension that started March 13, 2020. This means you don’t have to make monthly payments during this time. If you made a payment during this time, you can request a refund through your loan servicer.

Federal loan servicers were directed to report to credit reporting agencies as if regularly scheduled payments were occurring during the payment suspension period. Unless you chose to opt out of the payment suspension, servicers are reporting monthly payments of $0. Delinquency will not be reported during the payment suspension period, even if you chose to opt out of the payment suspension.

How the Current Flexibilities Compare to General Forbearance  
Learn the differences between the current payment suspension and general forbearance. 

Generally speaking, if you were up to date on your payments before the payment suspension period began, interest accrued prior to March 13, 2020, will not capitalize. This means no outstanding interest will be added to your principal balance when the payment suspension ends.

However, if you were in deferment or forbearance prior to the payment suspension period, then interest accrued prior to March 13, 2020, will capitalize when your original deferment or forbearance ends or when the payment suspension ends, whichever is later.

If you were in your grace period before the payment suspension period began, any outstanding or unpaid interest on your account will capitalize as it usually does when you enter repayment.

2

There is a Temporary 0% Interest Rate on Loans Owned by ED

Which Student Loans Are Eligible for the 0% Interest Rate? ​  


All borrowers with federal student loans owned by the U.S. Department of Education (ED) will automatically have their interest rates set at 0% from March 13, 2020, through the end of the COVID-19 emergency relief period.  

​ Eligible Student Loans for 0% Interest Rate​  

Federal Direct Loans (including Subsidized, Unsubsidized, Grad and Parent PLUS, and Consolidation Loans)​  

Federal Family Education Loan (FFEL) Program Loans​  

Federal Perkins Loans​  

  

Note: If you have any of the above loans and are currently in default, you are still eligible.   

  

Ineligible Student Loans for 0% Interest Rate​  

Private student loans ​  

FFEL Program loans that are owned by commercial lenders​  

Federal Perkins Loans that are owned by the school you attended   

For more updates and resources, visit StudentAid.gov/coronavirus 
 Learn what loans are eligible for the temporary 0% interest rate.
Federal borrowers with student loans that are ineligible for the 0% interest period: YOU CAN CONSOLIDATE  

  

FFEL Program loans owned by commercial lenders and Perkins Loans owned by the institution you attended are not eligible for this benefit at this time. To become eligible, you can consolidate.  

  

How to check if your loans are eligible  

Log in at StudentAid.gov  

Click your name on the top-right, a menu will appear. Select “My Aid.”  

Scroll down to “Loan Breakdown.”  

Loans without “Dept of Ed” listed are not eligible at this time.  

Pros and Cons of Consolidation  

  

Pros: You can consolidate loans not owned by the U.S. Department of Education into a Direct Consolidation Loan, which would be eligible for 0% interest rate.  

  

Cons: If you consolidate, make sure you understand how consolidation will impact your loans after the 0% interest rate period ends to make sure it’s the right decision for you. The interest rate on your loan may be higher and any outstanding interest will capitalize.
If you’re ineligible for 0% interest, you can consolidate your federal student loan.

From March 13, 2020, to the end of the COVID-19 emergency relief period, the interest rate on ED-owned student loans is automatically set at 0%. That means your student loans will not accrue (i.e., accumulate) interest during this time.

If you are able, continuing to make payments on the loan servicer’s website has some benefits.

Take advantage of the 0% period • Once interest accrued prior to March 12, 2020 is paid, the full amount of your payment will be applied to the principal balance • You can pay off your loan faster • You’ll lower the total cost of your loan over time Note: To provide relief during the COVID-19 emergency, federal student loans were automatically placed in an administrative forbearance, temporarily allowing monthly loan payments to stop. Additionally, interest was temporarily set at 0% on federal student loans. Find more info and updates about the administrative forbearance period at StudentAid.gov/coronavirus. Image of a woman sitting on the floor with her laptop and headphones.
Take advantage of the 0% interest rate period on your federal student loans.

3

Your Income-Driven Repayment (IDR) Recertification Date Has Changed

You will not have to recertify your income before the end of the COVID-19 emergency relief period, regardless of whether your recertification date would have happened prior to the end of the relief period. As part of the payment suspension, your recertification date has been pushed out from your original recertification date.

You will be notified of your new recertification date before it is time to recertify. If you have moved, changed phone numbers, or have a new email address, contact your loan servicer to provide updated contact information. 

Consider what your financial circumstances will be when repayment resumes. You might want to recertify early. If you recertify, your new payment amount will begin after the payment suspension ends. If you would like to recertify during the payment suspension, contact your loan servicer to request to do so. 

4

Avoid Coronavirus-Related Scams!

There is no fee for this payment suspension or 0% interest period—not from the federal government and not from your loan servicer. If someone asks for money for either of those benefits, it’s a scam. Your loan servicer provides free help with your questions or concerns about your loan payments.

There is no coronavirus-related loan forgiveness for federal student loans.

All official and legitimate loan forgiveness options can be found on our site. Your loan servicer provides free help with your questions or concerns about your loan payments or applying for loan forgiveness.

Learn about avoiding student aid scams. 

5

If You’re Struggling Financially, You Have Multiple Payment Options When Payments Resume

If you are worried you won’t be able to make your next payment after the payment suspension ends, you have options.

ED offers a variety of income-driven repayment (IDR) plans based on your income. Under an IDR plan, payments may be as low as $0 per month.

If you’re unsure about your next payment amount, you can also contact your loan servicer to confirm your upcoming payment amount. This info may be available to you online by logging in to your loan servicer’ s website.

Check out StudentAid.gov’s Loan Simulator to learn how switching your repayment plan could impact your monthly payment amount before your next bill.

After understanding all your repayment options, you can apply for a specific plan or ask to be placed on the repayment plan that results in the lowest monthly payment amount.

If you are already on an IDR plan but are currently unemployed because of the COVID-19 emergency, you can update (recertify) your information to see if you qualify for a new, lower payment amount by logging in and completing the steps below:

Recertifying an Income-Drive Repayment (IDR) Plan  

 

Step 1: Go to studentaid.gov/idrapp, Scroll down to "Returning IDR Applicants" and click the "Log in to start" button. 
 

Step 2: Select "I am submitting documentation for the annual recertification of my income-driven payment" under reason for request. 

Step 3: Verify that your employment status, family size, marital status, and income information are updated 

TIP: Use the IRS Data Retrieval Tool to transfer your IRS tax return information directly into your application. 
 

Step 4: Update your current address, contact information, and provide the best time to reach you. 
 

Step 5: Review your application information, sign, and submit for recertification.

Any changes to your payment amount will take effect after the payment suspension ends.

If none of these options seem beneficial to you, contact your loan servicer to discuss additional forbearance options after the payment suspension ends. However, please remember that interest accrues for most borrowers on a general forbearance.

This article was written by Miranda H., a Digital Engagement Strategist at the U.S. Department of Education’s office of Federal Student Aid. Beyond writing articles, her favorite way to pass the time during COVID-19 is by working on DIY projects in her apartment.