Skip to main content

You Now Have a Bit More Time to Pay Off Your Federal Student Loans

Published August 11, 2020

2 minute read

Devon Taylor

By Devon Taylor

For much of 2020, anyone with outstanding federal student loans were given a break. In the wake of the pandemic, the government offered a generous forbearance program that let borrowers breathe easy about those costly monthly payments. However, that original program is scheduled to end in September. If you’re still stressed about how you’re going to make those payments, we have good news.

The President signed an executive order on Saturday that extends the break on federal student loan payments. It also pauses accrued interest, to give those struggling a bit more of a break. This new forbearance program extends until December 31, 2020. At that point, you’ll have to have a plan in place to start making payments. (Unless it gets extended again, but we wouldn’t just assume that will happen.)

Although this is good news for some, it doesn’t mean everything is perfect. Critics of the President’s order claim that it’s merely an attempt to prevent Congress from extending the CARES act, which would provide more widespread relief to those affected by the pandemic. As pointed out by Politco, this new policy excludes “roughly 9 million federal student loan borrowers whose debt is held by private lenders or their colleges.”

Between the CARES Act, and the more recent HEROES Act and proposed HEALS Act, it can be tough to figure out exactly what your obligations are. Each piece of legislation offers slightly different relief.

Steps to Take

The good news is that the pause on payments is automatic. If you have a federally backed student loan, you are all set. However, it’s still a good idea to double-check your own individual situation. You don’t want to suddenly have bills in September that you weren’t anticipating. Some financial experts believe that the confusion between the multiple relief acts may cause loan providers to make mistakes. So make sure you know exactly what the payment status of your loan in, and when payments are required again.

Hopefully this extension allows you to get your finances on a more solid ground. After the global economic shutdown left the U.S. facing record unemployment, many borrowers are still struggling to pay their obligations. Try to use this extra relief to pay down high interest debt or build your emergency fund. If you already accomplished those things, consider using any extra money to invest while the markets are still recovering.

Devon Taylor

Managing Editor

Devon is an experienced writer and a father of three young children. He's simultaneously trying to build college funds and plan for an eventual retirement. He's been in online publishing since 2013 and has a degree from the University of Guelph. In his free time, he loves fanatically following the Blue Jays and Toronto FC, camping with his family, and playing video games.

Explore Student Loans

Young woman worried about student loans Perkins loans Student Loans

Perkins Loans: Everything You Need To Know

A Perkins Loan was a federal program that provided low-interest loans to college students who demonstrated exceptional financial need. The program, which operated as the “Perkins Loan Program,” no longer exists. It was discontinued on September 30, 2017. The final disbursements were permitted through June 30, 2018. Although the program has been discontinued, many current […]

Read More about Post Title

5 minute read

Man looks at Student Loan Notice Student Loans

Should You Count on Student Loan Forgiveness?

Now that January 20 has come and gone, there’s a new Democratic administration in the White House. We don’t want to get bogged down in the politics of the transition. However, President Biden taking office has many Americans hopeful he will do something to address the staggering student debt problem the country is facing. As […]

Read More about Post Title

4 minute read

See All In Student Loans

More from WalletGenius

Young couple worried about finances Save Money

How To Tell If Your Retirement Is In Jeopardy

One of the most common financial concerns for adults these days is retirement. It comes up over and over again. For anyone concerned about money, retirement is a very big problem to confront. Current (and future) generations of working-aged Americans aren’t exactly fairing well, when it comes to retirement savings. Some studies have shown that […]

Read More about Post Title

7 minute read

Young woman worried about student loans Perkins loans Student Loans

Perkins Loans: Everything You Need To Know

A Perkins Loan was a federal program that provided low-interest loans to college students who demonstrated exceptional financial need. The program, which operated as the “Perkins Loan Program,” no longer exists. It was discontinued on September 30, 2017. The final disbursements were permitted through June 30, 2018. Although the program has been discontinued, many current […]

Read More about Post Title

5 minute read

Capital budgeting paperwork Budgeting

Capital Budgeting: A Complete Guide

Capital budgeting is a business term used to describe the process of determining how to best use the capital the company has on hand. Should they expand? Should they reinvest in a new factory to increase capacity? Is it profitable to acquire another business for expansion? In other words, capital budgeting is the process of […]

Read More about Post Title

7 minute read

Woman checking her credit score Credit

What You Need to Know About Free Credit Scores

You probably know that your credit score is an important aspect of your finances. Your credit score goes beyond just helping you get a loan with a good interest rate. It can also influence your insurance rates and even impact what happens when you sign up for internet or a cell phone plan. Knowing your […]

Read More about Post Title

7 minute read

Budgeting

EBITDA: What Is It and How Is It Calculated?

It might look like it, but EBITDA is not actually an alien word. It is an acronym that stands for “earnings before interest, taxes, depreciation, and amortization.” As you may have guessed by now, it’s a metric used in the business world. A company’s EBITDA can help you better understand their ability to generate cash […]

Read More about Post Title

6 minute read

Trusted provider of accurate rates & financial information