The CARES ACT for College Students
Legislation that became U.S. law in March in response to the coronavirus pandemic includes helpful changes to student loans and financial aid.
College and COVID19 is a hot topic. With many changes happening to the college landscape the CARES ACT is welcome relief for many.
How the CARES ACT can help you
COVID19 has brought about much change for college students and their parents. In response, Congress passed the CARES ACT.
“On March 27, 2020, the president signed the CARES Act into law, which, among other things, provides broad relief for federal student loan borrowers.”
The CARES ACT went into effect on March 13, 2020 and will continue to be in effect until September 30, 2020.
“To provide relief to student loan borrowers during the COVID-19 national emergency, federal student loan borrowers are automatically being placed in an administrative forbearance, which allows you to temporarily stop making your monthly loan payment. This suspension of payments will last until Sept. 30, 2020, but you can still make payments if you choose.”
What you need to know about the CARES ACT and College Loans
You may be curious which loans are affected by the CARES ACT.
Here is the rundown on which loans are being impacted, from Wells Fargo.
Which federal student loans are impacted by the CARES Act? The CARES Act suspends principal and interest payments on all federal student loans through Sept. 30, 2020. Since U.S. Department of Education data shows an estimated 92% of all student loans are federal, this likely affects you if you borrowed money to pay for your college education.
This suspension is automatic — you do not have to apply to qualify for it or take any action. The suspended payments will count toward student loan forgiveness programs, including Public Service Loan Forgiveness, as long as you meet certain requirements, according to the U.S. .
Additionally, there are certain federal loans that will have 0% interest rates through Sept. 30, 2020. This means that if you do choose to pay your loan, you will not have to pay with any interest. Here’s a list of federal student loans that qualify for the 0% interest rate if they are owned by the U.S. Department of Education):
Defaulted and non-defaulted Direct Loans
Defaulted and non-defaulted FFEL Program loans
Defaulted and non-defaulted Federal Perkins Loans
Defaulted HEAL loans
Pell Grants
Pell Grants and the CARES ACT
If you have dropped out of school during the spring 2020 semester because of the coronavirus outbreak, you do not have to return your federal aid from Pell Grants. Dropping out will not affect whether you’re eligible for grants or federal loans in the future.
Federal Work-Study Program and the CARES ACT
Federal Work-Study Program wages will be paid until the end of the spring semester as if that work had been completed. That means even if you had to leave campus and your work-study job, you’ll still get a paycheck up to the full amount of work-study you qualified for in your financial aid package. If you have questions about your work-study payments or concerns about the program beyond the spring semester, contact your work-study manager or your school’s financial aid office.
Federal student loans held by other lenders and the CARES ACT
Some federal student loans under the Federal Family Education Loan (FFEL) Program are not owned by the U.S. Department of Education, but by commercial lenders or your school. These loans are not eligible for the 0% interest rate benefit at this time. However, the lenders are approved to suspend payments until September — they just aren’t required by law to do so. In this case, you should try contacting your loan servicer or the financial aid office at your school to find out what options are available.
Private student loans and the CARES ACT
The pause on repayment of federal student loans under the CARES Act does not automatically apply to private student loans, such as those from a bank or directly from your school. Contact your lender or the financial aid office at your university to find out what options are available if you are concerned you may have trouble making payments.
There are options to help you get through this crisis so you can stay on track with your college goals.
Many people have questions about their unique situations and how they will be affected by the CARES ACT.
Below you will find a list of commonly asked questions that are answered by Studentaid.gov
Student Questions about the CARES ACT
UPDATED: What if my campus has closed due to the coronavirus? Will I be able to finish the term and keep my federal student aid?
Please contact your school. Many institutions are making arrangements (such as take-home assignments or online classes) so students can complete the term. The CARES Act ensures students will be able to keep the federal student aid they have already received.
UPDATED: If my campus is closed or offering only online instruction, will I still get paid for the hours I am unable to work for my Federal Work-Study job?
If you started your job before coronavirus-related disruptions occurred, but you’re now unable to work your scheduled hours because of coronavirus-related disruptions (such as school or employer closures or student quarantines), your school may pay you for any scheduled hours or allow you to work by another means—for example, completing work online or remotely, depending on the job. Contact your school for more information.
If you had not started your Federal Work-Study job before coronavirus-related disruptions, you may not be paid Federal Work-Study wages for hours you cannot work. Check with your financial aid office to see if other sources of funding are available.
My parents can't go to their jobs because of the coronavirus, and they don’t get paid if they don’t work. Their unemployment means my financial need has increased. Can I get more financial aid?
Talk to the financial aid office at your school. They have flexibility to work with students to adjust financial aid when students’ or their parents’ income changes.
Someone in my family has the coronavirus, so our whole family has self-quarantined, and I can't attend classes. How can I keep up in school, so I don't fail classes and lose my financial aid?
We encourage you to contact your school’s financial aid office, as well as your academic advisor/coach or program coordinator, for additional guidance about your financial aid situation. Your school can tell you your options for continuing in your program of study. Additionally, if you need to take a leave of absence as a result of the coronavirus outbreak, you should speak with your school’s financial aid office.
Many schools have provided detailed coronavirus-related decisions and guidance for students. We encourage you to check your school’s website and verified social media accounts for resources and the latest information about this rapidly evolving situation.
If my school moves classes online, am I going to get less financial aid?
If your school has moved classes to an online format, you must regularly continue to participate in and complete the course work to remain eligible for financial aid. If you have questions about the online format, contact your school.
How do I contact my school’s financial aid office if the school is closed?
Check your school’s website for resources and contact information. Your school’s verified social media accounts also may be a good source for the latest information about how to contact your school during this time. While many schools have transitioned face-to-face courses to online instruction, most remain open and available to assist their students with questions.
NEW: I am a college student who needs additional financial assistance due to the disruption of operations on my campus. Is there money available to help me?
Under the CARES Act, all schools that participate in the federal student aid programs have been allocated funds to make emergency grants to students who meet the requirements to receive federal student financial aid for expenses related to the disruption of campus operations due to coronavirus (COVID-19). The grants can help cover eligible expenses such as food, housing, course materials, technology, health care, and child care. Each school decides the criteria for qualified students to receive a grant, the grant amount, and how and when the grant will be disbursed (paid out) to students. Your financial aid office is your best source of information about grant funds at your school.
FAFSA® Questions
NEW: Will my FAFSA® application be processed if my school is closed?
ED’s Central Processing System will process your FAFSA information and will send it to each school you list on your FAFSA form. If your school is completely closed, check your school’s website for resources and contact information. Your school’s verified social media accounts also may be a good source for the latest information about how to contact your school during this time.
NEW: Can I update my FAFSA® information if I (or my parent) lost a job because of closings due to the coronavirus outbreak?
If your or your family’s financial situation has changed significantly from what is reflected on your federal income tax return (for example, if you’ve lost a job or otherwise experienced a drop in income), you may be eligible to have your financial aid adjusted. Complete the FAFSA questions as instructed on the application (including the transfer of tax return and income information), submit your FAFSA form, then contact the school you plan to attend to discuss how your current financial situation has changed. Note that the school’s decision is final and cannot be appealed to ED.
NEW: I haven’t filled out a FAFSA® form for the 2020–21 year because I didn’t think I needed financial aid. Now I’m unemployed because my company closed due to the coronavirus outbreak. Is it too late to fill out a FAFSA form?
No. Both the 2019–20 and 2020–21 FAFSA forms are available at fafsa.gov. It’s possible that you’ve missed deadlines for aid from your state or school, but the federal FAFSA deadline for 2019–20 is June 30, 2020; and the federal deadline for 2020–21 is June 30, 2021.
NEW: Will my state and/or school FAFSA® deadline be extended?
As of April 15, 2020, the following states have extended their FAFSA deadlines (all deadlines listed here are for 2020–21 state financial aid unless otherwise indicated):
Delaware’s FAFSA filing deadline for scholarship purposes is June 15, 2020.
The District of Columbia’s FAFSA filing deadline is May 1, 2020 (for DCTAG, the deadline is June 30, 2020).
Kansas’s priority deadline is June 1, 2020, to be considered for state scholarships.
New Jersey’s deadline is June 1, 2020.
West Virginia has extended its 2019–20 deadline from April 15, 2020, to May 15, 2020. At this time, West Virginia has not extended the 2020–21 deadline.
To find out whether your school has extended its FAFSA deadline for purposes of institutional financial aid, contact the financial aid office at the school.
Borrower Questions
Questions About the 0% Interest Period
UPDATED: Interest is being temporarily set at 0% on federal student loans. Which loans does the 0% rate apply to?
From March 13, 2020, through Sept. 30, 2020, the interest rate is 0% on the following types of federal student loans, but only if they are loans owned by ED:
Defaulted and non-defaulted Direct Loans
Defaulted and non-defaulted FFEL Program loans
Defaulted and non=defaulted Federal Perkins Loans
Defaulted HEAL loans
Please note that some FFEL Program and HEAL loans are owned by commercial lenders, and some Perkins Loans are owned by the institution you attended. These loans are not eligible for this benefit at this time, but you can contact your servicer to ask about what benefits may be available.
To find out if your Direct and FFEL Program loans are owned by ED, visit StudentAid.gov/login. After you log in with your FSA ID, you will be on your StudentAid.gov dashboard. If you click on “view details,” you will be taken to your Aid Summary. If you scroll down on this page, you will see a section called “Loan Breakdown.” In your Loan Breakdown, if you see a servicer name that starts with “DEPT OF ED,” that servicer is for a loan that is owned by ED.
How can I take advantage of this 0% interest period if I have Federal Family Education Loan (FFEL) Program and Federal Perkins loans not owned by ED?
While your lender or school can provide these benefits should it choose to do so, you can consolidate your FFEL Program or Federal Perkins loans not owned by ED into a Direct Consolidation Loan, which would be eligible for 0% interest. However, if you consolidate, after the 0% interest rate period ends, the interest rate on your loan may be higher than what you are currently paying. In addition, when you consolidate, any outstanding interest will capitalize, meaning that any outstanding interest is added to your principal balance. Your servicer can provide you with information about how your loan balance, interest rate, and total amount to be paid would change if you consolidated into a Direct Consolidation Loan.
Who can tell me if my loans will have their interest rate temporarily reduced to 0%?
Contact your loan servicer online or by phone to determine if your loans are eligible. Your servicer is the entity to which you make your monthly payment. If you do not know who your servicer is or how to contact them, visit StudentAid.gov/login or call us at 1-800-4-FED-AID (1-800-433-3243; TTY for the deaf or hearing-impaired 1-800-730-8913) for assistance.
If my loans are owned by ED, do I need to do anything for the interest on my loans to be set at 0%?
No, ED will automatically adjust your account so that interest doesn’t accrue (i.e., accumulate). The account adjustment will be effective March 13, 2020.
UPDATED: If I make loan payments during the 0% interest period, how will they be applied?
During the period of 0% interest (March 13, 2020, through Sept. 30, 2020), the full amount of your payments will be applied to principal once all the interest that accrued prior to March 13 is paid.
UPDATED: Are private student loans eligible for the 0% interest benefit?
No. ED does not have legal authority over private student loans, and they are not covered by the CARES Act.
Questions About the Forbearance (Temporary Suspension of Payments)
I understand that my loans will be placed in administrative forbearance, temporarily suspending my monthly payments. How long will the administrative forbearance last?
The administrative forbearance will last from March 13, 2020, through Sept. 30, 2020.
NEW: If I’m currently in an income-driven repayment (IDR) plan, will my suspended payments count toward IDR forgiveness?
Yes.
NEW: Will suspended payments count toward Public Service Loan Forgiveness (PSLF)?
If you have a Direct Loan, were on a qualifying repayment plan prior to the suspension, and work full-time for a qualifying employer during the suspension, then you will receive credit toward PSLF for the period of suspension as though you made on-time monthly payments.
What will happen to my regular auto-debit payments if I do nothing?
Auto-debit payments are suspended during the administrative forbearance. Any auto-debit payments processed between March 13, 2020, and Sept. 30, 2020, can be refunded to you. Contact your loan servicer to request that your payment be refunded.
If you don’t want an administrative forbearance and want to continue making payments, contact your loan servicer to opt out of the administrative forbearance, and your auto-debit payments will resume.
You also have the option to remain in the administrative forbearance and make manual (i.e., not auto-debit) payments during the administrative forbearance period. Visit your loan servicer’s website to make a payment, or contact your loan servicer for more information.
If I made a payment after the president signed the CARES Act on March 27, 2020, can I receive a refund?
Yes; any payment you made during the administrative forbearance period (March 13, 2020, through Sept. 30, 2020) can be refunded. Contact your loan servicer to request that your payment be refunded.
UPDATED: If I’m trying to rehabilitate my defaulted student loan, will my suspended payments count toward my rehabilitation?
Yes. If you’re already in a rehabilitation agreement, all of your suspended payments will count. If you enter a new rehabilitation agreement between March 13, 2020, and Sept. 30, 2020, suspended payments that would have been made from the beginning of your agreement until Sept. 30, 2020, will count. For example, if you enter a new rehabilitation agreement on May 5, 2020, and your payment due date is May 15, suspended payments will count toward your successful rehabilitation for May, June, July, August, and September. You will not get credit for suspended payments for March and April, the months before you entered your new rehabilitation agreement.
How will I know when I will have to start making payments again?
The 0% interest period and administrative forbearance is currently set to expire on Sept. 30, 2020. Your servicer will contact you, no later than in August, to remind you that you will need to start making payments again. Make sure your contact information is up to date in your loan servicer account profile.
UPDATED: What if I want to continue making payments?
Continuing to make payments between March 13, 2020, and Sept. 30, 2020, could help you pay down your loan balance more quickly because the full amount of a payment will be applied to principal once all interest accrued prior to March 13, 2020, is paid.
You may either stay in the administrative forbearance and make payments, or opt out of the administrative forbearance and make payments.
Staying in the administrative forbearance and making payments:
If you wish to continue paying your loans during the administrative forbearance period, or to pay more or less than your regular payment amount, you are free to do so until the end of the administrative forbearance period.
You will not be billed.
You may not be able to resume auto-debit payment during the administrative forbearance period.
Contact your loan servicer or visit your servicer’s website to make a payment.
Opting out of the administrative forbearance and continuing to make payments:
You will be billed.
Auto-debit payments will resume.
Contact your loan servicer or visit your servicer’s website to opt out of the administrative forbearance, make a payment, or to find out how you can continue or start auto-debit payments.
If you opt out of the administrative forbearance and continue making regular payments but then experience a change in income, please contact your loan servicer as soon as possible to discuss options, such as enrolling in an income-driven repayment plan to lower your payments or opting in to the administrative forbearance that ends Sept. 30, 2020.
What if I want to continue making a partial payment while my loan is in forbearance?
As long as you are in forbearance, you will not be penalized for making a payment that is less than your usual monthly payment. Meanwhile, you still have the option to make a payment on your loan to make progress toward reducing your balance. Contact your loan servicer or visit your servicer’s website to make a payment or to find out how you can continue or start auto-debit payments.
NEW: What if my loan is currently in a grace period, and I was supposed to start making payments on a date that falls between March 13, 2020, and Sept. 30, 2020?
You will receive administrative forbearance (and your loans will remain at the 0% interest rate mentioned in the section above this one) for any period after your loans enter repayment between March 13, 2020, and Sept. 30, 2020. For example, if your loans entered repayment on April 15, 2020, you will receive a forbearance from April 15, 2020, through Sept. 30, 2020, and the interest rate on your loan will be 0% during this period. Note that entering repayment is a capitalization event, which means any interest that accrued on your loans prior to March 13 will be capitalized (added to the principal balance) at the end of your grace period. You can make payments during the forbearance and prior to entering repayment if you wish to avoid capitalization of some or all of the outstanding interest that accrued on your loans prior to March 13, 2020.
NEW: My Income-Driven Repayment (IDR) recertification date is coming up soon. Will the administrative forbearance affect when I should re-certify?
Yes. You will not have to re-certify your income before Sept. 30, 2020, regardless of whether your recertification date would have happened prior to Sept. 30, 2020. As part of the administrative forbearance, your recertification date has been pushed out six months from your original recertification date. You will be notified of your new recertification date before it is time to re-certify.
NEW: If I enter IDR during the administrative forbearance, will my payments automatically remain suspended? Will those months count toward IDR forgiveness?
Yes, your payments will remain suspended; and yes, the months will count toward IDR forgiveness.
NEW: If I consolidate into a Direct Consolidation Loan during the administrative forbearance, will my new consolidation loan automatically be placed in administrative forbearance?
Yes. However, if you consolidate, after the 0% interest rate period ends after Sept. 30, 2020, the interest rate on your loan may be higher than what you were paying before you consolidated your loans. In addition, when you consolidate, any outstanding interest will capitalize, meaning that any outstanding interest will be added to your principal balance. If you consolidate, you will also lose credit for any qualifying income-driven repayment or Public Service Loan Forgiveness payments you may have previously made. Your servicer can provide you with information about how your loan balance, interest rate, and total amount to be paid would change if you consolidated into a Direct Consolidation Loan.
NEW: What if I’m in a cancer treatment deferment? Will my loans be put into administrative forbearance and then back into deferment after the forbearance ends?
Yes, your loans will be placed into administrative forbearance. If your cancer deferment would have ended after Sept. 30, 2020, your loans will be placed back into that deferment automatically on Oct. 1, 2020.
If your cancer deferment recertification date falls between March 13, 2020, and April 1, 2020, your servicer will extend the date to Oct. 1, 2020. If your cancer treatment deferment recertification date falls later in the administrative forbearance period (i.e., between April 2, 2020, and Sept. 30, 2020), your loan servicer will extend the date for six months.
If you would like to re-certify during the administrative forbearance, contact your loan servicer to request to do so.
NEW: Will the interest that accrued on my loans before the administrative forbearance began on March 13 be capitalized (added to my loans) at the end of the administrative forbearance?
Interest could capitalize at the end of the coronavirus-related administrative forbearance period, depending on the status of your loans before March 13, 2020. You should contact your loan servicer about your specific situation, but here are a few common examples:
Generally speaking, if you were up to date on your payments before the administrative forbearance period began, interest accrued prior to March 13, 2020, will not capitalize.
If, before the administrative forbearance period began, you were in the type of deferment or forbearance in which interest would normally capitalize, then interest accrued prior to March 13, 2020, will capitalize when your original deferment or forbearance ends or on October 1, 2020, whichever is later.
If you were in your grace period before the administrative forbearance period began, any outstanding or unpaid interest on your account will capitalize as it usually does when you enter repayment.
Questions About Defaulted Loans
On March 25, 2020, ED announced that my federal tax refund would not be withheld to repay my defaulted federal student loan debt. My refund has already been taken. Will I get it back?
Yes, but only if your federal tax refund was in the process of being withheld—on or after March 13, 2020, and before Sept. 30, 2020—for the repayment of a defaulted federal student loan.
Your federal tax refund will not be returned to you if the process to withhold your refund was completed before March 13, 2020.
If you have questions about whether your federal tax refund was withheld, call ED’s Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923).
On March 25, 2020, ED announced that a portion of my Social Security payment, including disability benefits, would not be withheld to repay my defaulted federal student loan debt. My Social Security payment has already been taken. Will I get it back?
Yes. The portion of your Social Security payment that was taken will be returned to you if your payment was in the process of being withheld—on or after March 13, 2020, and before Sept. 30, 2020—for the repayment of a defaulted federal student loan.
The portion of your Social Security payment that was withheld will not be returned to you if the process to withhold it was completed before March 13, 2020.
If you have questions about whether your Social Security payment was withheld, call ED’s Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923).
UPDATED: On March 25, 2020, ED announced that my wages would not be garnished, but money is still being taken from my paycheck. What should I do?
Your human resources department will receive a phone call or a letter from ED instructing them to stop your wage garnishment. If ED receives funds from a garnishment between March 13, 2020, and Sept. 30, 2020, we will refund your garnished wages and contact your employer again.
UPDATED: On March 25, 2020, ED announced that Department-contracted private collection agencies stopped making collection calls and sending letters or billing statements. What should I do if I want to continue the payment arrangements I started before ED’s announcement?
You can continue your payment arrangement related to your defaulted federal student loan. Private collection agencies have been instructed to not make collection calls and not accept auto-debit payments from March 13, 2020, through Sept. 30, 2020. However, private collection agencies are available to assist you if you reach out to them during this period. To be connected to your private collection agency to continue your current payment arrangement, email ED’s Default Resolution Group or call them at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923).
UPDATED: On March 25, 2020, ED announced that Department-contracted private collection agencies stopped making collection calls and sending letters or billing statements. What should I do if I want to consolidate my defaulted federal student loans or start a loan rehabilitation arrangement now?
To consolidate, or to start a loan rehabilitation arrangement related to your defaulted federal student loans, email ED’s Default Resolution Group, or call them at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923) for assistance.
Will my defaulted loan accrue interest?
Defaulted loans owned by ED will not accrue interest from March 13, 2020, through Sept. 30, 2020. That includes Direct Loans and FFEL Program loans owned by ED. Read the Q&As above to learn more about the 0% interest period.
NEW: Do any of the federal student loan relief measures apply to my defaulted HEAL loans?
Yes, defaulted Health Education Assistance Loan (HEAL) Program loans are owned by ED; therefore, the federal student loan relief measures apply. Between March 13, 2020, and Sept. 30, 2020, the interest rate for defaulted HEAL Program loans is 0%, and collections activities related to these loans are stopped. Read the Q&As above to learn about your options to continue making payments during this period.
General Loan Questions
I’m currently on an income-driven repayment plan. I’m unemployed because of the coronavirus outbreak and don’t know when my income will return to the same level. What can I do?
You are automatically being placed in an administrative forbearance that allows you to stop making your payments from March 13, 2020, through Sept. 30, 2020.
If you are on an IDR plan and your income has changed significantly, you can update your information and get a new payment amount based on your current income. To do so, visit StudentAid.gov/idr, click on “Apply Now,” and then start the application by clicking on the button next to “Recalculate my monthly payment.” After the administrative forbearance ends on Sept. 30, 2020, your monthly payments will resume at the new amount.
If you would like to enroll in an IDR plan for the first time, visit StudentAid.gov/idr, click on “Apply Now,” and then start the application.
This Q&A contains general statements of policy under the Administrative Procedure Act issued to advise the public prospectively of the manner in which the U.S. Department of Education (ED) and Federal Student Aid (FSA) propose to exercise their discretion as a result of and in response to the lawfully and duly declared COVID-19 pandemic national emergency. ED and FSA do not intend for this Q&A to create legally binding standards affirmatively determining any member of the public’s legal rights and obligations for which noncompliance may form an independent basis for action.
Federal Government Websites for Additional Information
Here are some sites that you or your school may find useful:
Coronavirus.gov — The Centers for Disease Control and Prevention offers this site, which features everything from prevention tips, common symptoms, and current updates on how many cases there are in the United States, to advice about travel and a list of frequently asked questions.
USA.gov coronavirus page — USAGov shares how agencies across the federal government are responding to the outbreak.
Federal student loan servicers — Our website lists servicer contact information for borrowers who want to ask questions, request a deferment or forbearance, etc.
U.S. Department of Education COVID - 19 information for schools and school personnel
Information for Financial Aid Professionals website (for postsecondary school financial aid staff; look for information in the “Letters and Announcements” section)
Though there are many things to consider, overall this is great news for students and parents who have taken out student loans. For more information, go to https://home.treasury.gov/policy-issues/cares.
In a time where many students and families are looking for financial help for college, our Imagine Scholarships database is an affordable and helpful solution to finding money for college.