Feds Suspend Interest Accrual on Federal Student Loans

[SigmaFS]

The federal government has announced the temporary suspension of student loan interest accrual on federal loans in response to the COVID 19 pandemic. Unfortunately, this does not apply to private loans.

This Politico article contains more details:
Trump to waive interest on federal student loans 'until further notice'

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[Spikebd]

I wonder if this will remain permanent, especially because tons of people are clamoring for Student loan reform.

doubtful I know but this is becoming a serious issue

 

[Spydra]

I was really surprised to see this in the news. I don't recall this happening in recessions or other times of chaos so a part of me thinks 'what's the catch' and another part is relieved.

 

[Trogghunter]

 

[Trogghunter]

Language from the bill. Would this mean that payments are suspended automatically?

 

[SigmaFS]

Language from the bill. Would this mean that payments are suspended automatically?

Yes, it's automatic, retroactive to March 13th and currently in place through Sept 30th. It applies to Federal Direct Loans.

 

[SigmaFS]

The CARES Act, signed on March 27th, has the following borrower benefits through Sept 30, 2020(not an exhaustive list):

1. 0% interest rate
2. $0 payment
3. Non-payment for the period ending Sept 30th counts towards the 120 qualifying PSLF payment criteria and IDR repayment period.

These terms apply to Federal Direct Loans. This should apply automatically effective April 1, 2020.

 

[RangerBob]

The CARES Act, signed on March 27th, has the following borrower benefits through Sept 30, 2020(not an exhaustive list):

1. 0% interest rate
2. $0 payment
3. Non-payment for the period ending Sept 30th counts towards the 120 qualifying PSLF payment criteria and IDR repayment period.

These terms apply to Federal Direct Loans. This should apply automatically effective April 1, 2020.

Do you know if independent contractors can take the $5250 tax break for paying off student loans, or only employees? (For the latter, it’d be the employee that gets the tax break of course)

 

[SigmaFS]

Do you know if independent contractors can take the $5250 tax break for paying off student loans, or only employees? (For the latter, it’d be the employee that gets the tax break of course)

Here's the language that originally authorized this benefit:

(3)Principal shareholders or owners
Not more than 5 percent of the amounts paid or incurred by the employer for educational assistance during the year may be provided for the class of individuals who are shareholders or owners (or their spouses or dependents), each of whom (on any day of the year) owns more than 5 percent of the stock or of the capital or profits interest in the employer. (26 U.S. Code § 127 - Educational assistance programs)

My understanding is because you are a greater than 5% owner, you would not be eligible. Again, my understanding...

 

[ArdorAyurveda]

The CARES Act, signed on March 27th, has the following borrower benefits through Sept 30, 2020(not an exhaustive list):

1. 0% interest rate
2. $0 payment
3. Non-payment for the period ending Sept 30th counts towards the 120 qualifying PSLF payment criteria and IDR repayment period.

These terms apply to Federal Direct Loans. This should apply automatically effective April 1, 2020.

Just want to make sure I understand point #3 correctly -- $0 payments from April to September definitely count towards PSLF? And I don't have to do anything special to get those benefits?

Nice.

I also read somewhere on here that you can make IDR payments while you are in school, you just have to apply to waive your in-school deferment and then apply for IDR.

So if I am currently in medical school, I should waive my in-school deferment NOW to get those five months of qualifying PSLF/IDR payments. And then around September 1st, apply for IDR (with my $0 federal income) and get $0 monthly payments for the duration of medical school.

Am I missing something here? Feels like loophole/glitch in the matrix right now...

The reason why I would apply for IDR in September rather than now is because these next 5-6 months of payments under the CARES Act are essentially freebies. Applying for IDR now would get me the $0 monthly qualifying payments, yes, but I don't need to apply for IDR right now because the CARES Act is in effect...someone please correct me if I'm wrong.


Here's where I got the information that is informing my decision: Can You Get Public Service Loan Forgiveness? • Student Doctor Network

 

[RangerBob]

Just want to make sure I understand point #3 correctly -- $0 payments from April to September definitely count towards PSLF? And I don't have to do anything special to get those benefits?

Nice.

I also read somewhere on here that you can make IDR payments while you are in school, you just have to apply to waive your in-school deferment and then apply for IDR.

So if I am currently in medical school, I should waive my in-school deferment NOW to get those five months of qualifying PSLF/IDR payments. And then around September 1st, apply for IDR (with my $0 federal income) and get $0 monthly payments for the duration of medical school.

Am I missing something here? Feels like loophole/glitch in the matrix right now...

The reason why I would apply for IDR in September rather than now is because these next 5-6 months of payments under the CARES Act are essentially freebies. Applying for IDR now would get me the $0 monthly qualifying payments, yes, but I don't need to apply for IDR right now because the CARES Act is in effect...someone please correct me if I'm wrong.


Here's where I got the information that is informing my decision: Can You Get Public Service Loan Forgiveness? • Student Doctor Network

To the best of my knowledge, you can’t waive in school status. You can make optional payments, but can’t be on a payment plan. So I don’t believe there’s any way to get credit towards PSLF while I’m school. It wouldn’t make any sense. You can’t even waive your grace period (though consolidating into a federal loan gets around that)

Still, give your lender a call. Doesn’t hurt to ask.

 

[SigmaFS]

Just want to make sure I understand point #3 correctly -- $0 payments from April to September definitely count towards PSLF? And I don't have to do anything special to get those benefits?

Nice.

I also read somewhere on here that you can make IDR payments while you are in school, you just have to apply to waive your in-school deferment and then apply for IDR.

So if I am currently in medical school, I should waive my in-school deferment NOW to get those five months of qualifying PSLF/IDR payments. And then around September 1st, apply for IDR (with my $0 federal income) and get $0 monthly payments for the duration of medical school.

Am I missing something here? Feels like loophole/glitch in the matrix right now...

The reason why I would apply for IDR in September rather than now is because these next 5-6 months of payments under the CARES Act are essentially freebies. Applying for IDR now would get me the $0 monthly qualifying payments, yes, but I don't need to apply for IDR right now because the CARES Act is in effect...someone please correct me if I'm wrong.


Here's where I got the information that is informing my decision: Can You Get Public Service Loan Forgiveness? • Student Doctor Network

I believe you can waive the in-school deferment for the Federal Direct Graduate PLUS, but not the Federal Direct Unsubsidized.