What Trump’s Executive Order Might Mean for Your Student Loans

As Congress could not agree on a second stimulus package, President Donald Trump signed three memorandums and an executive order on Saturday to continue relief efforts amid the pandemic. One of the ordinances extended a hiatus on monthly student loan payments for people on certain government-owned student loans.

Trump sent a memorandum to Secretary of Education Betsy DeVos, on Saturday ordering an extension of relief for borrowers. The relief freezes payments and prevents interest from accruing between September 30 and December 31, 2020. The CARES Act suspended payments until the end of September, and now the memorandum extends that until the end of 2020.

If you have student loans, here’s what that means for paying off your debt.

Private student loan borrowers once again left behind

An estimated 9 million borrowers who created or refinanced their student loans with a private lender were excluded from the decree. They were also not covered by the original coronavirus abstention policy made available under the CARES Act. These borrowers should work directly with their lenders to discuss forbearance.

Many private lenders, such as SoFi and Earnest, offer forbearance or loan modification programs to their customers. Depending on the lender, they may request documents on financial hardship in order to qualify for forbearance. The terms of the forbearance will vary depending on the policies of the lender.

Borrowers should contact their lenders if they are having difficulty making payments to avoid default of payment.

Forgiveness of public student loans is not addressed

In the newly signed executive decree, the Public Service Loan Discount (PSLF) program is not discussed. The PSLF encourages college graduates to work for a nonprofit or government agency by giving up their student loan balance after making 120 on-time payments. But Trump efforts to end the civil service loan forgiveness program, in addition to not addressing the program in its executive order, has worried borrowers.

The CARES Law signed in March notes that those who aim to qualify for the PSLF will have each month of abstention during the coronavirus emergency “count” for this reference if they continue to work for an eligible employer.

If you were forced to take a job with an ineligible employer, such as a for-profit business during the pandemic, or if your work schedule was cut below 30 hours per week, the payments you made until now will always count towards the PSLF. When you return to an eligible employer, you get credit for the payments you make in that new job. You simply won’t get credit for the time your job was not eligible for the PSLF.

DeVos and the Ministry of Education are expected to announce further details on how the executive decree interacts with the PSLF in the coming days.

Those that qualify, be sure to check with your repairman

Qualifying for the Federal Student Forbearance Extension is fairly straightforward. As with the CARES law, the freeze will automatically be applied to your account.

But borrowers must remain vigilant to ensure that the forbearance extension is accurately reflected in their student loan accounts. Watch your student loan manageronline portal to make sure you are not billed in error once the decree is in effect.

If you have any questions about the status of your loan, contact your loan officer directly.

Related: Best private student loans of 2020

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