September is traditionally a time for back to school and, even in a time of COVID-19 restrictions, September was to be the month when student loan payments got back on track.
Well, like a lot of things, we're looking at yet another new game plan here. And it's one that savvy consumers might be able to use to their advantage.
Borrowers across the country began receiving notices in April from their federal student loan servicers about temporary 0% rates and a pause in payments. No payments were due, which theoretically offered some relief to tight budgets as wages were cut and jobs were lost during the fight against the coronavirus pandemic.
But that deal was set to end Sept. 30 and borrowers would have to resume making payments on these federal student loans soon.
As the health crisis continues to loom, though, borrowers are now looking at receiving an automatic three-month extension as the federal student loan forbearance program is set to run until Dec. 31.
Loan servicers are expected to notify borrowers of the extension through the fall. And, according to the U.S. Department of Education department, borrowers can expect to see this extension reflected in their accounts over the next several weeks.
- Who continued to pay student debt in 2020?
The first round of relief came into play when a majority of student loan borrowers received more breathing room under the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, signed by President Donald Trump on March 27.
The new extension until Dec. 31 came into play after the White House issued an order on Aug. 8 and the Department of Education followed up on Aug. 21 to implement the memorandum.
Not everyone is covered. About 9 million borrowers - those with private student loans, Perkins loans and Federal Family Education Loans not owned by the federal government - were left out of the picture, according to the Student Borrower Protection Center, a nonprofit advocacy group.