Six Things to Know About Current Repayment Flexibilities and Your Federal Student Loans
Posted By: Melissa Elliott - 2/1/2021 12:00:00 AM

On January 20, 2021, the secretary of education extended the 0% student loan interest rate and suspension of payments on federal student loans owned by the Department of Education (ED) until September 30, 2021. These relief measures began on March 13, 2020. 

Below, we have answered questions about these COVID-19 emergency relief measures and the resulting flexibilities for federal student loans. 

Which loans qualify for the COVID-19 suspension of payments and the 0% interest rate?

The suspension of payments and 0% interest rate applies to the following types of federal student loans, but only if they are loans owned by the U.S. Department of Education (ED):

  • Defaulted and nondefaulted Direct Loans
  • Defaulted and nondefaulted FFEL Program loans
  • Defaulted and nondefaulted Federal Perkins Loans
  • Defaulted HEAL loans

If my loans are owned by ED, do I need to do anything to suspend my payments or for the interest on my loans to be set at 0%?

No, ED has automatically adjusted your account so that your payments are suspended and interest does not accrue (i.e., accumulate).

How long will the suspension of payments and 0% interest rate last?

These flexibilities are currently scheduled to last through September 30, 2021.

Tip: If you can afford to make payments during this period, you will pay off your loan faster and lower the total cost of your loan over time.

I am currently in school. How does the 0% interest rate impact my loans?

Direct unsubsidized loans normally accrue interest while you are in school. However, from March 13, 2020, through the end of the COVID emergency relief period, the interest rate on all ED-owned loans has been temporarily lowered to 0%, even while you are in school. That means your student loans will not accrue (i.e., accumulate) interest during this time.

When the COVID emergency relief period ends, regular loan interest rates will apply.

How will I know when I will have to start making payments again?

The 0% interest period and suspension of payments are currently scheduled to end on September 30, 2021. Both Federal Student Aid and your servicer will contact you ahead of time 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.

What if I want to continue making payments?

Continuing to make payments during the payment suspension 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.

As long as your payments are suspended, you can make a payment that is less than your usual monthly payment. Any payment you make on your loan will 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.

REMEMBER, there is no fee for this payment suspension or 0% interest period—not from the federal government and not from your loan servicer. Some companies may charge a fee to give you repayment help for federal student loans during the COVID-19 emergency. These companies are not affiliated with or endorsed by ED. If someone asks for money for either of those reasons, it is a scam. Your loan servicer provides free help with your questions or concerns about your loan payments. There is no coronavirus-related loan forgiveness for federal student loans. Learn more about avoiding student aid scams.

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