Good news for those struggling to pay off those federal student loan debts during the novel coronavirus pandemic: On Aug. 8, President Donald Trump directed the secretary of education to continue to suspend loan payments, stop collections and waive interest on department of education-held student loans until Dec. 31, 2020. Anyone with these loans was excused from making payments until Jan. 1, 2021, with no interest accumulating; however, loan servicers encouraged loan holder to continue paying their student loan balances to more quickly eliminate their loans in the long run. Any payments made during the period from Trump’s announcement until next January would go toward the loan’s principal balance.
Payments and interest have been suspended on four types of federal student loans: Federal Direct Loans (including PLUS loans), Federal Family Education Loan Program (FFELP) loans held by the government, Federal Perkins loans held by the government and Defaulted Health Education Assistance Loan (HEAL) loans.
The original announcement of this policy was scheduled to expire on Sept. 30, 2020. However, because “many Americans remain unemployed due to the COVID-19 pandemic, and many more have accepted lower wages and reduced hours while states … continue to impose social distancing measures,” the policy was extended to give the economy and the pandemic more time to stabilize, according to the president’s memo.