On March 27th, President Trump signed the “Coronavirus Aid, Relief, and Economic Security Act’’, or the ‘‘CARES Act’’, which states that the government will waive interest and suspend payments on all student loans held by the Department of Education until September 30, 2020. On August 8th, President Trump signed an Executive order to extend this interest waiver through December 31, 2020. Education Secretary Betsy DeVos extended this program until August 31, 2022.
President Biden has further extended the 0% interest and no payments due until August 31, 2022.
Additionally, the CARES Act introduced a measure enabling employers to make tax-free contributions to employee student loans. Below is a summary of what you need to know and the options available to you.
You can take advantage of the 0% interest rate on federal student loans to put yourself in a strong financial position. You can use the amount you would normally pay to towards your student loans to:
Federal student loan payments and interest are set to resume on August 31, 2022. Though your autopay should start back up automatically, set a reminder now to ensure your payments are rescheduled at that time, so you don’t miss payments going forward and incur any late fees or penalties.
Currently, around 8%⁴ of employers offer student loan repayment as a benefit. Up until recently, this benefit was treated as income and employees were taxed on the contribution amounts. With the passage of the CARES Act on March 27th, employers are now able to make tax-free contributions to employee student loans.⁵ If you think this applies to you and your employer, or if you'd like to learn more, you can reach out to us at firstname.lastname@example.org.