The CARES Act and Your Path to Public Service Loan Forgiveness

On March 27, 2020 the CARES Act was signed into law. Part of this $2 Trillion policy includes a waiver of interest and payments on your federal student loans.

What does this mean for borrowers working towards PSLF?

If you’re working towards Public Service Loan Forgiveness, you may be concerned about your payments being paused. I have good news for you! The CARES Act explicitly states that all paused payments will count towards any forgiveness track you were already working towards.

This means you just earned six free months towards your Public Service Loan Forgiveness qualifying payment requirement.

Section 3513 of the CARES Act states that the Department of Education is suspending all payments due for federally owned student loans. However, the Act states that even though your payment will be suspended, you will still earn credit towards any loan forgiveness program you were working towards already.

Our interpretation is that if you were already working towards Public Service Loan Forgiveness, you will not have a payment until September 30, 2020, but will still earn credit towards the 120 payments required for Public Service Loan Forgiveness.

Here's how to earn this credit:

You won’t need to call your loan servicer to take advantage of this policy either; all borrowers will automatically be entered into a six month payment and interest waiver from now until September 30, 2020. However, it may take some time for this to be reflected in your account as loan servicers are experiencing large backlogs due to a reduction in staff.

What if I have lost my job?

What we’re still unsure about is whether or not borrowers who were working towards Public Service Loan Forgiveness who loose their job will still be eligible for the free payments towards their qualifying payment count. If this is something you are concerned about, assume that you will not earn any qualifying payments while you are unemployed. _

COVID-19 Relief Updates: Since the publishing of this article in March 2020, the government has extended federal student loan relief through September 30, 2021. Visit studentaid.gov for more information.