The Coronavirus Aid, Relief and Economic Security (CARES) Act was created to provide financial relief for people impacted by COVID-19.  If you have federal student loans, you are eligible for payment relief and 0% interest through the end of September.

Temporary Suspension of Payments

With many suffering job transitions or loss during the pandemic, the CARES Act administrative forbearance, or temporary suspension of federal tuition loan payments, is a tremendous subsidy.  Administrative forbearance will last from March 13, 2020 through September 30, 2020. Any auto payments in place will be suspended automatically during this period.

If you want to continue making payments, contact your loan service provider to opt out of the administrative forbearance. You can also make manual payments by visiting your loan service provider’s website. Since you are not required to make payments during the administrative forbearance, you are able to make payments of less than your minimum payment amount.

During the forbearance period, interest will not accrue, and your credit history will not show the payment lull.

Types of Loans Offering Relief

The CARES Act provisions for federal student loan relief are specific to these types of loans:

  • Direct Loans owned by the US Department of Education
  • Federal Family Education Loans (FFEL) owned by the US Department of Education (DOE)
  • Federal Perkins Loans owned by the US Department of Education
  • Defaulted Health Education Assistance Loans owned by the US Department of Education

It is important to note that CARES Act provisions will not apply to FFEL and Federal Perkins Loans owned by a third-party lender outside of the DOE.

Refinancing Consideration Outside of CARES Act Provisions

If you have private student loans or student loans not owned by the DOE, you can still reduce your interest rate, reduce your payment or some combination of the two.

With current interest rates at or near all-time lows, it is a good time to investigate refinancing your private student loans with a third party like SoFi, Earnest or a handful of other providers.

However, refinancing federal student loans covered by the CARES Act is not needed with 0% interest rates in effect through September 30 and the possibility of relief being extended past September 30. These student loans can always be refinanced separately or refinanced with your private student loans at a later date.

If you are a high-income earner looking for additional guidance in debt management, investment management, tax and estate planning or asset allocation, the advisors at Budros, Ruhlin & Roe are here to help. Student loan repayment should not prevent you from having confidence in building your financial future.  Our GROWwithBRR program can help turn uncertainty into assurance in your wealth strategies.

Kevin Wuebker, CFP®

Senior Wealth Manager


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