Here’s How the CARES Act Impacts Your Student Loans

Here’s How the CARES Act Impacts Your Student Loans

Here’s How the CARES Act Impacts Your Student Loans

Though it includes some relief for student loan borrowers, it’s hardly enough. And advocates are fighting for more.


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Even before the pandemic, millions struggled to pay monthly student loan bills.

And in a rapidly deteriorating economy, the expectation that borrowers will continue making burdensome student loan payments is, to put it mildly, unrealistic. Americans from every community are facing unemployment, food and housing insecurity, and unforeseen medical costs. Student loan payments are frequently another crushing burden in an already impossible situation.

There is some good news: The CARES Act passed by Congress and signed into law includes some student debt relief. Unfortunately, the relief applies to only some student loan borrowers. Much more needs to be done.

First, a quick look at how the CARES Act works for federal student loan borrowers: The stimulus package passed by Congress mandates a temporary suspension on federally held student loan payments and interest. It also stops collection on defaulted federal student loans. The suspension is automatic, meaning borrowers do not have to contact their servicer to request a stop on payments. Those who can afford to do so can continue making payments during this automatic suspension, to more quickly pay down the principal.

But the CARES Act falls short of providing relief for all of America’s 46 million student loan borrowers. Because of the complexities of the government’s student loan system, millions of federal student loans held by borrowers are actually in the portfolios of commercial lenders and universities, not the Department of Education.

Borrowers with privately held Federal Family Education Loans  and Perkins Loans that are not owned by the US Department of Education do not receive the payment suspension. Many more people with private student loans from banks are also excluded from the emergency provisions as well.

Consumer advocates are well aware of the many obstacles that can prevent people from accessing the student loan forgiveness offered to them by law. Their efforts ensured that the coronavirus stimulus’s six-month payment and interest suspension period still qualifies as time spent in the Public Service Loan Forgiveness program. This federal program forgives the remaining loan balance for people who have worked over 10 years in critical public service jobs as firefighters, teachers, nurses, and many of the people currently on the front lines of this crisis.

When this program was rolled out in the fall of 2017, thousands of borrowers saw their applications denied because of myriad obstacles. The emergency relief passed by Congress is designed to not create additional roadblocks—but it didn’t do anything to remove existing problems, either.

The CARES Act includes relief for borrowers in default: the most distressed and underserved borrowers. This legislation directs federal debt collection agencies to suspend the garnishment of wages, tax refunds, Social Security benefits, and other collection actions on federally held student loans. If collections against you were being processed after March 13, you may request a refund on that amount from your federal loan servicer.

These changes are certainly a step in the right direction and will provide critical short-term, economic relief to millions of borrowers and their families.

But, let’s face it—this is far from enough. While the student debt relief provided in this stimulus package is unprecedented, it fails to address the fact that the economic consequences of this health pandemic will far outlast a six-month period. Advocates are echoing the calls from legislators in Congress and the Senate to pass broad debt cancellation to create long-term relief from the weight of student loans.

The good news is that support is emerging to continue advocating for those left out of the CARES act: More than 550,000 people signed the petition to cancel student debt altogether; over 475,000 letters have been sent to legislators directly; and record numbers are signing up for “Tele-Townhalls” to address the crisis and help borrowers navigate this bewildering time.

Millions of Americans are shouldering the burden of student debt. We believe it will take millions of us to demand that it ends.

Want to get involved?

Student Debt Crisis is calling on everyone to join a growing grassroots movement: Sign this urgent petition!

In order to assist borrowers struggling to make their payments, the consumer advocates at Student Debt Crisis, along with Savi, a social impact tech startup, created a completely free tool for student loan borrowers affected by the COVID-19 crisis.

If you or someone you know has lost their job, had their hours reduced, and are worried about making their student loan payments for longer than the automatic six-month suspension, this new tool allows borrowers to quickly and accurately apply for income-driven repayment—which can reduce or even eliminate payments for 12 months. You can check out the tool online at

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