Student Loans and the CAREs Act – What You Need to Know

The Federal Student Loan forbearance period that was implemented on March 27, 2020, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act is set to cease on January 31st, 2021. This forbearance period allowed federal student loan borrowers to suspend loan payments and set interest rates to zero percent (Student Aid). This means that minimum payments and accruing interest on these types of loans will resume in February 2021.

Before student loan repayments resume, it is important to complete the following:

  • Calculate Next Monthly Payment: Borrowers should log into their student loan accounts to figure out how much payments will be once the forbearance ceases. This will enable the borrower to plan ahead and make sure they have the proper amount of funds set aside for payments.
  • Reactivate AutoPay: If a student loan borrower wants to continue autopay once February begins, this feature will need to be reactivated in their account.
  • Pay Down Debt Early: If borrowers have extra cash set aside, consider paying down higher interest rate loans (+ 6/7%) before the forbearance period ends (Interest Rates). We recommend speaking with us first to ensure this decision aligns with your overall financial plan.
  • Seek Additional Help: If borrowers are unable to make payments once the forbearance period ends, they should reach out to their loan provider to see what other options there may be available. These options may include switching to an income-driven repayment plan or unemployment deferment to postpone payments. Generally speaking, we typically do not recommend refinancing government loans as they include more beneficial terms, such as lower interest rates and forbearance provisions (Navient).

While there is always the possibility that President-Elect Biden could extend the student loan forbearance period past January 31st, borrowers should assume that payments will eventually restart at some point and have a plan in place before this occurs.

If you are interested in discussing this topic in more detail, please reach out to us. We are here to help you make the best decision regarding your outstanding loans.


Contact Michelle Tigani

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