President Trump announced the United States government would waive federal student loan interest amidst the coronavirus outbreak. Because many people are being forced to stay at home, not work, or work less, many people will need this break financially. However, the Trump student loan interest waiver doesn’t mean what you think it does.
So, What Does It Mean?
Friday afternoon Trump announced he would like to waive interest on student loans during the coronavirus outbreak. For those out of work, it sounds like great news, but it doesn’t mean you don’t have to make your payment.
When Trump announced this change, the Department of Education immediately went to the drawing board to figure out how this will work. They came up with this…
Your same payment will be due but the full amount will go to the principal and none of it will be going towards the interest. At this time, no interest will be applied to your account. This will give short-term relief to borrowers during the outbreak.
Individuals who aren’t working at this time may need to pause their payments while they are out of work or until they get back on their feet. For these borrowers, you have a few options.
- Income-Driven Payments: If your income is changing or you need to make a smaller payment, call your loan provider and discuss your options. Many of them will decrease the amount you have to pay based on your monthly salary.
- Deferment: Deferment will give you a break from making payments on your student loans and you won’t be responsible for any interest accrued on subsidized loans during this time. There is a short list of reasons you might be granted deferment, including unemployment, cancer treatment, economic hardship, education, military duty, or rehab.
- Forbearance: Similar to deferment, forbearance will give you a break from paying your student loans. However, you will be responsible for any and all interest during this time. You don’t have to have specific reasons why you are applying for forbearance.
People looking for deferment or forbearance will not have to make payments for a determined period of time. Typically, your loans would continue accruing interest during this time. With President Trump’s proposal, people needing a break from payments won’t have any interest added to their accounts.
However, it is a good idea if you can keep up your student loan payments at this time to do so. Don’t take the interest-free period to take a break from paying off your loan. In fact, paying on it now can actually benefit you.
Questions About The Waiver
So far, there are still a lot of unanswered questions surrounding the Trump student loan interest waiver, including some the Department of Education can’t answer. For instance, will the interest being waived now be added on later? DOE officials don’t yet have an answer to this.
Also, it isn’t yet clear as to whether or not federal PLUS loans will be covered under the waiver. This includes parent PLUS loans and graduate education loans.
All in all, the changes that need to happen for this waiver to take effect will be difficult for loan providers to implement in such a short period of time. Not to mention, some of these service providers will need to send their call center employees home to decrease the risk of contracting coronavirus. So, if you are looking to contact your provider about this, be patient.
The Trump Student Loan Interest Waiver Can Benefit You
Although you will still have to make payments on your loans, the Trump student loan interest waiver can help you if you aren’t in need of forbearance or deferment. Actually, you can take a good chunk off the amount you borrowed and shorten the amount of time you’ll be paying it back.
This waiver will be available to more than 35 million borrowers who have received a federal student loan. Private lenders, like Sallie Mae, will not be covered under the waiver.
Lastly, if you are wondering about what you need to do to benefit from the interest waiver, it’s nothing! You don’t have to contact your loan provider. The interest will automatically be waived during this time and will be retroactive to Friday when Trump announced the change.