The Impact of the CARES Act on PSLF

On March 13th, 2020 President Trump directed the Department of Education to implement a 60 day waiver on interest for federal student loans. Two weeks later, Congress passed and President Trump signed into law the CARES Act, which was a more far reaching policy that suspends payments (interest and principal) on all federal student loans through September 30, 2021.

If you are enrolled in the Public Service Loan Forgiveness (PSLF) program, this article provides guidance from the Department of Education on the impact of the CARES Act on your student loans. To learn more about how to get your loans in compliance with PSLF, schedule a free consulation with a GradFin PSLF Expert.

Top 10 questions and answers for PSLF borrowers navigating the suspension period:

Q: What does the temporary suspension of payments mean?
A: The temporary suspension of payments means that all of your federal student loans have been automatically placed into “administrative forbearance” between March 13 through September 30, 2021.

Q: Which loans are eligible for the payment suspension?
A: All federally-owned loans, including Direct Loans, Perkins, and FFEL loans. However, FFEL loans and Perkins loans that are owned by private lenders or private institutions are not eligible.

Q: Will the suspension period count toward Public Service Loan Forgiveness?
A: Yes, if you are enrolled in an Income-Driven Repayment plan, work full-time for a qualifying employer during the suspension period, the Department of Education has indicated that you will receive credit for qualifying payments during the suspension period as if you made on-time monthly payments.

Q: What happens to my auto-debit payments?
A: The Department of Education has authorized your federal loan servicers to suspend all auto-debit payments during the administrative forbearance period.

Q: If I made a payment after March 13th, can I get a refund?
A: Yes. The Department of Education has provided guidance that any payment made during the suspension period (between March 13 and September 30, 2021) can be refunded. Contact your federal loan servicer if you are interested in requesting a refund.

Q: Will a refund cause any issues with my PSLF qualifying payments?
A: No, any refund of a payment made during the suspension period will not disqualify that as a qualifying payment.

Q: When will I have to start making payments again?
A: Your federal loan servicer will contact you in August to remind you that your loan payments will resume in October. Please reach out to your federal loan servicer for more information on the start date.

Q: What if I sign up for an Income-Driven Repayment plan after March 13, will that count as a qualifying payment for PSLF?
A: Yes, as long as you are approved for an Income-Driven Repayment plan, the payments you would have made in an IDR plan during the suspension period will count, assuming you meet the other eligibility requirements of the PSLF law.

Q: My employment was approved for the PSLF program after the suspension period and I received a statement of the approval from FedLoan Servicing. My loans are not at FedLoan, when should I expect the loans to be transferred?
A: The transfer of your loans from your current servicer to FedLoan is not expected to happen until after the suspension period ends. You should still enroll in an income-driven repayment plan via to make sure you are fulfilling the borrower requirements of the law. GradFin is compiling a list of borrowers in this situation so that we can work with FedLoan to make sure the transfer can be initiated after the end of the suspension period.

Q: My qualifying employer has issued a company-wide furlough policy. Will this have any impact on my qualifications for PSLF?
A: According to the PSLF law, borrowers must work full-time and over 30 hours per week for a qualifying employer to satisfy the employer requirements of the PSLF law. Currently, the Department of Education has not released guidance detailing the impact of furlough policies on PSLF. We will update this article and our communications to these borrowers when more guidance is provided by the Department of Education.

For more information, schedule a free consultation with a GradFin PSLF Expert to discuss how we can help you stay in compliance with the PSLF laws.