CARES Act: Impact on Student Loans

Our post, CARES Act: What you need to know, was an overview of the entire bill and how it may affect you.

Below is a detailed breakdown of the Student Loan provisions contained in the CARES Act and some strategies to consider.

If you have Direct Loans

The CARES Act dropped your loans to having 0% interest and no payments until 9/30/2020.

  • If you’ve experienced a decrease in household income and you are on an income-based repayment plan…
  • Re-certify your income to lower your payment. When your payments resume in October, they will be at lower rate than you were paying before.
  • You can re-certify your income anytime you experience a drop in income.
  • If you are doing a Forgiveness Program (PSLF, TEPSLF, Teacher Loan Forgiveness or 20/25 year payment forgiveness)…
  • Don’t pay during this payment suspension since these $0 payments count towards your loan forgiveness.
  • However, increase your savings account contribution by your old student loan payment. So you don’t get used to spending that “extra” money and also build your savings for the next several months.
  • For example if your loan payment was $300 a month and you were saving $200 a month to your savings account then increase your savings account contribution to $500 a month. When your loan payments resume in October you can lower back to $200 and in the meantime you will have saved an additional $1,800.
  • Contact your loan servicer to request a refund of any loan payment made after March 13, 2020 and put that in your savings account.
  • If you do not qualify for any loan forgiveness…
  • Keep making payments if you can. You will have to call your loan servicer and ask them to remove the automatic payment suspension. Any payments you make will go towards the principal and will result in you paying down your student loan balance faster than you originally anticipated.

If you have FFEL Loans

Your loan interest rate and payment remain the same. The CARES Act did nothing to change your FFEL loans.

  • You can contact your loan servicer and see if they are offering any relief.
  • We can help you transfer your loans over to the Direct Loan program to receive the 0% interest and $0 payments, but it will take several months and it’s not always the right thing to do in the long run.
  • Let us know if you have a FFEL you’d like reviewed to see what’s best for your personal situation.
  • Apply for a Direct Loan Consolidation
  • If you have any Direct Loans already, be sure you DO NOT include them in this consolidation (only your FFEL loans).

If you have Private Loans

Your loan interest rate and payment remain the same. The CARES Act did nothing to change your Private Loans.

  • However, many of the Private Student loans servicers have their own programs to help in times of uncertainty. If you have private loans, requesting a forbearance might be your best way forward. Interest will most likely continue to accrue (it depends on your servicer), but a forbearance will allow you to suspend payments for a certain period.
  • They may not offer a forbearance option at all, but if you’re in trouble, you should call and ask.
  • If you have Private Student Loans and are doing fine with repayment, keep going!

Thanks for taking a few minutes to read up on the Student Loan provisions of the CARES Act and how they may affect you. We hope you’re able to benefit from this advice and save some money during this uncertain time. All the best. Stay safe and healthy.



How do I know if I have Direct, FFEL or Private Loans?

  • If you login to your loan servicer it should say Direct or FFEL in the name of the loan. If not, you can login to and this will show all your Federal Student Loans (Direct and FFEL).
  • If you know you have more than what is listed here then they are likely Private Loans, but I would call your loan servicer to confirm.

What happens with automatic payments?

  • Automatic payments are suspended during the administrative forbearance period (until 9/30/2020). Any automatic payments processed between March 13, 2020 and September 30, 2020 can be refunded. You should contact your loan servicer if you want to request a refund for this period.


The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. There is no guarantee that any strategies discussed will result in a positive outcome. None of the information in this document should be considered as tax advice. You should discuss any legal, tax or financial matters with the appropriate professional.