What does the CARES Act do for student loans?

The Coronavirus Aid Relief and Economic Security (CARES Act) was first passed by President Trump on March 27, 2020 with goal of helping people with their student loans. Trump extended the effective timeframe twice and President Biden extending its protection a third time, through September 30, 2021. The CARES act reduces interest rates to 0%, stops wage garnishments and collection attempts if you are in default and suspends your need to make a payment if your loan qualifies.  It’s important to note that not all student loans in Chicago are eligible.

What loans qualify for protection under the Cares Act?

According to FSA.gov, only federal student loans held by the Department of Education are eligible for protection. Some Stafford/FFEL and Perkins loans may not be covered, especially if your loan is in good standing and you make payments on time. Depending on your circumstances, you may not benefit from the CARES Act and must continue paying these loans even while other loan payments are suspended.

Some federal student loans are subsidized by the federal government but are not owned by the federal government and that is the major difference as to which loans are covered by CARES.

Are there exceptions to student loan protection under the CARES Act?

Despite the fact that the CARES Act attempts to clearly define which loans qualify for protection, there are several exceptions. Some loans can become federal owned loans based on the status of the loan, your status, or various other circumstances. Understanding eligibility requirements, how they apply to your loan and what it means in the end is best accomplished with the help of a trained student loan lawyer. Making a mistake can cost you dearly with a severe negative impact when the CARES Act expires or potentially sooner.

How does a student loan lawyer help me?

A trained, experienced student loan lawyer understands the specific circumstances of the loan cycle. They can help you understand your loan status and the strategies you can implement during the protection period and after the CARES Act expires. Knowing how to position your loans now can help you avoid collections, make it easier to plan your finances, and ease any stress you have on this topic. Contact me today to set up an analysis of your student loans so you are prepared and don’t get stuck in the middle when CARES expires.

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