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Student Loan Forbearance Extended through January 2021

The U.S. Department of Education announced a 1-month extended forbearance on collecting student loan payments & interest accrual. 

student loan extended forbearance

Image by McElspeth from Pixabay

On Friday, December 4, the Department of Education extended the forbearance period expiring on December 31, 2020. Its press release says, “[f]ederal student loan borrowers will not be expected to make payments through January of next year… .”

What Relief Does The Extended Forbearance Include?

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act of last March included significant relief for federal student loan borrowers. Section 3513 of CARES. But that relief expired after September 30, 2020. A few days before that expiration, the Department of Education extended that relief through December 31, 2020. Now, the extension pushes the protections through  January 2021.

The Extent of the Coverage

The December 4, 2020 press release referred to an “extension of the federal student loan administrative forbearance period, the pause in interest accrual, and the suspension of collections activity through January 31, 2021.” Also, “[n]on-payments will continue to count toward the number of payments required under an income-driven repayment plan, a loan rehabilitation agreement, or the Public Service Loan Forgiveness program.”

For most borrowers, that’s what you need to know. You don’t have to pay, interest isn’t accruing, and no collection can happen. Also, during these forbearance months, these non-payments count for the 3 purposes listed.

If You Need to be More Precise…

Beyond this limited list, the press release said more broadly that “the current relief measures will continue until the end of January.” So what precisely is in the extended forbearance’s “current relief measures”? They are whatever was in the CARES Act since that’s what the Department of Education had extended from the Act’s deadline of September 30 to the previous deadline of December 31, 2020.

See our blog post of April 22, 2020, detailing the CARES Act’s coverage.

It boils down to the following benefits for federal student loans (some of which overlap with the list in the new press release):

  1. Suspension of all loan payments through September 30, 2020 (now extended through January 31, 2021).
  2. Waiver of all interest during this time.
  3. Suspension of all involuntary collection during this time.
  4. Each non-payment is treated as if the borrower had made the payment for credit reporting purposes.
  5. Same thing for loan forgiveness and loan rehabilitation purposes.

The Kinds of Student Loans NOT Covered

The CARES Act, and the two extensions granted by the Department of Education, apply only to FEDERAL student loans. They do not apply to PRIVATE student loans. None of the relief mentioned her applies to private student loans.

There are also a few relatively small subsets of federal student loans not covered. Again, see our earlier blog post about the CARES Act. Or else talk with your student loan servicer or your Kalispell bankruptcy lawyer.


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