Monday, Congress approved second coronavirus relief package that includes $ 600 stimulus checks for many people – but no additional student loan forbearances for borrowers.
Last March, the CARES law break in federal student loan payments and interest, which gives many borrowers a break. Earlier this month, Education Secretary Betsy DeVos prolonged this tolerance until January 31, 2021.
The new stimulus deal offers no further extensions on student loan forbearance, but the current expiration date leaves enough time for President-elect Joe Biden’s team to take over in January 2021 and offer relief additional.
When will student loan repayments resume
From now on, student loan repayments are expected to resume after January 31, 2021, meaning that no payments will be due and no interest will accrue until that date. For people on income-based repayment plans, each month of abstention counts towards the number of payments required for forgiveness.
This forbearance only applies to federal student loans, although some private student loan lenders have offered assistance to affected borrowers on a case-by-case basis.
What’s in the bill for borrowers?
While the new economic aid bill did not extend the forbearance, there are some provisions that students and borrowers should be aware of.
The bill makes changes to the federal Pell Grant program for the 2021-2022 school year, allowing a maximum grant amount of $ 5,435 per student per year.
It also extends a lesser-known benefit of the CARES Act: tax relief for employers that help employees repay student loans up to $ 5,250 per year of educational assistance.
The CARES law amended a section of the tax code provide tax relief to employers who provide education assistance to their employees, by adding student loan repayment to this definition. The new stimulus agreement extends eligibility for this program until January 1, 2026. Only 8% of employers offered this assistance in 2019, according to data from Human resources management company, but this extension could increase that figure, according to the group.
Will the Biden administration extend student loan forbearance?
President-elect Joe Biden’s inauguration on Jan.21, 2021 could bring further relief: Biden has discussed student loan cancellation, and recommended giving student borrowers $ 10,000 for coronavirus relief. However, it’s unclear what the new administration will do once in power and what Congress will agree to.
