Federal Student Loan Vacation Under the CARES Act

At the end of March, political leaders across the planet, including governors of almost every state in the U.S., ordered over a billion people to ‘shelter-in-place’ to slow the spread of the novel coronavirus. In addition to slowing the virus, these orders have also drastically slowed or halted the growth of the global economy in many sectors. This sudden and drastic economic downturn led the U.S. Congress to pass the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), a $6 trillion relief package, which President Trump signed into law on March 27.  In addition to the SBA loans discussed in David Olsky’s post, federal student loan borrowers will receive additional relief in the form of an automatic forbearance on student loan payments through Sept. 30.

The CARES Act student loan relief package applies to all student loan borrowers with direct loans from the Dept. of Education.  CARES Act Section 3513(a) requires the Dept. of Education to provide notice to qualified borrowers by April 13, but no formal announcements or communications were made by Secretary Davos.

If you have student loans serviced by any companies listed below, you likely qualify for benefits under the CARES Act:

  • Cornerstone

  • FedLoan Servicing (PHEAA)

  • Granite State – GSMR

  • Great Lakes Educational Loan Services, Inc.

  • HESC/Edfinancial


  • Navient

  • Nelnet

  • OSLA Servicing

  • ECSI

The CARES Act does not apply to private student loans or student loans that borrowers consolidated or refinanced with a private lender, such as SoFi or Earnest.  Borrowers with privately held student loans that are struggling amidst the coronavirus crisis should contact their servicer for potential relief or deferment options.

The Office of Federal Student Aid has posted guidance for borrowers that includes notice that forbearance will be automatic and any recurring or scheduled payments will be suspended retroactively from March 13 to September 30, without any action by the borrower. Qualified Borrowers are entitled to a refund for any payments made after March 13, and should contact their loan servicer if they are interested.

Borrowers may continue to make payments on their student loans before September 30, and those payments will be applied to pay down the principal of their loans (after repaying any delinquent interest).  If you are interested in taking advantage of this time to pay down the principal of your debt more quickly, you must contact your servicer to schedule payments as even auto-debit payments have been suspended by the Federal government.


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