U.S. President Donald Trump signed an executive order on Saturday directing the Education Department to extend an interest-free payment pause for 40 million student loan borrowers until at least the end of 2020.
“Currently, many Americans remain unemployed due to the COVID-19 pandemic, and many more have accepted lower wages and reduced hours while States and localities continue to impose social distancing measures,” the executive order stated. “It is therefore appropriate to extend this policy until such time that the economy has stabilized, schools have re-opened, and the crisis brought on by the COVID-19 pandemic has subsided.”
The protections for federally-held student loans were set to expire on September 30, as codified by the CARES Act, and will now extend until December 31, 2020. Private student loans are unaffected by the executive action action.
NEWS: Trump orders @usedgov to continue suspension of monthly payments and 0 percent interest on all federally-held student loans until Dec. 31.— Michael Stratford (@mstratford) August 8, 2020
Here's the key part of the memo: pic.twitter.com/7NVFftVZT6
It’s unclear if the extend the administration’s previous policy of pausing the seizure of wages or tax refunds of Americans who defaulted on their federal student loans.
It’s also unclear if borrowers on the Public Service Loan Forgiveness program could count these months towards the 120 months of on-time payments that they’re required to make before they can have the remainder of their loans forgiven.
Yahoo Finance reached out to the Department of Education for clarification and will update this post with an details.
Aarthi is a reporter for Yahoo Finance covering education. Follow her on Twitter @aarthiswami. If you are a student loan borrower who is struggling with your debt and would like to share your experience, reach out to her at firstname.lastname@example.org