Department of Ed. halts loans payments, sets 0% interest rate until Sept. 30

The U.S. Department of Education is automatically halting all payments for student loan borrowers until the end of September.

“To provide relief to student loan borrowers during the COVID-19 national emergency, federal student loan borrowers are automatically being placed in an administrative forbearance, which allows you to temporarily stop making your monthly loan payment,” the agency’s Federal Student Aid office said in an announcement.

Suspension of payments will last until Sept. 30, but student loan borrowers can still choose to make payments. Borrowers should receive a notification once the forbearance benefit has been applied to their accounts no later than April 10, the FSA office posted online Friday.

Interest rates for federal student loans have temporarily been set to 0%, which also lasts until the end of September. The 0% interest rate became effective March 13, but took a couple of weeks to apply to student loan borrowers’ accounts.

The 0% interest rate applies to defaulted and non-defaulted Direct Loans, Family Federal Education Loans and Federal Perkins Loans.

The relief provisions fall under the CARES Act President Trump signed last week and only apply to federal loans. The Department of Education does not have legal authority over private student loans, which are not covered under the $2.2 trillion coronavirus economic aid act.