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2021 COVID-19 Student Loan Repayment Relief

Average individual student loan balances in the United States increased to over $38,000 in 2020 according to Experian, the credit reporting company. This is a tremendous amount of debt that students take on to further their education and improve their career opportunities upon graduation. When the pandemic hit, many recent graduates lost their jobs as a result of the worldwide disruption. This left many borrowers without income to repay their student loans and wondering if there would be any COVID-19 student loan repayment relief available to them. 

President Trump introduced loan forbearance in 2020 to provide temporary help. President Biden has extended this protection and has also raised the possibility of more extensive loan forgiveness as an option in these unprecedented times. Here is what you should know about COVID-19 student loan relief.


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Are federal student loan payments suspended during the pandemic?

The CARES Act, signed into law in March 2020, offered a temporary pause in federal student loan payments due to the pandemic. This pause lasted through September 30, 2020. Further extensions by President Trump left the suspension in place through January 31, 2021. As a result, payments on federal student loans were not required for most of 2020. 

When President Biden took office, one of his first actions was extending this pause through September 30, 2021. This gives former students even more breathing room to focus on their pandemic financial needs for the time being.

Are payments on private student loans suspended during the pandemic?

The laws signed by President Trump and President Biden extend only to federal loan borrowers. Private lenders can offer help to borrowers during the pandemic, but they are under no legal obligation to do so. Most experts believe interest-free forbearance, as is happening on the federal level, is not likely to be offered in the private loan market.

Private lenders often have a disaster or emergency forbearance option for borrowers. These options provide short-term pauses on payments if the borrower faces an emergency, such as an unexpected job loss.

Borrowers who have not had a credit hit as a result of the pandemic may opt to refinance their private loans to more favorable payment terms or interest rates. This is not forbearance or forgiveness, but it can make the loans more affordable overall.

If a borrower with a private student loan is struggling with repayments because of the pandemic, the best course of action is to discuss options with the lender. Many lenders will work with borrowers to make payments more affordable, even though they are not required to do so. 

Does interest on federal student loans accrue during the suspension period?

During President Trump’s suspension of federal student loan collections, interest did not accrue. Administrative forbearance paused everything, including interest, collection activities, and payments, to allow borrowers to more easily navigate the pandemic. President Biden’s extension continues the same rules. Therefore, through September 30, 2021, students with federal student loans will not incur any new interest on their loan balances.

Does the Biden Administration or Congress plan to cancel student loan debt?

President Biden introduced the idea of federal student loan forgiveness during his campaign. He has indicated plans to expedite a $10,000 loan cancellation for federal student borrowers, but this has not yet been introduced. In February 2021, many advocates called on President Biden to sign an executive action that would forgive $50,000 in federal student loans, but the president has yet to do so.

Currently, President Biden is still calling for some student loan debt forgiveness, but he is waiting for Congress to pass a bill instead of resorting to an executive order.

Whether loan forgiveness happens or not, what is clear is that federal student loan borrowers have options to help them with the current financial crisis. By taking advantage of those options, they can make it through the pandemic with fewer financial repercussions.

Take Advantage of Student Loan Relief

If you have found yourself struggling financially as a result of the pandemic, there are options for student loan relief. Even if you have private loans, you can still reach out to your lender to ask for some help restructuring your payments. Rocket Lawyer offers information and advice at the Rocket Lawyer COVID Legal Center. You can also use the free Rocket Lawyer Hardship Letter to send to your lender.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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