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K-State Research and Extension
123 Umberger Hall
Manhattan, KS 66506-3401

May 19, 2020

Payment on Student Loans Hits a Pause, But Keep Paying if You Can

Submitted by Pat Melgares

Among its many provisions, the Coronavirus Aid, Relief and Economic Security Act passed by the U.S. Congress in late March hit the pause button for students who owe money for their college education.

But Robin Eubank-Callis, a family and consumer science agent for K-State Research and Extension in Barber County, says it benefits students to continue paying on those loans if they can.

“With the CARES Act, interest on qualified loans was moved to 0%, so the loan amount will not increase, even though the number of payments you owe will remain the same,” Eubank-Callis said. “However, if you are in a position to continue making payments, that is a good idea. Current payments will be fully credited toward the principal, which then lowers the total interest paid over the life of the loan.”

She noted that the act lowered interest to 0% for direct loans, federal family education loans (FFEL), federal Perkins loans and health education assistance loans (HEAL). The 0% rate went into effect on March 13, and will run through September 30.

“If you have questions about what type of student loan you have or if this applies to you, contact your loan servicer,” Eubank-Callis said.

She added the CARES act is not a loan forgiveness program; students are still required to pay the balance on whatever they owe. “This current program simply delays payments without a penalty,” she said.

To assure that they are receiving the 0% rate through September 30, students are encouraged to contact their loan servicer, Eubank-Callis said.

According to the U.S. Federal Reserve Board, 60% of individuals currently under age 30 who have recently earned a bachelor’s degree acquired debt while doing so. For those who earned graduate degrees, that number rises to 73%. Eubank-Callis noted that 93% of those debts are a result of student loans.

She also cited statistics from the Federal Reserve indicating that of the first generation college students under age 30, 16% of them are behind on payments.

Thus, for many, even a brief pause in paying back students loans is welcome relief.

“I was recently visiting with a 4-H mom and she was worried because her husband had just lost hours at work with no promise of when it would pick back up,” Eubank-Callis said. “They were trying to navigate the unemployment system. I could hear the stress in her voice and she wasn’t sure how to handle this deep cut into their already tight budget.

“When she heard about the student loan forbearance, she checked and all of their loans qualified. With that removed from her budget, she knew they would be able to stretch her income until his work picked back up.”

Eubank-Callis and many of her colleagues across Kansas are available to answer questions about student loans and other financial issues. For more information or assistance, contact your local K-State Research and Extension office.

More information on the student loan repayment program also is available online from the U.S. Department of Education.