At the end of last week, the Department of Education announced that Education Secretary Betsy DeVos has directed Federal Student Aid (FSA) to extend until December 31, 2020 the relief that was provided to federal student loan borrowers by the CARES Act.  The CARES Act suspended loan payments on federal student loans and temporarily reduced interest rates to zero until September 30, 2020.  Secretary DeVos was directed to take action to extend such relief pursuant to a memorandum that was part of the executive orders signed by President Trump on August 8.

As we previously noted, for federal student loans held by the ED, Section 3513 of the CARES Act not only suspended payments and set interest rates at zero percent until September 30, 2020, it also halted collections and counted non-payment of such loans toward the required 120 monthly payments for public service loan forgiveness.  While the President’s memorandum did not extend these two additional protections for federal student loans held by the ED, the ED’s press release suggests that Secretary DeVos’s action does include an extension of such relief.  The press release states:

During this extended time frame for the payment suspension, collections on defaulted, federally held loans are still halted, and any borrower with defaulted federally held loans whose employer continues to garnish their wages will receive a refund of those garnishments.  Non-payments by borrowers working full-time for qualifying employers will count toward the 120 payments required by the Public Service Loan Forgiveness program and as payments that are required to receive forgiveness under an income-driven repayment plan.

Like the CARES Act, neither the President’s memorandum nor Secretary DeVos’s action provides relief to borrowers whose federal Perkins and Federal Family Education Loan Program debt are privately held or to private student loan borrowers.