The provisions in the CARES Act apply to “federally held” student loans. So what does that mean? We’ll break it down by each loan type below.
If you’re not sure what type of loans you have, you can log in to Federal Student Aid, the Department of Education’s website, or the website of your loan servicer. You can also create an account with Summer and sync your loan information in our CARES Act tool—we can tell you right away which of your loans are eligible.
Direct loans qualify for all of the provisions of the CARES Act, including the suspension of payments and the interest waiver. Direct loans are the newest type of federal student loan. You likely have Direct loans if you took out your student loans after 2010 and borrowed from the government through your school.
If you have Direct loans, you don’t need to do anything else to make sure you can access the benefits! (This includes Direct PLUS loans and Direct Consolidation loans).
FFEL and Perkins Loans
Federal Family Education Loans (FFEL) and Perkins loans are older types of federal loans. They are only eligible for the interest waiver if they are federally held, and unfortunately most of them are not.
If your FFEL or Perkins loans are federally held, the lender will be listed as the Department of Education when you log in to Federal Student Aid.
The good news is that these loans will qualify if they are “consolidated” into a Direct Consolidation loan. This will change the loan type to a Direct loan and make it eligible for benefits like the payment suspension and the interest waiver.
If you don’t want to consolidate your FFEL or Perkins loans and you’re having trouble making your monthly payments, you can still speak to your loan servicer about a temporary forbearance. There are also several states that have reached agreements with commercial lenders to offer wider relief on loans that aren’t eligible for the CARES Act—you can find more information in our article here.
Parent PLUS Loans
If you took out loans on behalf of your child to attend school, you may have federal Parent PLUS loans. Some Parent PLUS loans were lent under the Direct loan program, and they will be federally held and eligible for the benefits in the stimulus package. Some older Parent PLUS loans were lent under the FFEL loan program and are not federally held and thus will not be eligible for the benefits in the new law.
If your loans are federally held, the lender will be listed as the Department of Education when you log in to Federal Student Aid. You can also contact your loan servicer to find out whether your Parent PLUS loans will qualify.
Like FFEL and Perkins loans, Parent PLUS loans can be consolidated into a Direct loan if they don’t qualify. This will change the loan type to a Direct loan and make it eligible for benefits like the payment suspension and the interest waiver.
Private loans don’t qualify for the provisions in the CARES Act, but if you’re having trouble making your payments, we’d still recommend talking to your loan servicer about your options. They may be able to offer a temporary deferment of payments even if interest is accruing. Many private servicers have already offered this to borrowers who have lost income due to coronavirus.
You can also look into refinancing your private loans. With interest rates currently at historic lows, this may be a good time to consider it. If you’ve already refinanced, you may be able to do so again for an even lower rate!
Different lenders will adjust to new interest rates at different times, so we’d recommend looking at multiple lenders to find the lowest interest rate you can. Summer’s guide to refinancing goes into more detail on making this decision.
We know that this can be a confusing process at an already difficult time, so don’t hesitate to let us know if there’s anything we can do to help. You can send us a chat below, or reach out at firstname.lastname@example.org.