does the cares act cover student loans

To get all the important details you need on how to apply for cares act student loans, Consider Helping Employees Pay Their Loans, Understand the Student Loan Provisions of the CARES Act, If You Can and lots more All you have to do is to please keep on reading this post from college learners. Always ensure you come back for all the latest information that you need with zero stress.

The Cares Act was introduced in 2010 as a means of giving people affected by the recession a chance to get their lives back on track. The idea is that you can file for bankruptcy if you are behind on your mortgage payments, or even if you have just been laid off and don’t have a way to pay your bills.

However, there are certain types of debt that are exempt from bankruptcy protection under the Cares Act. Student loans are one of these types of debt. If you want to get out from under those loans, then it’s time for us to talk!

Good news for all you student loan borrowers out there! The CARES Act, the sweeping stimulus legislation enacted in March, includes relief for student loan borrowers. Under the new law, no payments are required on federal student loans owned by the U.S. Department of Education between March 13, 2020 and August 31, 2022. In addition, the interest on these federal student loans will automatically drop to zero percent between March 13, 2020 and August 31, 2022. Private student loans, and federal student loans not owned by the Education Department, are not covered by the CARES Act.

So if you’ve got a pile of student loan debt sitting around that you’re just not sure what to do with right now… go ahead and relax! The CARES Act is here to help you get through those tough times with minimal fuss and stress.

how to apply for cares act student loans

Student Loans and the CARES Act: What to Know

As student loan borrowing has skyrocketed in recent years, so has the stress associated with paying off that debt. Four in 10 millennial employees have student loans, with nearly three-quarters saying that those loans have an impact on their ability to meet other goals. 1

The coronavirus pandemic has compounded economic stress on student loan borrowers, with 59% reporting increased stress, anxiety, and depression caused by their student loans during the COVID-19 pandemic.2

The recently passed Coronavirus Aid, Relief and Economic Security (CARES) Act may provide some relief.

Provisions of the law range from suspended student payments on some loans to providing tax incentives for employees whose employers help with loans. In these difficult financial times, assisting employees with their loans may not be possible for many employers, but supporting your workers in understanding how the law does impact them can still be a valuable benefit.

That’s important for millennial borrowers, many of whom have struggled to build wealth in an adulthood marked by financial challenges. Their economic growing pains have also impacted their parents, typically baby boomers, who may be helping their adult children manage their loan payments—even at the expense of their own retirement savings.

“When we think about student loans, we often think about a younger person, just graduating and new to the workforce,” says Kalena Griffin Costa, Head of Business Development for Financial Wellness at Morgan Stanley. “But there is a significant amount of student debt being held by those with graduate or advanced degrees, as well as by people who have funded their children’s education. These groups are also impacted.”

There are several ways that you can help:

Understand the Student Loan Provisions of the CARES Act

Student loan relief is just one aspect of the CARES Act, a large piece of legislation passed in March 2020. If your employees have questions, here’s the immediate impact on them:

  • Most federal loans have automatically been placed into “administrative forbearance,” which means they can stop making payments, without incurring interest or penalties, until September 30, 2020. Borrowers can check to see whether their loans qualify by calling their loan servicer.
  • Borrowers who want to continue making payments during the forbearance period can do so. Since the interest rate on loans will remain at zero, any payments will go directly toward reducing principal.
  • The CARES Act does not offer relief to borrowers with private student loans, although there are some state programs available.

Take This Opportunity to Offer More Financial Education

Even with the relief provided by the CARES Act, many of your employees likely still face challenges when it comes to student loans, particularly if they (or their children) have large private student loan balances.

They may benefit from education or resources around loan consolidation and debt repayment. That can take the form of thought leadership content, webinars or live coaching. Those employees who can take advantage of CARES Act student loan provisions may be unsure whether they should continue making payments during forbearance or put that freed up cash toward retirement or other financial goals, such as an emergency fund.

“Employers do an exceptional job with executive benefits and estate planning for folks with complex financial situations,” says Tom Conlon, Morgan Stanley Head of Retirement Sales. “It’s important to also cater to those folks who are just coming into the workplace for the first time.”

If you offer financial coaching as part of a financial wellness program, directing workers to enlist the help of a coach may be helpful. Otherwise, you may want to point them to other resources, such as the Consumer Financial Protection Bureau or the Institute for Student Loan Advice

Consider Helping Employees Pay Their Loans, If You Can

Companies with the available resources can take their support for employees with student loans a step further, providing the additional benefit of student loan payments. The CARES Act allows employers to pay up to $5,250 toward student loans on behalf of employees and the employees would not owe U.S. federal income taxes on the payments. That could make a significant dent in a borrower’s total debt load, which averaged nearly $30,000 for the Class of 2018.3

For many employers, however, even if they want to provide such a benefit, it’s not financially possible in today’s economic environment. Before the pandemic, just 4% of employers offered student loan repayment assistance.4 More cost-efficient methods of support, such as education and coaching, can still go a long way to reducing employee stress.

“When an employer is helping workers improve their financial circumstances, and offering financial wellness, it shows that they care,” says Griffin Costa. “That is powerful, it means a lot, especially at a time like this when there is so much additional stress that everyone is feeling.”

Learn more about Morgan Stanley at Work, helping companies and individuals wherever they are on their journey of wealth creation.

CARES Act: How to Relieve Your Student Loans | eStudentLoan

CARES Act Student Loan Fact Sheet
Payments automatically deferred and interest is
waived onfederally held student loans through
Sept. 30, 2020.
• Covers approximately 95% of borrowers, excludes federal debt
held by private companies (Federal Family Education Loan
program) and federal debt held by colleges and universities
(federal Perkins loans).
• Each month during payment deferral period still counts
towards loan forgiveness for borrowers in public service jobs
and student loan rehabilitation.
• Borrowers may continue to make payments toward the
• Deferred payments will still be counted as payments to credit
reporting agencies during deferral period.
Suspends collection actions and penalties for
borrowers with defaulted federal loans
through Sept. 30, 2020.
• Waived penalties include wage garnishment, tax refund
reduction, or reduction of any federal benefit, including Social
Security benefits.
• The Department of Education is returning about $1.8 billion to
more than 830,000 defaulted borrowers whose money was
withheld on or after March 13.
Allows companies to pay up to $5,250 of employee’s
student loan payments on a tax-free basis through
Dec. 31, 2020.
• Private student loans qualify for this program.
• Payments can be made to the borrower or to the lender.
• Payments would be excluded from income and payroll taxes
(both the employee and employer portion).
Waives consecutive service requirement for Teacher
LoanForgiveness Program during COVID-19
• Waives requirements that years of teaching service be
consecutive if service is interrupted due to COVID-19
emergency and the borrower resumes teaching and completes
five years of qualifying service (before/during/after COVID-19
Waives requirementthat students repay entire
portion of federal student loan if they
withdraw from courses due to COVID-19

The CARES Act Was Supposed To Help Student Loan Borrowers, But For Many, It  Has Failed

The Caring Act doesn’t cover student loans, but we’re going to try to do something about it. In fact, [company name] is now creating a petition to bring student loan debt relief into the scope of The Caring Act. This will help tens of millions of Americans get access to the care they need at a time when they can least afford it.

We hope you’ll sign our petition and share it with your friends and family on social media. If you have any questions, please leave them in the comments below!

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