The student loan repayment will be suspended immediately, according to the US Department of Education. The move comes amidst the spread of coronavirus in the US, which has led to many businesses closing their doors.
The US Department of Education will be suspending student repayments for students for a certain group of borrowers. They indicated the suspension only applied to federal loans that are held by the Department of Education. The move comes amid coronavirus lockdown, where most businesses have closed their doors and laid-off workers.
Student loans repayment suspension
The Department said it would consider those who had defaulted their federal loans for suspension and the directive would take effect immediately. They also backdated the timeline when this new law would come to effect, placing it on March 13th.
This directive will also affect involuntary loan repayment efforts such as administrative wage garnishments, social security offset and federal tax returns. This means that the deductions for repayments of these loans would stop immediately.
What the directive entails
The department was very clear that the directive was only meant for student loans held by the government. They indicated that loans from guarantee agencies and colleges would not be suspended and individuals would continue paying these loans. This was because the federal government had no control over these entities and therefore, could not intercede to make them suspend the loans.
The department, however, did not make it clear whether the federal tax refund seized before March 13th due to student loans would be refunded. They also did not indicate if wage garnishment from the same period would be considered.
Relief legislation passed
Legislators also passed a relief to business funding that would help people in economic distress to surviving this crisis. The $2 trillion funding was agreed by the senate and has since been voted for that will guarantee every American a stipend per month until the lockdown is lifted.
Coronavirus has spread to all states in the US and infected more than 68000 citizens, with 1032 succumbing to the virus. It is unclear when some states which have implemented lockdown will lift it and how long the crisis will last. The move by the Department of Education is a silver lining on a dark cloud that has engulfed the US.
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