The use of the term “student loans” to refer to education loans in general can cause uncertainty as to whether parent loans are included. In particular, parents wonder whether their loans are eligible for the payment pause and interest waiver enacted by the Coronavirus Aid, Relief and Economic Security Act (CARES Act).
The payment pause and interest waiver includes Federal Parent PLUS loans in addition to Federal Stafford Loans, Federal Grad PLUS loans and Federal Consolidation Loans.
To be eligible, a federal education loan must be owned (held) by the federal government.
The following loans are federally-held federal education loans that are eligible for the payment pause and interest waiver. All loans in the William D. Ford Federal Direct Loan Program (Direct Loans) are eligible.
- Federal Direct Stafford Loan
- Federal Direct Grad PLUS Loan
- Federal Direct Parent PLUS Loan
- Federal Direct Consolidation Loan
In addition, certain loans made under the Federal Family Education Loan Program (FFELP) are eligible for the payment pause and interest waiver. Some are not.
FFELP loans made in 2008-2009 and 2009-2010 that were transferred to the U.S. Department of Education under the Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) are eligible.
FFELP loans that are in default are eligible if title to the loan was transferred to the U.S. Department of Education when the guarantee agency paid the default claim filed by the FFELP lender. However, if the loan has been rehabilitated and sold back to a FFELP lender, it is not eligible for the payment pause and interest waiver.
See also: Complete Guide to Parent Loans
All other FFELP loans, which are still held by a bank or other financial institution, are not eligible for the payment pause and interest waiver. In particular, Federal Parent PLUS loans in the FFEL program, other than the ECASLA loans and defaulted loans, are not eligible.
The following loans are not eligible for the payment pause and interest waiver:
- Federal Perkins Loans
- FFELP loans other than ECASLA loans and defaulted loans
- Private student loans
- Private parent loans
Borrowers of Federal Perkins Loans and FFELP loans can convert their loans into eligible loans by consolidating them into a Federal Direct Consolidation Loan. Consolidating loans may cause the loans to lose certain benefits, such as loan discounts on FFELP loans and loan forgiveness on Federal Perkins Loans.
Private student and parent loans cannot be converted into eligible loans.
How to Tell If an Education Loan Is Eligible
There is potential for confusion because borrowers may not know whether their loans are federally-held or not.
Unfortunately, there is no easy way to tell whether your loan is eligible. Knowing the name of your loan servicer is not definitive, since some loan servicers service both FFELP and Direct Loans. Some even service both federal and private student loans.
You can login to StudentAid.gov to get a list of your federal loans. Direct Loans and FFELP loans are identified differently. However, the differences can be obscure, especially with regard to ECASLA and defaulted loans.
If you are unsure whether your loans are eligible, contact your loan servicer and ask if your loans are eligible for the payment pause and interest waiver enacted by the CARES Act.
Options for Ineligible Loans
If your loans are not eligible, there are other methods of getting a payment pause.
If a borrower’s income is below 150% of the poverty line in the income-based repayment (IBR), pay-as-you-earn repayment (PAYE) and revised pay-as-you-earn repayment (REPAYE) plans and below 100% of the poverty line in the income-contingent repayment (ICR) plan, the monthly payment will be zero. Ask the loan servicer to recertify your income if you lose your job or your income has dropped mid-year.
Private student loans may be eligible for a forbearance or a partial forbearance. A forbearance suspends all payments for a period of time, but interest continues to accrue and will be capitalized (added to the loan balance) if unpaid. A partial forbearance pauses payments to principal, but still requires interest-only payments.