Stimulus Package Brings Relief to Most Student-Loan Borrowers

The stimulus package passed by Congress will allow student loan borrowers to suspend payments until Sept. 30. 

Borrowers can postpone payments without penalty or interest accruing, according to The Washington Post.  Each month will continue to count toward loan forgiveness for borrowers in public service jobs and also count toward student loan rehabilitation.

The benefits exclude individuals with federal debt held by private companies, a program that ended in 2010 when the Obama administration went to direct lending. The plan also omits federal Perkins loans for low-income students held by colleges and universities.

The Education Department has halted requests to the Treasury Department to collect tax refunds, paychecks and Social Security benefits from individuals in default on federal student loans. The Treasury Department will also refrain from transferring new accounts to private debt collectors for 60 days from March 13. 

The leniency only applies to federal loans, individuals in default on commercial bank-based federal loans can still have a portion of their paycheck, disability income or tax refund taken by the government if they go into default. Those individuals should contact their lenders for payment options.