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How the CARES Act May Impact Your Student Loan Repayment Strategy

In March, Congress passed the biggest economic relief package in U.S. history. The Coronavirus Aid, Relief, and Economic Security Act designated $2 trillion in relief to aid American citizens and businesses suffering during the COVID-19 crisis. As part of this package, Americans with qualifying federal student loans can expect a break from payments through September 2020, with no new interest accruing on qualifying loans during this time period and the potential to reduce their principal more quickly.

With unemployment at record highs, this student loan relief helps many who will struggle financially because of COVID-19. But how can you confirm if you qualify for relief, and does it make sense to take advantage of the CARES Act and not make payments on your loans until after Sept. 30?

Here’s what you should know before changing your student loan repayment strategy.

  1. Before making any decision, start by gathering your current student loan information.

    These are uncertain times for everyone. If you’re not sure what to do about your student loans, start by gathering your federal loan information at All of your private and federal student loans will be listed on your credit report, which you can retrieve for free at Once you have that information, you can determine whether your existing student loans are covered.

  2. You’ll want to think carefully before refinancing federal loans during this time.

    While it may still be in your best interest to refinance your private student loans, you would lose access to the economic relief package’s benefits by refinancing your qualifying federal student loans. However, it’s a good idea to re-evaluate your situation when October rolls around, and interest once again begins to accrue on your qualifying federal student loans.

  3. Consider refinancing student loans that are not covered in the economic relief package.

    If you were in school prior to 2010, you may have loans from the Federal Family Education Loan (FFEL) program or Perkins loans. It’s important to note that privately held FFEL loans do not qualify for 0% interest or payment suspension. You will be expected to continue regularly scheduled payments on all privately held student loans. Contact your loan servicer to find out if your FFEL loans are held by the Department of Education, or by a private entity.

  4. You could pay off federal loans sooner by continuing to make payments.

    If you’re not feeling a financial strain, consider continuing to make your regular federal student loan payments. For borrowers who continue to make payments, the full amount of their payment will be applied to the principal amount of their loans once all interest accrued prior to March 13 is paid.

    As long as you are financially healthy and have an emergency savings fund, continuing payments could help you pay off your student loans faster and save interest in the long run.

  5. If you’re seeking Public Service Loan Forgiveness (PSLF), this six-month break counts toward your qualifying payments.

    This is excellent news if you are confident you are on-track to receive PSLF. Your monthly payment will be essentially $0 dollars during this timeframe, so if you work for a qualifying employer and have been following all other program requirements, you should probably take advantage of this stimulus benefit and stay on your current course towards PSLF.

  6. Beware of scams.

    The federal government will not ask for a fee to suspend your payments. There is no action required of you. If someone asks for money to process this information, it is a scam and you should report them to the FTC’s complaint assistant. You do not need to pay someone to help with your student loans. You should also be aware of these warning signs to help you avoid student loan debt relief scams, as well as how to get help if you are a victim of a scam.

Even though it’s a stressful time and you have lots of information coming your way, take some time to determine whether your existing student loans are eligible. To take advantage of the 6-month payment suspension on qualifying federal student loans, contact your student loan servicer or check your account online. Your servicer may automatically change your qualifying federal student loan payment to $0 per month. It’s important to consider your own unique repayment goals before determining how to best take advantage of this economic relief package’s student loan benefits.

If you are having financial difficulties due to job loss, reduced hours or other impact from the coronavirus, we’re here for you. If you are a Commerce Bank customer facing financial hardship due to the impact of the coronavirus, please call us at 833-518-3458 to discuss your current accounts.

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