The CARES Act has provided relief across the board. For those of us who have student loan debt, the CARES Act has come in with a plan to help manage those payments for the time being. But, is everyone covered?
There is no question about it. Student loans are a big deal. The education that came along with accruing the debt is priceless, but when that bill comes every month it can be hard to remember that. Although we have had some positive steps forward in our economy since the pandemic hit earlier this year, many of us are still dealing with financial strain. When money gets tight, the first things that come to mind are taking care of the essentials; a place to live, food, transportation, and your bills. For a lot of Americans, this has been hard to take care of. Student loans put pressure on many, regardless of what was going on in the country. Thankfully, when the CARES Act was signed, relief was finally here. Those with student loans were going to get a little break. But, did that mean everyone with student loan debt was going to feel this relief? Sadly, no.
The United States has seen relief and support in more ways than one through the ongoing pandemic of COVID 19. The CARES Act has been one such support system. It has provided small business loans, helped with those planning for retirement, given us our stimulus payments, and it also ushered in relief for the payment on student loans. According to Dave Ramsey and AmericanProgress.org around 43 MILLION adults in America have student loan debt. The CARES Act gave many Americans one less thing to worry about. It has allowed thousands of Americans to allocate these funds to keep food on the table and the lights on. While many of us waited for our stimulus checks to appear, this was cause for celebration. But, it didn't mean a celebration for every student loan holder. While this aid did help those 43 million Americans, it didn't help them all.
In any situation before the pandemic, to stop or pause your loan payments you would have to prove that you were financially unable to pay your loan. When you proved this, you would then qualify for a forbearance or deferment. These are the technical terms for putting your loan on hold. While your payments are paused, your loan continues to accrue interest while it's in forbearance. With the CARES Act, every federal student loan was automatically put in forbearance, your loan payments were paused, and no interest will accrue until its end date, according to Forbes and Dave Ramsey. You do have the option to continue your loan payments if you wish, and it is recommended you do so if you can afford it.
Did you notice the specific loans that are being taken care of by the CARES Act? Only federal student loans. These loans are personally owned by the United States Department of Education. Any other private student loans that are not federally owned will not be covered under the CARES Act. To give you a better idea, here is a list of federal and private student loans that are and are not covered:
As of now, according to Dave Ramsey, the loan forbearance and the 0% interest will last until September 30th. This could be extended, but only time will tell. Please note that this is not the government forgiving all of your federal student loan debt, nor are they paying your loan for you. Once the CARES Act ends, you will need to pick up where you left off. If the focus of your money needs to be survival, then take advantage of this opportunity. If you can keep paying your student loan, continue to do so. Regardless of your decision, take this time to save up as much as you can. If these last three months have taught us anything, being prepared is a must.
If you do have a private student loan, there are some companies out there that are offering some relief during this time, according to Forbes. This is not true of every company and they are not legally mandated to do so. If you are having issues paying your private student loans, call your loan company immediately and see if there is something you can do. If you are going to put your loan on forbearance, make sure to ask about the interest that will be built up.
This Act has done a lot of great things, but there is a darker side to it. According to Forbes, there was more damage done than relief. There have been reports that one, if not more, of the U.S. Department of Education loan services, reported borrowers loan status to credit bureaus. This very improper move lead to serious credit damage. Some have even had their tax refunds seized, illegally, by the Department of Education. The Department of Education claims that all tax funds have been repaid, but some citizens are still waiting. Lawsuits have even been filed, says Forbes.
As much as the CARES Act has helped, was it worth it? Will it be able to sustain the country in the months to come? As much as it has seemed to help a good number of people, it has also seemed to fail many others. If you have any questions about your finances during this time, need help with your tax payments or tax money for 2019 or 2020, please never hesitate to contact us. We are here to support you and our amazing community of Goose Creek! if you are looking for the best accounting services in Goose Creek, the best tax preparation in Goose Creek, business consulting in Goose Creek, bookkeeping in Goose Creek, or payroll services in Goose Creek, we are here for you! Our phone lines and inboxes are waiting for you. Don't hesitate! Please stay safe, everyone. We will see you soon!
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