CARES Act - Quick Overview

The CARES Act was enabled March 13, 2020 as a result of the COVID-19 pandemic. This temporarily paused all eligible student loan payments and set the interest rate to 0%, and officially ended September 1, 2023.

Now that the payment pause has ended, you are responsible for paying both your loan principal and any unpaid interest.

Why am I now being reported as late?

When the CARES Act ended in 2023, servicers were allowed to collect interest again, but continued to mark the loans as deferred. Starting in late 2024, they removed the deferment verbiage and marked clients late after 90 days of no payments. 

SAVE [Saving on a Valuable Education]

What is changing, when and how will this affect me?

On Feb. 18, 2025, a federal court issued a new injunction preventing the U.S. Department of Education from implementing the Saving on a Valuable Education (SAVE) Plan and parts of other income-driven repayment (IDR) plans. As a result, the IDR and online loan consolidation applications were temporarily unavailable.

However, as of March 26, 2025, the online IDR application is once again available for eligible borrowers to apply for the Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) Plans. The online loan consolidation application is also available again.

Federal Government Debt Collection

Q: What loans are included?

A: Any student loans that have entered default after 270 days of nonpayment.

Q: When does this start?

A: May 5th

Q: How will the government collection on this debt?
A: Wage Garnishment, Tax Refunds, Social Security Benefits

An expected 5.3 million people are currently in a default status with another 4 million that are 3 months behind on payments

What Can I do to avoid this?

If you are not currently in default, past due or have recently been marked late for student loans on your credit report, you should work to get in touch with your student loan servicer ASAP!

Borrowers still have options to avoid the harshest penalties. One path out of default is loan rehabilitation - a process that requires nine consecutive on-time payments based on income and expenses. Betsy Mayotte, President of The Institute for Student Loan Advisors, noted that rehabilitation is a one-time opportunity, but for many, it offers a path back into good standing.

Loan servicers can guide borrowers through the rehabilitation process, but time is of the essence.

RESOURCES

Federal Student Aid Website: https://studentaid.gov/

Check the status of your Student Loans: https://studentaid.gov/fsa-id/sign-in/landing/?redirectTo=/aid-summary/loans

Loan Simulator to compare repayment plans: https://studentaid.gov/loan-simulator/

Apply for Income-Drive Repayment: https://studentaid.gov/idr/