Summer breaks down what the CARES Act means for student loan borrowers

Photos by: Summer

COVID-19 has shaken up just about every aspect of our lives: from if, how, and where we can work, to access to healthcare and financial security.

In response to the considerable financial hardship caused by COVID-19, Summer (GCT 2019) has ramped up its efforts to support one of the most vulnerable groups: the 45 million student loan borrowers.

The individuals and families that are most vulnerable are those who cannot work remotely, do not have access to paid leave, have had hours cut due to closures, or have recently needed to file for unemployment. Summer is here to offer some first-hand knowledge about how this public health and economic crisis has hit these individuals the hardest and exacerbated certain systemic inequalities.



The most important thing to note is that on March 31st, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. It included several provisions relating to student loan payments, including updates to previously announced student loan changes. Here are 10 key pieces of information to know if you or someone close to you is unsure how to manage their student loans at this time:

  1. The provisions in the CARES Act apply to “federally held” student loans. This includes all Direct Loans as well as certain Federal FFEL and Perkins Loans and certain Parent PLUS loans. The Summer team can help you know if you qualify for the CARES Act student loan benefits.
  2. There will be no payments due on federally held student loans from March 13th through September 30th. Direct debits will be suspended automatically by your loan servicer, and they’re required to notify you of this by April 15th. You can choose to still make payments during this period if you’d like to. If you made a payment after March 13th, you can request to have it refunded.
  3. Interest will not accrue on federally held student loans until September 30th. This means your loans will have a zero percent interest rate through the end of September. If you decide to make payments during this period, the payments will first be applied to any outstanding interest, but then will be directed to the principal of your loan balance.
  4. The recertification deadline for income-driven repayment plans will be extended. If you are currently enrolled in an income-driven repayment plan and your annual recertification date is before September, the deadline should automatically be extended.
  5. Suspended payments during this period will count towards forgiveness programs like income-driven repayment (IDR) forgiveness and Public Service Loan Forgiveness (PSLF). If you are already on track for programs like PSLF, you can stop making payments and they will still count toward the 120 required for forgiveness.
  6. Suspended payments during this period will be reported to credit agencies as on-time monthly payments. This will work differently from a normal forbearance, and will be more beneficial to borrowers’ credit scores.
  7. Involuntary collection on defaulted federal student loans will be paused. If your loans are in default and your wages or tax returns have been garnished, that should stop as of March 13th. If your funds were garnished after that date, you should receive a refund. If you’re in the process of rehabilitating your defaulted loans, the months of suspended payments will count toward your rehabilitation payments.
  8. You will be notified at least six times before payments resume. Starting on August 1st, your servicer is required to notify you via phone, mail, or email with details of when and how your payments will resume. They will also be required to communicate options like income-driven repayment to make sure payments stay affordable.
  9. If you had to withdraw from school during the coronavirus crisis, your Direct loans will be canceled. This will apply to Direct loans that you took out for this semester.
  10. The changes also present opportunities for those fortunate enough to have a stable income. If you are attempting to pay off your loans more quickly, consider optimizing your loan payments with the interest waiver.


Editor’s note: This blog was adapted from Summer’s COVID-19 Resource Guides below. If you are a Company member and want to use Summer’s platform, create your account here or reach out to to learn more.

More resources:

The CARES Act and What It Means for Your Student Loans

Do I Qualify for the CARES Act Student Loan Benefits?

Optimizing Your Loan Payments with the Interest Waiver

When and How to Contact your Student Loan Servicer During COVID-19

Understanding Other Provisions in the CARES Act