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Payment on federal student loans suspended

Posted at 7:22 AM, Apr 14, 2020
and last updated 2020-04-19 17:01:41-04

ALLENDALE, Mich. — Payments on federal student loans have been suspended, a real gift for Michigan residents who face unemployment and an uncertain financial future.

The federal stimulus bill created the loan suspension for 60 days. Subsequent legislation extended that to six months. So, payments do not have to be made on federal student loans until September.

Usually, suspension of federal student loan payments mean that interest continues to accrue, but this time it’s different.

"What it means for those with loans is that there are no payments required and there's no interest accruing on any of the federal student loans for the next several months," said Michelle Rhodes with Grand Valley State University.

Loan holders have several options. One is to continue to make payments, even though you don’t have to. “If they can continue to make payments it all goes towards the principal balance of that loan,” Rhodes said. “it will really shorten the payoff time if they can continue to pay if they're not experiencing a hardship.”

You will not be penalized if you don’t pay on a federal student loan until the end of the suspension. But Rhodes points out a difference between federal and private student loans.

“Make sure you know who your student loan servicer is, and the differentiation between a private loan and a federal student loan, because the private student loan companies can do what they've chosen to do during this time.”

The suspension is retroactive to March 13 and continues to September 30. If you have made a payment since March 13, you can request a refund from your loan servicer.