Millions of borrowers with federal student loan debt will get a brief break on interest rates for the next 60 days.
U.S. Secretary of Education Betsy DeVos Friday afternoon announced the terms of the student debt relief President Trump promised last week.
For the next two months, all borrowers with federal student loans will have their interest rates set to zero and will have the option of suspending their payments for the next 60 days without accruing interest. Normally when payments are halted, interest accrues and is added to the principal, with future interest accruing on a larger debt.
“These are anxious times, particularly for students and families whose educations, careers and lives have been disrupted,” DeVos said. “Right now, everyone should be focused on staying safe and healthy, not worrying about their student loan balance growing.”
Borrowers who make payments during this two-month period will have the full amount of their payment applied to the principal amount of their loan and any interest accrued prior to the president’s March 13 relief announcement.
DeVos authorized an automatic suspension of payments for any borrower more than 31 days delinquent as of March 13 or who becomes more than 31 days delinquent.
Student debt, which totals more than $1.5 trillion nationwide, is second only to mortgage debt in the U.S. Some 35 million borrowers who owe about $1.2 trillion in federal student debt could be affected by the new grace period on interest rates.
But DeVos cautioned that some borrowers, including those seeking Public Service Loan Forgiveness, may want to continue making payments. And those seeking an administrative forebearance must apply for one through their loan servicers.
