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Student Loan Relief

| August 12, 2020

Americans who owe student loans will receive an extended period to defer their student loan payments. President Trump recently signed an executive order that extends the period in which student loan borrowers with federal student loans will not be required to make payments and their outstanding balances will not accrue interest. This extends the student loan relief from its previous expiration under the CARES Act of September 30th to the end of 2020.

The extension of student loan relief will benefit the approximately 35 million people with student loan debt, many of whom were struggling to make their payments before the recession. In early 2020, 1 in 7 student loan borrowers were in delinquency status. Some   analysts   estimated   that   more   than 50% of student loan borrowers could have gone into default if the CARES Act student loan provisions were not extended.

However, student loan borrowers should be leary of the recent relief action. Many constitutional experts question whether the President has the authority to extend CARES Act provisions through an executive action. The US Constitution primarily gives Congress the power to control federal government expenditures. So this most recent executive order may be challenged in the court which could put student loan borrowers in a precarious situation should the order be overturned retroactively. For this reason it may be best to continue to make your student loan payments after September 30th if you are able to do so.