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CARES Act: Student Loan Borrower Relief

by Financial Design Studio, Inc. / March 31, 2020

The CARES Act- Student Loan Borrower Relief fee only financial advisor deer park barrington chicago draft

CARES Act: Student Loan Borrower Relief

Background:  Along with the goal of the CARES Act putting money into the pockets of Americans, there is also help for them to keep more money in their pockets.    

Timing: You can reach out to your student loan lender immediately to learn what you need to do in order to defer your payments.

Benefits: 

There are several benefits specific to student borrowers and student loan holders, some of which you have to take action toward if you want to receive them.  Here is a list of all the individual benefits you could qualify for.

  • You can suspend your student loan payments until September 30, 2020.  In order to suspend your payments you need to reach out to your lender.  They will not automatically suspend these for you. You may suspend your payments and still choose to pay some amount toward your loans during the time of payment suspension.
  • No interest will accrue on your student loans through September 30, 2020.  Even if you do not suspend your payments the interest should not accrue during this time.
  • For programs of loan forgiveness (such as the Public Service Loan Forgiveness program) this time will be counted toward the time accrued for your forgiveness.  If you are using a loan forgiveness program you should pause your payments since your loans will ultimately be forgiven and there’s no reason to make payments during this benefit period.
  • Additionally, any tax payer having their tax refund decreased or wages garnished because of involuntary collections of student loan payments overdue, will have these measures waived during this time.  For those having tax refunds reduced due to debt repayment, you should file your tax return during this time period so you receive your full refund during this period.  
  • Some employers pay employees up to the $5,250 (2020) annual limit, in addition to compensation, to be used specifically for paying down student loans.  From the time of the enactment of the CARES Act (March 27, 2020) through the end of 2020, this amount will not be included as compensation for employees, therefore nontaxable to the employee.  
  • Sections of the CARES Act allow for students who have to leave school mid-semester due to a qualifying emergency to have the portion of PELL Grants or Subsidized Student Loans, or direct loans forgiven or canceled.  

What constitutes a qualified emergency for relief of PELL grants or loans taken?

  1. A public health emergency related to the coronavirus declared by the Secretary of Health and Human Services pursuant to section 319 of the Public Health Service Act (42 U.S.C. 247d). For example: COVID-19
  2. An event related to the coronavirus for which the President declared a major disaster or an emergency under section 401 or 501, respectively, of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170 and 5191)

Interested in the other areas of the CARES Act? We are breaking down these details by section in the following resource. You can click to the particular section you’re interested in directly below if you’d like to read the specifics of those first.  We do encourage you to look through all of the sections that could potentially impact you since this is a very generous bill aimed at keeping our country’s economy strong during and after this pandemic.

Financial Design Studio CARES Act Summary

Like any benefit that becomes available to you it is critical to see if it makes sense to use the provisions allowed.  While a benefit might make your temporary financial situation better, it might not be beneficial in the long term. However, those who need these provisions were created for are likely in immediate need to use the benefits until employment returns to normal.

Individuals:

Recovery Rebates

Coronavirus-Related Retirement Distributions 

Enhanced loans from employer retirement plans

Required Minimum Distributions waived for 2020 

Qualified Charitable Contributions – NEW Above the line deduction 

AGI Limit for Cash Charitable Contributions Limit Temporary Repealed

Student Loan Borrower Relief

Miscellaneous Healthcare Benefits

Unemployment Benefits

Mortgage Forbearance Request

 

Business Owners:

Paycheck Protection Program & Forgivable Loans

Employee Retention Credit

Payroll Tax Payment Deferral 

Net Operating Losses Loosened

Wondering how this affects your future finances? Schedule a call with Financial Design Studio, financial advisors in Deer Park, to discuss your portfolio today.

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Financial Design Studio, Inc.

We are financial advisors in Deer Park and Barrington, IL. A team with a passion for helping others design a path to financial success — whatever success means for you. Each of our unique insights fit together to create broad expertise, complete roadmaps, and creative solutions. We have seen the power of having a financial plan, and adjusting that plan to life. The result? Freedom from worrying about the future so you can enjoy today.