The CARES Act and Federal Student Loans: What to Know

To alleviate the financial hardships caused by the COVID-19 pandemic, the CARES Act provided relief for borrowers with public loans by automatically enrolling them into administrative forbearance. During this period, payments on eligible loans are deferred and the interest rate is waived through January 31, 2022.

Eligible Loans for Administrative Forbearance and Zero Interest Rate

  • Direct Loans (defaulted and non-defaulted)
  • Federal Family Education Loans (FFEL) owned by the Department of Education (DOE) (defaulted and non-defaulted)
  • Defaulted FFEL program loans not owned by the DOE
  • Federal Perkins Loans owned by the DOE (defaulted and non-defaulted)
  • Defaulted Health Education Assistance Loans (HEAL)

To find out a borrower’s eligibility, please visit and follow these steps:

  • Access the borrower’s dashboard
  • Select “View Details”
  • Click on “View Breakdown”
  • Scroll to “Loan Breakdown”

If applicable, the DOE will appear in the name of the loan.

0% Interest Loan

Borrowers with the above eligible loans had their loan interest rate automatically reduced to 0% starting on March 13, 2020. If a borrower made payments during the administrative forbearance, the full amount of these payments was applied to the loan principal.

Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR)

The PSFL program forgives the remaining balance of existing federal student loans after 120 qualifying monthly payments while working full-time for any government or not-for-profit organizations.

If a borrower enrolled in the PSLF program while qualifying for IDR before March 13, 2020, their payment suspension period will count toward their required number of payments, as if they had made the monthly payments themselves.

Loans that are eligible for PLSF:

  • Federal Direct/Stafford loans (subsidized)
  • Federal Direct/Stafford loans (unsubsidized)
  • Federal Direct PLUS loans
  • Federal Direct consolidation loans

Please visit the PSFL Help Tool to learn more about the program and the process to enroll. The tool utilizes borrowers’ personal information and student loan details to help determine if their employer and loans qualify for PSFL, while providing action steps to take to receive the benefit.

Future of Administrative Forbearance

The Department Of Education and some lawmakers urged the Biden Administration to extend the relief beyond September 30, 2021. Many borrowers will be pleased to know the date was extended. Loan servicers have until at least 21 days before payments are due to notify borrowers of their financial responsibilities.

Preparing to Resume Loan Repayment

It is important to evaluate a borrower’s budget and payment options before repayment resumes. Borrowers can access to learn how much they have borrowed and what their estimated payments will be. They can utilize the loan simulator, also available at, to strategize repayment options that best fit their financial goals. Borrowers may consider refinancing with a private lender by assessing each loan’s interest rates to determine if consolidation can lower the overall interest rate of the loans.

To learn more about budgeting and preparing to pay your student loans, please contact our team.

This information is based upon publicly available information and is provided for general information and educational purposes only. Although the information contained herein has been compiled from data considered to be reliable, the information in these materials may change at any time and without notice.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

About the Author