White House OKs student loan suspensions

The Trump administration Friday moved to waive federal requirements for standardized tests for students in kindergarten through 12th grade and gave borrowers with student loans the option of suspending payments, actions taken in response to the COVID-19 pandemic.

For at least 60 days, the 42 million Americans holding $1.5 trillion in federal student debt can ask their loan servicers to temporarily postpone their payments. Any lenders who were more than 31 days behind on their bill as of March 13, or who become that delinquent, will have their payments automatically suspended.

“These are anxious times, particularly for students and families whose educations, careers, and lives have been disrupted,” Education Secretary Betsy DeVos said in a statement. “Right now, everyone should be focused on staying safe and healthy, not worrying about their student loan balance growing.”

All federal student borrowers, regardless of whether they choose to postpone their payments, will automatically have the interest on their loans set at zero for at least 60 days. The new interest rate will be retroactive to March 13. Any payments borrowers make will go strictly to the principal of their loans once all interest accrued before March 13 is paid.

People in public service jobs will have to think twice about postponing their payments. Opting out for two months will result in a longer path to debt cancellation for those working toward Public Service Loan Forgiveness. The federal program cancels the remaining balance of a borrower’s debt after 120 ontime monthly payments, but postponing the bill will lengthen the process.

Separately, the president said his administration is waiving federal requirements for standardized tests for K-12 students because the pandemic has forced most schools to close.