Student loan relief extension: What does it mean for you?

President Trump has signed an executive order providing student loan relief through the end of the year. Here's what it means for you.

Many borrowers with federal student loans are facing serious financial struggles during the coronavirus pandemic. Fortunately, there was recently a student loan relief extension.

President Trump signed an executive order that suspends payments of federal student loans through the end of the year. This executive order extended the moratorium on student loan payments signed into law by Congress earlier this year and offers much-needed additional relief for those struggling with loan repayment.

However, the executive order doesn't apply to all student loan borrowers — particularly, those with private student loans. If you have private student loans and need additional relief, you'll want to seek other relief measures such as a student loan refinance. Multi-lender marketplace Credible can help walk you through the process and compare rates to help you save money.

What to know about student loan deferment

It's important to understand how the student loan relief extension can help you meet your financial goals and what the limitations are. Here's what you need to know.

Can I defer my federal student loans?

Yes. Under the terms of President Trump's executive order, payments on federal student loans held by the U.S. Department of Education are automatically suspended through December 31, 2020. During this time period, no interest will accrue and no late fees or other penalties will be imposed for non-payment.

Each month in which the loan payments are suspended will still count towards earning eligibility for Public Service Loan Forgiveness. Every month will also count as one of the nine qualifying months necessary for those pursuing student loan rehabilitation, which enables borrowers to erase a default by making on-time payments.


Borrowers who are in default (note: defaulting on a student loan can be a bad idea) will not face any collections activity through the end of the year, and those who have a wage garnishment order because of previously defaulted loans will receive a refund of garnished funds.

Unfortunately, there are more than seven million borrowers with federal student loans that are not held by the Department of Education but that are instead held by their university or by a private company. They are not covered by the executive order, so their loan payments will not be deferred.

Can I defer my private student loans?

No. Unlike federal loans, private student loans are not eligible for deferral. Private student loans are held by banks, credit unions, and online lenders — rather than by the Department of Education. These loans generally come with fewer borrower protections than federal loans, and Trump's executive order has no effect on payments due to them.

Those with private student loans remain responsible for paying their monthly loan payment in full or they will face consequences, including damage to their credit score and even the threat of legal action in case of a default.  


Should I refinance my student loans?

Those who are struggling may be able to reduce the cost of their private loans — and thus make payments more affordable — by refinancing.

You can use Credible's free online tools to compare prequalified student loan refinancing rates from up to 10 lenders without any impact on your credit score. Plus, it's free!


Refinancing involves obtaining a new loan from a private lender and using it to pay off one or more existing loans. You'll need to qualify for a refinance loan, but if you can secure one with a lower interest rate and/or a longer repayment timeline, you can reduce your monthly payment.

You may also be able to lower total payment costs over time, but only if you don't extend repayment for so long that the added time paying interest adds up to more than the savings that come from reducing your rate.

You should compare student loan refinancing rates from multiple lenders in order to determine if you can qualify for an affordable refinance loan. Find out your rate today.


Credible's student loan refinancing calculator can also give you a clear picture of what your monthly payment costs would add up to after you secure a refinance loan.

If you can reduce your student loan payments through refinancing, this may give you the breathing room you need to make payments even if coronavirus has caused your income to drop.

Other options for loans not eligible for deferment or forbearance

If you have federal or private student loans that are not eligible for deferral and you're facing financial hardship — and can't make your student loan payments or reduce your costs by refinancing — you have a few options:

  • Contact your servicer
  • Reach out to a financial advisor
  • See if you fall under the student loan grace period

Contact your servicer: Your best option is to contact your servicer. Your loan servicer can help you understand your options for deferment or loan forbearance, both of which would enable you to pause student loan payments temporarily until you get back on your feet. Most student loan lenders understand these times are unprecedented and may offer you a months-long forbearance period. Don't wait to reach out and ask for help if you need it.

Reach out to a financial advisor: You can go a step further and reach out to a financial advisor to examine your repayment plans and for advice on how to get additional relief.

See if you fall under the student loan grace period: Student loan borrowers who recently graduated should also understand the meaning of a grace period. You may not have to start your monthly payments right away. Again, contact your servicer for more details.