Good Financial Reads: What You Need to Know About Student Loans

President Trump announced shocking news that all interest on federal student loans will be waived until further notice. This was just one of many actions that the government and the Federal Reserve are taking to help combat the economic effects of the Coronavirus.

Here are some of the key provisions of the announcement:

Federal Student Aid recently released its updated federal student loan statistics through September 30^th, 2019. Here are some of the highlights:

• The total outstanding federal student loan balance is now $1.51 trillion. To put that in perspective, the Gross Domestic Product (GDP) of Spain is $1.50 trillion. The federal student loan balance in this country exceed the monetary value of all goods and services produced by the 13^th largest country in the world, as measured by GDP. Oh, by the way, this figure doesn’t include private student loans… 

As part of the CARES Act, all federal student loan payments are automatically suspended until September 30th. During this time period, no interest is accruing between March 13^th, 2020 and September 30^th, 2020.

This covers the following loans:

• Direct federal loans
• FFEL federal loans
• Federal Perkins loans

This is a significant relief to student loan borrowers – it’s basically the equivalent of an interest-free loan from the government so you can re-prioritize your cash flow right now.