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Students and families are encouraged to continue paying on college loans, especially now that interest rates for most loans are at 0%.

Payment on student loans hits a pause, but keep paying if you can

Current payments will be fully credited toward principal, reducing interest paid

May 14, 2020

MANHATTAN, Kan. – Among its many provisions, the Coronavirus Aid, Relief and Economic Security Act passed by the U.S. Congress in late March hit the pause button for students who owe money for their college education.

But Robin Eubank-Callis, a family and consumer science agent for K-State Research and Extension in Barber County, says it benefits students to continue paying on those loans if they can.

“With the CARES Act, interest on qualified loans was moved to 0%, so the loan amount will not increase, even though the number of payments you owe will remain the same,” Eubank-Callis said. “However, if you are in a position to continue making payments, that is a good idea. Current payments will be fully credited toward the principal, which then lowers the total interest paid over the life of the loan.”

She noted that the act lowered interest to 0% for direct loans, federal family education loans (FFEL), federal Perkins loans and health education assistance loans (HEAL). The 0% rate went into effect on March 13, and will run through Sept. 30.

“If you have questions about what type of student loan you have or if this applies to you, contact your loan servicer,” Eubank-Callis said.

She added the CARES act is not a loan forgiveness program; students are still required to pay the balance on whatever they owe. “This current program simply delays payments without a penalty,” she said.

To assure that they are receiving the 0% rate through Sept. 30, students are encouraged to contact their loan servicer, Eubank-Callis said.

According to the U.S. Federal Reserve Board, 60% of individuals currently under age 30 who have recently earned a bachelor’s degree acquired debt while doing so. For those who earned graduate degrees, that number rises to 73%. Eubank-Callis noted that 93% of those debts are a result of student loans.

She also cited statistics from the Federal Reserve indicating that of the first generation college students under age 30, 16% of them are behind on payments.

Thus, for many, even a brief pause in paying back students loans is welcome relief.

“I was recently visiting with a 4-H mom and she was worried because her husband had just lost hours at work with no promise of when it would pick back up,” Eubank-Callis said. “They were trying to navigate the unemployment system. I could hear the stress in her voice and she wasn’t sure how to handle this deep cut into their already tight budget.

“When she heard about the student loan forbearance, she checked and all of their loans qualified. With that removed from her budget, she knew they would be able to stretch her income until his work picked back up.”

Eubank-Callis and many of her colleagues across Kansas are available to answer questions about student loans and other financial issues. For more information or assistance, contact your local K-State Research and Extension office.

More information on the student loan repayment program also is available online from the U.S. Department of Education.

At a glance

While the recent CARES Act temporarily lowered interest rates on student loans to 0%, you should continue paying on those loans if you can.


Family Finances

Notable quote

“(I)f you are in a position to continue making payments (on student loans), that is a good idea. Current payments will be fully credited toward the principal, which then lowers the total interest paid over the life of the loan.”

-- Robin Eubank-Callis, family and consumer science agent, K-State Research and Extension Barber County


Robin Eubank-Callis

Written by

Pat Melgares

For more information: 

U.S. Department of Education loan borrower questions


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K‑State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the wellbeing of Kansans.
Supported by county, state, federal and private funds, the program has county extension offices, experiment fields, area extension offices and regional research centers statewide. Its headquarters is on the K‑State campus in Manhattan.