Just like you cannot judge a book by its cover, you cannot judge the contents of an executive order by its title.
President Donald Trump’s Memorandum for the Secretary of Education issued August 8, 2020, is titled:
Memorandum on Continued Student Loan Payment Relief During the COVID-19 Pandemic
At first blush, you may assume this is just a continuation of the legislature’s previously enacted CARES Act, which allows for deferred student loan payments to count toward Public Service Loan Forgiveness (PSLF) through Sept. 30, 2020, so long as you would have otherwise qualified for the payment to count.
However, on closer examination, the language used by Trump in his executive order is different from that of the CARES Act – making it seem that payments deferred after Sept. 30, 2020, will not count toward PSLF.
Update: New Clarification Issued Aug. 21
In fact, the Department of Education recently provided clarification on the Aug. 8, 2020, student loan relief extension order. A press release issued Aug. 21, 2020, states that “[n]on-payments by borrowers working full-time for qualifying employers will count towards the 120 payments …” for PSLF (emphasis added).
Note that the extended student loan relief is in effect through Dec. 31, 2020.
The Relevant Language
In the CARES Act, the legislature used specific language providing for student loan payments deferred through Sept. 30, 2020, to count toward the 120 payments needed to obtain PSLF, if you would have otherwise qualified for the payments to count.
In Trump’s executive order issued Aug. 8, 2020, he did not include the clear language the legislature used regarding PSLF, and instead used the following language:
Sec. 2. Extension of Student Loan Payment Relief. (a) In light of the national emergency declared March 13, 2020, the Secretary of Education shall take action pursuant to applicable law to effectuate appropriate waivers of and modifications to the requirements and conditions of economic hardshipdeferments described in section 455(f)(2)(D) of the Higher Education Act of 1965, as amended, 20 U.S.C. 1087e(f)(2)(D), and provide such deferments to borrowers as necessary to continue the temporary cessation of payments and the waiver of all interest on student loans held by the Department of Education until December 31, 2020 (emphasis added).
The relevant language to those seeking PSLF is “economic hardship deferments.” While these types of deferments are available to those seeking PSLF if needed, at first it appeared that payments deferred under economic hardship would not count toward the required number of payments needed to obtain PSLF.
Pursuant to the executive order, no interest on your student loans will accrue from Oct. 1, 2020, through Dec. 31, 2020. However, most of those seeking PSLF aren’t too worried about interest, because any payments made doesn’t even remotely touch the amount of interest that is accruing on a regular basis.
Keep an Eye on This Dynamic Situation
The legislature has left for their respective summer recesses. The House of Representatives is to be back in session Sept. 14, 2020, and the Senate on Sept. 8, 2020.
There’s always a chance that negotiations between the leaders of the parties and the White House continue throughout the recess and the legislature is called back into session early on an emergency basis to pass another bill.
There’s also a chance that the legislature could come back from recess in September and pass a new bill as well.
As you can see, it is important to analyze the language the legislature uses in any subsequent bills that are passed to see if deferred payments count toward PSLF.
For the most up-to-date information on COVID-19 and student loans, visit ed.gov/coronavirus.
The Public Interest Law Section Board will continue to track changes that affect PSLF during these difficult times. We recognize how important this issue is to our members and their families.