In Episode 82 of Credit 101, we explore an important option for individuals seeking temporary relief from student loan payments. Here’s what you need to know about stopping payments on your student loans:

Interest-Free Period for Specific Loan Types:

• If you have Federal Perkins Loans, Direct Subsidized Loans, or Subsidized Federal Stafford Loans, you’re in luck. During the specified period, the government will cover all interest accruing on these loans. This means you won’t accumulate additional interest during the pause in payments.

Government Pays Interest:

• The government has implemented a policy to cover the interest on the mentioned loan types. This temporary relief aims to ease the financial burden for borrowers during challenging times.

Interest Accrual on PLUS Loans:

• It’s essential to note that if you have PLUS loans, interest will continue to accrue during the payment pause. Unlike the aforementioned loans, the government won’t cover the interest on PLUS loans.

Added Interest to Loan Balance:

• For borrowers with PLUS loans, any interest that accrues during the pause will be added to the loan balance. This ensures transparency about the financial impact of the temporary relief period.

Understanding the specifics of this option allows borrowers to make informed decisions about their student loans. If you have the covered loan types, taking advantage of the interest-free period can provide valuable breathing room for your finances.