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Everything You Need to Know About Student Loans and the CARES Act Expiration

Soon after business closures started in March 2020 to contain the coronavirus pandemic, Congress passed the CARES Act. This federal program offered widespread assistance programs in the face of a national emergency. In addition to several rounds of direct stimulus payments, CARES expanded unemployment benefits to help independent contractors and part-time gig workers and immediately froze student loan payments and interest accrual on federally-funded loans.

The student loan forbearance element of the CARES Act expires on Aug. 31, 2022, meaning millions of borrowers will soon have to start making payments again after almost two years of deferment. Here are all your CARES Act FAQs so you can be prepared when your payments restart.

CARES: Student Loans, Rent, and Unemployment

The public health emergency that forced lockdowns across the country led to widespread layoffs and furloughs, especially in the restaurant and travel industries. This created a ripple effect of problems: it’s hard to pay your rent and your student loans when you don’t have an income.

To help student loan borrowers, the CARES Act automatically put all federal loans into forbearance, which means no payments were required and no interest would be accrued. It was originally set to expire in September 2020, but was renewed many times. It is now expected to expire on May 1st.

In addition, the CARES Act offered economic aid to unemployed gig workers and self-employed freelancers, small businesses, schools, and renters, through a set of loans, grants, and protections intended to prevent people from falling too far behind financially during lockdowns.

Who cares about CARES?

The CARES Act immediately provided relief for federal student loan borrowers by allowing people to stop making their monthly payments. Before the COVID pandemic, anyone struggling to pay federal student loans could ask to restructure their payments, either by switching to an income-based repayment plan or getting their loans deferred due to hardship. What was different about the CARES Act provisions was that it also froze interest accrual, so anyone who took advantage of the payment pause did not see the balance of their loans increase.

CARES also offered billions of dollars to small businesses. The Paycheck Protection Program—more commonly known as PPP loans—offered businesses up to two rounds of forgivable loans equal to 10 weeks of payroll expenses for any staff members they would continue to employ during the pandemic. Families struggling to pay rent were protected by an eviction moratorium, and the CARES Act also offered additional stimulus payments to parents.

Freelancers and gig workers aren’t traditionally eligible for regular unemployment benefit programs because they don’t pay into unemployment insurance through their jobs. But they were able to receive weekly payments under the Department of Labor’s Pandemic Unemployment Assistance, or PUA. Their benefit amount was based on income reported to the IRS on the previous year’s tax return.

Unemployment benefits are administered at the state level, but PUA offered federal funding for broader support to provide better economic security. Essentially, anyone whose employment was affected by COVID, like people who couldn’t telework and people who couldn’t work in order to care for a family member, was eligible for higher benefits for additional weeks than states are traditionally willing to pay them. Claimants also received automatic extra payments from the federal government in an effort to replace people’s full income while they were unemployed due to the pandemic. The number of weeks of unemployment people can receive under PUA has been extended several times. State laws regarding weeks of benefits people are eligible for have varied.

Past CARES extensions

The pause on student loan payments and interest has been extended several times. It was first set to expire on Sept. 30, 2020, but was soon pushed to Dec. 31, 2020, then Jan. 31, 2021. On President Biden’s first day in office, he extended the pause once again to Sept. 30, 2021. In early August, he pushed the date once again to May 1, 2022 and in April, he pushed the date out to Aug. 31, 2022.

Biden has said his latest extension will be the last, and it’s likely he means it this time. Although the economy has not yet fully recovered from the pandemic, other parts of the CARES Act have also been allowed to expire, like the eviction moratorium and the additional payments once offered under PUA. The Small Business Association, or SBA, has not offered additional rounds of PPP loans since spring 2021.

Once the CARES Act’s forbearance expires, borrowers will have to start making monthly payments again at the interest rates they had before the CARES Act kicked in. That means the current 0% interest rate will end on Aug. 31st, and federal loans will immediately start accruing interest again at the rate you were offered when you first signed for the loans.

You should expect to receive a billing statement about three weeks before your payment’s due date. You can get additional information about payments resuming at

What’s next?

If you’re looking to lower your student loan payments once the freeze ends, refinancing may save you money in the short-term and over time. Interest rates are historically low right now, which means it’s a good time to lock in a lower rate. Once the economy starts picking back up, interest rates are likely to start rising in short order.

If you work in qualifying public service industries or nonprofits that are eligible for public service loan forgiveness (PSLF), you might want to wait—forgiveness could save you thousands of dollars depending on how much debt you have left. If you’re not qualified for PSLF, however, refinancing to lower your interest rate can help you get out of debt faster by allowing you to pay your principal balance more quickly.

If you’re curious about refinancing, Earnest has some of the lowest rates and you can check your rate in 2 minutes without any credit impact. This way, you’ll get an idea of any potential savings before making a decision.

Here’s a list of benefits you get with Earnest:

  • Low rates
  • Set a new payoff date and get your ideal monthly payment
  • Pick from 4 payment options

Learn more about refinancing with Earnest.


Since March 2020, the CARES Act has helped keep people afloat through stimulus payments, expanded unemployment benefits, and a freeze on federal student loan payments and interest. The CARES Act expiration is likely to cause some confusion for borrowers for a period of time, but you can get ahead by making a plan for how you’ll react once you have to start making payments again. Refinancing now while interest rates are historically low may lower your payments and help you pay off your debt significantly faster.



AN UPDATED NOTE FOR BORROWERS WITH FEDERAL STUDENT LOANS: On April 6, 2022, the U.S. Department of Education announced a final extension of the student loan payment pause until Aug. 31, 2022. We want Earnest customers to explore all their options before applying to refinance their federal student loans. Refinancing a federal student loan with a private lender means you will no longer have access to benefits of your federal loans, including the temporary 0% interest rate and suspension of payments effective through Aug. 31, 2022 on federally held loans, or any other relief measures implemented for federal loans to address the COVID-19 crisis. Please carefully review your current and potential benefits with your federal loan servicer before refinancing.

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Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.