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Everything You Need to Know About the CARES Act and Your Options for Relief

Americans haven’t had to make payments or pay interest on federal student loans for almost 2 years, thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act¹ the federal government passed in March 2020. Deferment on federal loans has helped many borrowers stave off financial hardship and avoid missed payments.

But starting in January 2023, loan payments will be due once more. Now is the time to make a repayment plan so you’re prepared when you get your next bill.

Option 1: Student Loan Forgiveness

Congress passed the CARES Act after the coronavirus pandemic was declared a national emergency. Federal student loan borrowers can normally ask for forbearance, which offers temporary relief from payments, but interest still accrues during that forbearance period. Under the CARES Act, no payments have been required and no interest has accrued.

If you think you may be eligible for student loan forgiveness, you should research your options now so you can make sure you fulfill all of the requirements once payments resume.

Who’s Eligible for Federal Student Loan Forgiveness, Discharge or Cancellation

  • Public servants working for the government and people who work for some kinds of non-profit agencies who have made 120 qualifying payments
  • People who have been defrauded by for-profit colleges or whose educational institutions closed while they were in school or shortly afterward
  • Some teachers who have worked in low-income schools for five consecutive years
  • People who become totally and permanently disabled

In October, President Joe Biden announced a temporary waiver to allow people seeking PSLF to count certain payments that were not previously eligible, expanding the number of people who should be able to receive forgiveness.

For your best chance at forgiveness, it’s important to understand exactly how much and when you should make payments. You can learn more and find FAQs about PSLF eligibility at

Option 2: Refinancing

Refinancing allows you to borrow the balance of your student loans from a private lender or student loan company, like Earnest, to pay back the federal government and close out your loans. Interest rates fluctuate with the economy, and refinancing allows you to take advantage of lower rates if and when they become available.

Most students don’t have high credit scores, but many have a chance to build up their credit after graduation. Having a history of on-time payments can help build your credit score and be another factor in potentially lowering your interest rate with refinancing. But your interest rate won’t change, unless you refinance your loans with another company.

Assuming you continue to make similar monthly payments, refinancing for a lower interest rate can save money over time by decreasing the amount of interest that accrues on a daily basis. This means you’ll pay more of your principal balance in each of your monthly payments, which reduces your overall interest cost and can decrease the time to pay back your loan.

You may also want to refinance to get a lower monthly payment, which can save you money in the short-term but ultimately extends the amount of time it takes to pay back your loan.

In the last 15 years, federal interest rates for undergraduate student loans have ranged from 2.75% to 6%. While all loans have 0% interest during the CARES Act payment pause, your loans will revert back to your original interest rate once the freeze expires.

Interest rates are currently at historically low levels, and refinancing with a private company like Earnest can take your interest rate as low as 1.88% variable APR (includes Auto Pay discount¹) if you have good credit and a history of making payments on time. Depending on how much debt you have, even a 1% interest rate reduction can save you thousands of dollars and help you get out of debt faster.

Pros and Cons of Refinancing

Refinancing your federal student loans for a lower interest rate can help you pay off your debt faster, and for a lower cost. It’s free and easy to check if Earnest can offer you a lower rate than your current loans—checking only takes two minutes, and doesn’t impact your credit.

The federal government offers certain protections for borrowers, however, and it’s important to consider the pros and cons of refinancing with a private lender.


  • Refinancing now, before the CARES Act payment pause ends, can help you lock in a lower rate that will save you more money over time.
  • Lowering your monthly payments can help you direct more money into savings or mortgage payments, so you can get debt-free faster and relieve some of the anxiety you may feel about debt.
  • Earnest doesn’t charge late payment fees and may allow you to skip a payment once a year² if you’re experiencing financial hardship.
  • Earnest will work with you to create a repayment plan that works for your finances and goals.


  • Refinancing with a private lender means you’ll lose access to benefits from the federal student loan program, including forgiveness and income-based repayment plans. You can learn more about eligibility requirements for forgiveness and the protections the federal government offers at³
  • Refinancing before the payment freeze ends means you’ll start paying interest again sooner.

Option 3: Consolidation

If you have multiple student loans through the federal government, you may be able to consolidate them. Consolidating your loans bundles everything into one payment for an interest rate that’s an average of the rates of your existing loans.

Some people prefer to consolidate rather than refinance because it can lower your payments without letting go of some protections—like potential Public Service Loan Forgiveness—that the government offers. However, if you have any outstanding interest, it will become part of your principal balance if you consolidate, meaning you’ll then accrue interest on a higher principal balance. If your loans are different sizes and are financed at different interest rates, consolidating may also ultimately result in paying more interest. You can use a student loan calculator to determine your total payoff amount and decide whether consolidating is the right move for you.

Make a Plan of Action

No matter what you decide to do, the most important thing is to have a plan. We suggest reviewing your budget and your finances and taking some time to think about your long-term financial goals.

Not sure where to start? You can follow these steps:

Step 1:

Check your rate for refinancing before the end of the year. You can check your rate with Earnest here in about 2 minutes. Earnest offers some of the lowest rates and most flexible payment options available from any private loan servicers, and we’ll work with you to choose the best payment plan for your budget.

Step 2:

Research your options for forgiveness and consolidation. If you meet the eligibility requirements for student loan forgiveness, refinancing might not be right for you. Likewise, if you can lower your payments and interest rates through consolidation without refinancing, keeping your loans with the federal government might be your best option.

Step 3:

Set a reminder on your calendar to check in with yourself before the holidays to make sure you follow through on researching your options and making a plan. Missed payments can hurt your credit score, which can affect your ability to get a home loan later on from a mortgage servicer, so if your payments are too high for your budget, it’s better to figure that out now so you can seek help before it’s too late.

Step 4:

Practice making payments by putting aside the amount of your monthly payment into a special savings account for the next few months. Once payments restart, you can use these savings as a cushion in case things get tight next year. Alternatively, if you can afford it, you could make a lump sum payment on your loans before interest starts accruing in January 2023, to decrease your principal balance and reduce the amount of interest you pay.

What Else You Need to Know About The CARES Act Expiration

In addition to student loans, the CARES Act has provided much-needed housing and unemployment assistance, but many of those provisions have already expired. For example, expanded unemployment insurance (UI) benefits called Pandemic Unemployment Assistance (PUA) that allowed self-employed people to receive weekly UI benefits have ended.

The Pandemic Emergency Unemployment Compensation program extended the number of weeks of unemployment benefits people could receive, and each state has had a different approach to extending similar programs.

The CARES Act also helped homeowners avoid foreclosure by providing additional and mortgage relief options for loans serviced by the FHA and USDA, like mortgage forbearance.

Even though these benefits have ended, many people are experiencing financial hardship. If you are having a difficult time, you may be able to seek help from other federal programs. The Consumer Financial Protection Bureau, or CFPB, has resources for finding counselors approved by the Department of Housing and Urban Development who can help you navigate questions about federally-backed mortgages and additional repayment options.

Get Started

Whether you’ve continued to pay down the principal balance of your loans while they’ve been deferred or you’ve had to focus on other financial obligations, you’re not alone, and you have options. You still have time to figure out how to lower your payments or pay off your loan faster.

Check your interest rate for refinancing your student loans with Earnest today to see if you can lower your payments and meet your financial goals faster. You can check your rate in 2 minutes without any impact to your credit score. You’ll be able to understand your potential savings before you make any decisions.

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
  • Earnest may let you skip a payment once a year if needed


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

1 AN UPDATED NOTICE FOR BORROWERS WITH FEDERAL STUDENT LOANS: We want federal student loan borrowers 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 any benefits of your federal loans, including the temporary 0% interest rate and suspension of payments effective through December 31, 2022 and the debt cancellation on federally held loans announced by the Department of Education on August 24, 2022 (which includes up to $10,00 in debt cancellation for qualifying federal student loan borrowers – the amount is increased to up to $20,000 for qualifying Pell Grant recipients), the Public Service Loan Forgiveness Limited Waiver Option available through October 31, 2022, or any other current or future measures implemented for federally held loans. Please carefully review your current and potential benefits with your federal loan servicer, including debt cancellation and loan forgiveness options such as Public Service Loan Forgiveness and Income-Driven Repayment, before refinancing. To learn more about debt cancellation, visit

2 Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

Before applying for private student loans, it’s best to maximize your other sources of financial aid first. It’s recommended to use a 3-step approach to assembling the funds you need: 1) Look for funds you don’t have to pay back, like scholarships, grants and work-study opportunities. 2) Next, fill out a FAFSA® form to apply for federal student loans. Federal student loans do not require a credit check or cosigner, and offer various protections if you’re struggling with payments. 3) Finally, consider a private student loan to cover any difference between your total cost of attendance and the amount not covered in steps 1 and 2. For more information, visit the Department of Education website at

Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC NMLS #1204917, CA CFL #6054788535 Mission St., Suite 1663, San Francisco, CA94105. Visit for a full list of licensed states.

One American Bank, 515 S. Minnesota Ave Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.

© 2021 Earnest LLC. All rights reserved.

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