Trump Administration to Waive Student Loan Interest Amid COVID-19 Crisis
President Trump declared that he would waive student
loan interest in an effort to provide student loan relief to Americans during the COVID-19 crisis.
A waiver would stop interest from adding up, and that could eventually reduce the
overall amount owed over the lifetime of the loan. But it won’t immediately
lower the amount a borrower owes each month, unless the servicers are told to
recalculate each monthly payment—which is usually divided between paying down the principal and the interest.
An administration official later stated that the waiver would likely be in the
form of an executive order. However, questions
about the waiver remain, such as how long would the waiver last? Would interest
be capitalized at the end of the waiver period?
Capitalization of interest at the end of the waiver period would likely increase
the total amount owed on the loan. At the time of writing, the U.S. Department
of Education had not released any details on the waiver.