Stimulus Acts and Student Loans: What You Need to Know about CARES, HEROES, and HEALS

As of February 2020, student loan debt in the United States reached a record total of $1.6 trillion. Many people are struggling to pay student loans and taking part in various deferment and other assistance programs. As COVID-19 and related shutdowns caused economic issues across the nation, the federal government passed the CARES Act, which included some stimulus relief for student loan holders. Find out more about stimulus help for student loans below.

The CARES Act Stimulus Package and Student Loans

The CARES Act included a number of stimulus benefits for student loan holders. Some of the main benefits related to student loans are listed below. It’s important to note that these benefits are only applicable to federal student loans and do not impact private student loans or federally backed student loans held by commercial lenders.

  • Federal student loans went into automatic forbearance. From March 13 to September 30, 2020, federal student loans don’t have to be paid. Automatic payments have been put on hold during this time as well. You can continue to make payments if you want. The automatic forbearance simply means you don’t have to pay your loans during this time. The amount you owe will be added on to the back end of the loan to be paid later.
  • If your loan is automatically paused during this time, the creditor is not supposed to report missed payments to the credit bureaus.
  • Suspended payments will still count toward income-driven repayment forgiveness programs as well as Public Service Loan Forgiveness Programs.
  • Federal tax returns in 2020 are not being withheld to cover defaulted student loans as long as the process to take the refund was not started before March 13. Wage garnishments for defaulted student loans were also paused.

It’s important to note that the CARES Act mandated all of these changes, but the Department of Education and others couldn’t roll them out overnight. Some borrowers saw continued garnishment of wages, automatic loan payments, or the taking of tax returns. Others reported negative items appearing on credit reports because of paused payments.

Lawsuits were filed and the various organizations are working to correct all these issues. But it’s important to keep track of your student loans, even if they’re on administrative pause, and check your credit regularly to ensure inaccurate information isn’t being reported. Luckily, you can access your credit reports for free weekly through April 2022 via And if you want to dig in even further, sign up for ExtraCredit: you can keep track of 28 of your FICO scores and your credit reports from all three bureaus.

The HEROES Act, the HEALS Act, and Student Loans

HEROES stands for the Health and Economic Recovery Omnibus Emergency Solutions Act. The House of Representatives passed this bill in May 2020. On July 27, the GOP leaders in the Senate finally announced its version of the Act—the Health, Economic Assistance, Liability protection, and Schools (HEALS) Act—which will now be subject to negotiations with congressional Democrats before being voted on. Unfortunately, the GOP version has removed many of the consumer protections originally included in the House’s HEROES Act. The final version will likely fall somewhere between the two proposed acts, with Democrats.

Both versions of this second stimulus bill include another round of stimulus checks for Americans. Under the House’s version of the act, student loan payments would be paused through September 2021—that’s a year longer than the loan payments are paused under the CARES Act. The proposed GOP plan currently allows individuals to defer student loan payments, but only if they have no income. Otherwise, payment will be 10% of your income, after expenses.

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    The version of the HEROES Act passed by the House also extends the student loan assistance to some loans not covered under CARES. Those include Federal Perkins Loans and HEAL and FFEL Program loans that aren’t owned by the Department of Education. The Senate bill does not currently include this provision.

    Under the HEROES Act, certain loan holders—both private and federal—could also experience cancellation of up to $10,000 in student loan debt. That’s because the United States Treasury would be required to make payments up to $10,000 for each borrower during the time when payments are paused for individuals. The HEALS Act does not include this provision either.

    Now we will have to wait for the House and Senate to negotiate the final terms before we know what will actually be included.

    Other Features of the HEROES Act and HEALS Act

    • Another round of stimulus checks. Both versions propose another $1,200 per person, but they differ on the amount available to dependents.
    • An extension of the extra weekly unemployment benefit through 2021. The version passed by the House kept the benefit at $600 per week; Senate Republicans have proposed lowering the amount to $200 per week.
    • The version passed by the House includes $100 billion in rental assistance and $75 billion in homeowner assistance.
    • The version passed by the House includes hazard pay for essential workers; the GOP’s proposal does not include this funding.

    Reaching Out for Help with Student Loans

    HEROES hasn’t passed, and not everyone qualifies for assistance under the CARES Act. But many commercial lenders are offering their own assistance programs. If you are struggling to pay your student loans during this time, reach out to your lender and find out what help they can offer.

    Doing nothing when you know you can’t pay your debt typically makes the situation worse, so communicate with your lender as soon as you think there might be an issue.

    Check out the COVID-19 Financial Resource Guide for more information on managing your personal finances, credit, and debt during this time. There are many programs for assistance and tools you can use to make life during COVID-19 more stable for you and your family.

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