How the stimulus program will affect your student loans
Updated on April 24, 2020
If you have defaulted on your student loans, you may be wondering if you’ll be able to keep your stimulus check. Not only will you be able to keep your stimulus check, but you also won’t have any of your wages garnished as a result of your student loan debt during the crisis. Here’s what you need to know about how the stimulus program will affect people with student loan debt:
1. You won’t get your wages or savings garnished
While some of your wages will usually be garnished if your student loans are in default, this will not be the case during the coronavirus crisis. Furthermore, your student loans will not accrue interest during this time. In fact, the interest rate will be 0% for all federal student loans until September 30th of this year, and this means that all of the payments that you make on your student loans will be applied to principal rather than interest.
Despite this, it’s still extremely important to make sure that you pay back your student loan debt on time. This will ensure that your loans do not go into default, and the stimulus program can help you stay out of default during these difficult times!
2. Your stimulus checks are not based on your income
Everyone will get the same amount for their stimulus check, which is $1,200. While many other tax refunds are based on your income, this is not the case with this tax refund. If you have any dependents, you’ll get an extra $500 for each dependent in your home.
3. You won’t have to pay any taxes on the stimulus check
Your stimulus check will be 100% yours to keep, and you can spend it, save it, or invest it. It’s actually a tax refund rather than a form of income, which means that you won’t need to pay taxes on it. However, you will get the full $1,200 even if you paid less than this amount in federal taxes. Also, people who are currently out of work due to the pandemic or are self-employed will get the stimulus check.