By Rachel Puryear, Attorney at Law
First of all, I would like to give a huge thanks to the nonprofit advocacy group Student Debt Crisis (SDC). I highly recommend joining and supporting them if you are able. I attended a very informative webinar by them, where they explained and broke down the provisions of the CARES Act regarding student loans. In case you missed it, I’m summarizing it for you again here.
So, here’s the scoop:
- Student borrowers with federally backed loans qualify for some temporary relief under the CARES Act, as is further explained below. Other student borrowers were (inexplicably and for no good reason) left out of such relief. So first of all, find out whether your student loans are federally backed, in order to know if you qualify for such relief.
- Here’s what loans are NOT federally backed: Private loans. “Commercially-held” FFEL loans, or Perkins loans owned by universities (this is more common for loans made before 2010).
- Here’s what loans ARE federally backed: Direct loans issued directly from the Department of Education. This includes most loans made after 2010. This also includes loans which were not federally backed initially, but were bought back by the government, such as with loan consolidation.
- If you are in doubt: If you do not know for sure whether your loan is federally backed, you can visit studentaid.gov, a federal database of all federally backed student loans. Create an account there if you do not already have one, and you can find out there if your loans are federally backed. You can also inquire to your student loan lender and loan servicer to find out more.
If your loans are not federally backed, unfortunately, you were left out of any relief by the CARES Act. There was no good reason to do this, such borrowers could have been included in the relief just as easily as those with federally backed loans, and should have been. If you got screwed out of this relief, please contact your Congressional representatives and demand to be included in the CARES Act relief. If you didn’t get screwed out of this relief, also contact your Congressional representatives anyway and demand that all borrowers be included in the CARES Act relief – we are all in this together.
What if your loans are federally backed? Here’s what type of relief you can get under the CARES Act:
- Payments are suspended, and interest is waived until September 30, 2020.
- The time in suspension counts towards Public Service Loan Forgiveness payments (so long as you are still making qualifying “payments” of $0, while in qualifying employment, so you must keep your job), and towards Income-Based Repayment program payments, and towards Loan Rehabilitation program payments.
- Suspended payments are treated as on-time payments for the purposes of credit reports.
- Involuntary collection activities (wage garnishment, tax SS withholding) are suspended for 60 days.
- The Department of Education must notify borrowers of any changes within 15 days, starting on August 1, 2020.
- Students who were forced to withdraw from school due to the pandemic crisis can cancel their (federally backed) loans for this time period.
- Suspensions of payments is supposed to happen by April 10, 2020. If your next payment is due after that, SDC suggests that you wait because your payment should be suspended before then. If you already made a payment, and did so since March 13, 2020, you can request a refund from your loan servicer – it is still unclear, though, whether they will be forced to refund the payment to you.
- If you do not see any activity from your loan servicer about suspending payments by April 10, or your servicer does not acknowledge this suspension under the CARES Act, call your Congressional representative and request a caseworker to help you.
- If you have automatic payments, they should be automatically suspended.
- It also appears – but is still not entirely clear – that for those in Income-Based Repayment programs, there will be a 6-month extension for the annual recertification required for this program. As I find out updates about this, I will post further about them.
- If you were subject to involuntary collection activity since March 13, you should automatically receive a refund. If your tax refund was withheld, this question has not yet been specifically addressed by the Department of Education, so go to studentaid.gov/coronavirus where questions are being addressed and updated frequently.
- If you have a parent loan for your student child, you should be eligible for the same relief as other borrowers. In other words, you can get relief if those loans are federally backed loans.
- If your loans are not federally backed, you might be thinking of consolidating them. SDC addressed this issue specifically. You can consolidate – however, they do not recommend it. This is because (1) That process takes a while and will be pending much of the suspension period, (2) Because of the way the interest is capitalized in this process, you might have a bigger loan balance, (3) If you are in any type of forgiveness or income-based repayment program, the clock for getting your loans discharged after a number of qualifying payments is restarted.
- If you have loans which are not federally backed, reach out to your lender to find out what kind of relief might be offered. Again, don’t be shy about calling your Congressional representative and requesting a caseworker if you ever need help with anything.
Interested in more about repayment and loan forgiveness options? Be sure to check out this online student loan aid tool, Savi.This has lots more great information that anyone with a student loan should review.
Here’s a fun fact: Congresswoman Nancy Pelosi tried to include a provision in the CARES Act which would have provided up to $10,000.00 of loan cancellation for all student debtors. The Republicans killed it. Next time someone tells you both parties are the same? Think about that. The polite glossing over of the differences between the two main parties needs to stop.
Make noise with your representatives, get up in their faces. Even for borrowers not needlessly left out in the cold, the CARES Act relief is not nearly enough to address the national disgrace of an entire generation being seriously overburdened by nondischargeable debt, simply for pursuing an education like they were supposed to do. If you think what borrowers are getting is not nearly enough, good – because it’s not enough, and you should not think that it is enough. Register to vote, and turn out to vote in November, and vote out the damn Republicans.
As always, dear readers, be safe and healthy out there. Please help keep everyone safe by observing official recommendations for social distancing, sheltering in place, covering your face in public, and practicing proper hygiene. Please also help others where you can in ways big and small, and ask for help if you need it. We will all get through this together. Thank you for reading, and for following me. I hope you enjoyed this, and learned something valuable.
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Please note that the above is offered for educational purposes only. The information presented may not take into account every exception, variation, or complication which could apply to someone’s legal matters. Accordingly, nothing in this post or blog is ever intended as, nor should be construed by or relied upon by anyone, as legal advice. If you need legal advice, please consult an attorney who can give you assistance specific to your needs.