Resources for student borrowers during COVID-19

More details on the COVID-19 Interest Waiver and Payment Suspension

COVID-19 Interest Waiver and Payment Suspension

The CARES Act temporarily suspended monthly payments, waived interest, and paused collections for federal student loans owned by the U.S. Department of Education through September 30, 2020. The COVID-19 federal loan relief has been extended several times, most recently by the Biden-Harris Administration, which announced that these benefits would be extended for a final time through December 31, 2022

For borrowers who are not in default, suspended loan payments will continue to count towards loan forgiveness under the Public Service Loan Forgiveness program and income-driven repayment plans.  

The payment suspension is automatic. However, if borrowers elect to continue making payments during the suspension, those payments will be fully applied to loan principal, once any interest that was outstanding as of March 13, 2020 is paid off. 

On March 30, 2021, the U.S. Department of Education expanded the interest waiver and pause on collections to include privately-owned defaulted loans in the Federal Family Education Loan (FFEL) Program.

For more details, please review the U.S. Department of Education’s FAQ. 

Some Borrowers Need to Consolidate

Certain types of federal student loans must be consolidated into the Direct Loan Program to be eligible for the payment pause and 0% interest rate, including privately-owned loans made through the Federal Family Education Loan (FFEL) Program that are not in default and Perkins loans owned by schools. These loan types must also be consolidated to be eligible for the $10,000/$20,000 in loan forgiveness announced by the Biden-Harris Administration on August 24, 2022. They must also be consolidated to benefit from the one-time account adjustment, which counts all time a borrower has been in repayment towards forgiveness under income-driven plans, even if they have never enrolled.

 

Defaulted Federal Loans

The CARES Act, paused involuntary collection activity on defaulted federal student loans held by the U.S. Department of Education, including wage garnishments, social security benefit offsets, and tax refund interceptions. Additionally, payments were paused for borrowers enrolled in rehabilitation plans. On August 24, 2022, the Biden-Harris Administration announced that these benefits would continue through December 31, 2022. It also announced that borrowers who defaulted before the pandemic will receive a “Fresh Start” on repayment by eliminating the impact of delinquency and default and allowing them to reenter repayment in good standing. The Department has been updating its website with more details about the Fresh Start initiative as they become available.

Below is information relating to refunds on defaulted loans:

  • If your federal tax refund was in the process of being withheld on or after March 13, 2020, your federal tax refund should have been returned to you. 
  • Similarly, any portion of your Social Security benefit that was in the process of being offset on or after March 13, 2020 should have been returned.
  • If your wages continued to be garnished after March 13, 2020, contact your employers human resources department. If the U.S. Department of Education received funds from your paycheck after the wage garnishment should have stopped, they should have been refunded.

Additionally, on March 30, 2021, the Biden-Harris Administration expanded the interest waiver and pause on collections to include privately-owned loans in the Federal Family Education Loan (FFEL) Program that default between March 13, 2020 and December 31, 2022.

  • Any interest that accrued on your defaulted FFEL Program loan after March 13, 2020 will be waived.
  • The U.S. Department of Education is working to automatically return any offsets and garnished wages taken since March 13, 2020.
  • If you made a voluntary payment on your defaulted FFEL Program loan since March 13, 2020, you may request a refund.
  • If your FFEL Program loan defaulted on or after March 13, 2020, it will be returned to good standing, transferred to a federal loan servicer, and the default notation will be removed from your credit report. This is separate and apart from the Fresh Start initiative. 

Please note that non-defaulted privately-owned FFEL Program loans are not eligible for this reliefIf your FFEL Program Loans are not in default, you should consolidate them into the Direct Loan Program, as discussed above.

Visit the U.S. Department of Educations website to learn more about COVID-19 relief for defaulted loans and the Fresh Start Initiative.

Private Student Loans

Non-federal loans made by private lenders are not eligible for the U.S. Department of Educations interest waiver, payment suspension, or stoppage of involuntary collection. Private loan borrowers who are struggling to afford their student loan payments should contact their loan servicers to determine what options may be available to postpone or reduce payments.

Other Resources

The Attorney General’s Student Loan Assistance Unit is available to help borrowers explore repayment options. The Attorney General’s Office also continues to advocate for more relief for struggling student loan borrowers.

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