Managing Student Loans Amid the Coronavirus
Carolina Rodriguez
We recognize COVID-19 may have an immediate impact on student loan borrowers. If you or someone you know is worried about paying your student loans and doesn't know what to do, our Education Debt Consumer Assistance Program (EDCAP) is providing over-the-phone and remote counseling services.
We are here to help and guide you. Our helpline is available 888-614-5004 (M-F, 9 am – 4 pm), or you can email edcap@cssny.org. Visit us at edcapny.org for more information about our free services.
But first, here are some things to know and consider when dealing with your student loans during these challenging times. We hope to keep you informed as new updates at the federal and state levels become available.
Federal Action Updates
The CARES Act provided student loan relief until September 2020. By Executive Order, this relief has been extended until December 2020. For federal student loans owned by the U.S. Department of Education, you can expect the following:
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Payments will continue to be automatically suspended through an administrative forbearance.
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Interest rates will remain at zero.
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Suspended payments will count toward forgiveness programs, like the Public Service Loan Forgiveness, if you meet the other program requirements.
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Collection activities for defaulted student loans are suspended. This means that there will be no wage garnishments or other benefit offsets to pay off student loans for the remainder of 2020.
The above relief only applies to loans held by the U.S. Department of Education. They do not apply to private, Perkins, and commercially held FFEL loans. Contact us if you have questions or need help determining whether your loans qualify.
Action Steps
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Stay tuned! Most federal student loan payments are suspended until December 2020 through President Trump’s Executive Order. Be on the lookout for additional information and potential congressional action that may ratify or expand this relief.
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Confirm the status of your student loans. When in doubt, call your student loan servicer or look at your Federal Student Aid account to know the status of your loan(s) and when your next payment is due.
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Recertify your Income Driven Repayment (IDR) plan. If you were enrolled in an IDR plan and needed to recertify during the suspension period, do so now. You can recertify at studentaid.gov. If you wait and payments resume, you may be placed on a standard repayment plan.
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If your loans are in default, get help to get them in good standing. Getting your student loans in good standing avoids collection fees, wage garnishments, and other benefit offsets.
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Keep a copy of your student loan records. Download your records, including notices from your servicer and your Federal Student Aid account. Why? The U.S. Department of Education has contracted new servicers and some of the major servicers, like Nelnet and Great Lakes, may stop servicing loans in the future. You can read more about this here.
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Do not pay for student loan help! You should never have to pay to manage your student loans. Do not fall prey to organizations offering to get you student loan forgiveness or other “relief” available because of this pandemic. Contact your servicer, a non- profit, like EDCAP, or legal service agency for free help.
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Do not ignore your private student loans. If you have private student loans, contact your lender and explore possible options. If you stopped paying them, get help first to determine the best course of action.
New York State Updates
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Governor Cuomo and State Attorney General Leticia James continue to halt debt collection on student debt owed to the state considering COVID-19 and the anticipated economic repercussions.
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It is important to point out that this relief only applies to students that owe student debt, like tuition, to State University of New York campuses. This does not apply to federal or private student loans. This does not apply to federal or private student loans.
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The Department of Financial Services is issuing guidance to state-regulated financial institutions to alleviate the adverse impact on consumers that can demonstrate financial hardship caused by COVID-19. This includes waiving late fees and providing new loans on more favorable terms. More information can be found here.
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For more information on options available to federal student loan borrowers, click here.
Remember that each situation is different. Again, feel free to contact EDCAP to explore your best options during this crisis.