Statement: Averting a Student Loan Default Crisis Brought on by COVID-19
We commend Governor Cuomo and State Attorney General Leticia James for halting debt collection on student debt owed to the state in light of COVID-19 and the anticipated economic repercussions. However, it is important to point out that this relief only applies to state-owed debts and not to federal or private student loans. As of today, debt collectors can continue pursuing borrowers who have defaulted on their federal or private student loans.
To that end, we urge the Governor and our State Legislature to ensure student loan borrowers have accurate information and the unbiased help they need to address their federal and private student loans amid this crisis. The Education Debt Consumer Assistance Program (EDCAP) is uniquely equipped to help borrowers in the face of an economic downturn that looms ahead. The need for EDCAP services will only increase as more borrowers struggle to make ends meet and try to avoid default. Funding EDCAP to offer statewide assistance and to be able to disseminate accurate and unbiased information as the federal and state government takes action is imperative. It cannot wait.
President Trump’s solution to waive interests on federal student loans does little to avert the economic downturn people are facing. Most importantly, the president is only proposing waiving the interest. People still must make their total payment.
As Congress contemplates a broad emergency relief package to cushion the economy against the coronavirus, it should consider ways to stave off a potential loan default crisis as Americans try to weather the economic recession that lies ahead. That should include loan assistance programs at the state and local level.
In the interim, student borrowers will need to balance conflicting needs and need help making informed decisions. Here in New York, those individuals can turn to EDCAP. It offers one-on-one counseling services through its helpline (888-614-5004) and through remote scheduled counseling sessions. For more information about EDCAP’s services, visit edcapny.org or email us at edcap@cssny.org.
EDCAP is an initiative of the Community Service Society.