Critical New Details Released For Coronavirus Student Loan Relief

Last week, Congress passed a stimulus package that provides critical short-term student loan relief for millions of student loan borrowers. The relief includes a suspension of certain federal student loan payments and collections through September 30, 2020, as well as an interest freeze. While the relief package does not help all student loan borrowers, many will benefit.

Unfortunately, student loan borrowers desperate for details and immediate relief have been left in limbo. The Department of Education did not release any guidance to student loan servicers about how borrowers should access these programs. When student loan borrowers contacted their servicers to request more information, they may not have been provided with complete or accurate facts.

Now, the Department of Education has finally released details and guidance regarding these student loan relief programs, which will be further disseminated to loan servicers and debt collectors. Here are some highlights:

• The Department has confirmed that payments on government-held federal student loans will be suspended through Sept. 30, 2020. The suspension is automatic. Borrowers do not have to request it.
• The Department has confirmed that the suspended months will count for Public Service Loan Forgiveness, even if payments are not made. The months of suspended payments will also count towards loan forgiveness associated with income-driven repayment plans, and for rehabilitation programs for borrowers who are in default. Borrowers should not request a forbearance, since periods of forbearance may not count towards loan forgiveness.
• Borrowers in default will have their wage garnishments, Social Security offsets, and tax refund seizures suspended. This will be retroactive to March 13, 2020. Any tax refund seizures, Social Security offsets, or wage garnishments that occur between March 13, 2020 and September 30, 2020 will be refunded to borrowers.
• Loan servicers will be instructed to suspend billing and all automatic debits starting on April 10, 2020.
• The payment suspension is retroactive to March 13, 2020. Borrowers who made a payment — or had a payment auto-debited from their bank account — between March 13, 2020 and September 30, 2020 can contact their loan servicer to request a refund.
• For borrowers on an income-driven repayment plan, recertification deadlines may be extended.

To reiterate, these relief programs apply only to government-held federal loans. This does not apply to FFEL-program federal loans and Perkins federal loans not held by the government, nor does it apply to private student loans.