Relief for Federal Student Loan Borrowers
Borrower Relief (Section 3513): The law suspends payments and interest accruals on Federal Direct Loans and FFEL loans through September 30, 2020 as well as collection activity on such loans.
We anticipate the Department and state governments will issue additional guidance related to provisions of the CARES Act in the coming days and weeks as the relief is implemented.
National Association of Student Financial Aid Administrators (NASFAA) release 3/25/2020
Relief for Federal Student Loan Borrowers
The bipartisan proposal would suspend payments and interest accrual on federal Direct Loans and Federal Family Education Loans (FFEL) held by ED until Sept. 30, 2020. The bill would also count each month of suspended loan payments as if the borrower had made a payment for the purpose of income-driven repayment plan loan forgiveness or Public Service Loan Forgiveness, as well as for loan rehabilitation purposes. Suspended payments are to be reported to consumer credit reporting agencies as regularly scheduled payments made by the borrower.
Involuntary collections such as wage garnishment, tax refund reductions, and reductions of federal benefits like Social Security benefits would also be suspended until Sept. 30, 2020.
The bill requires ED, within 15 days of enactment, to inform borrowers of the temporary suspension and of their option to continue to make payments. The bill also requires ED to send six notices to borrowers, beginning on Aug. 1, 2020, informing them that the temporary suspension period is ending, and reminding them of their obligation to resume repayment. Those notices would be required to include information about income-driven plans.
Related to repayment, the bill also provides a tax break for large employers who contribute to an employee’s student loan payment. Under the measure, employers could pay up to $5,250 in payments for employees tax-free.”
This Section only applies to Direct Loans and FFELs that are held by the Department of Education. If a borrower refinanced a federal loan and it is now held by a private company, this Section will not apply. It also does not apply to private education loans.
For further information we recommend you refer to your National Student Loan Data System (NSLDS) and FED Aid at:
studentaid.gov/announcements-events/coronaviru
www.benefits.gov/benefit/4625s
studentaidhelp.ed.gov/app/home/site/nslds
We will continue to monitor for updates. Wishing you and all you love health and wellbeing. The Pacifica’s Department of Financial Aid
