Some states are stepping in to help private student loan borrowers, who have not been helped by the coronavirus relief act.
Private lenders reached an agreement in late April with the governments of California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, Vermont, Virginia and Washington state. New York, the state hardest hit by the coronavirus, had already put in place a similar initiative.
The agreement calls on private lenders and affected loan managers to:
-
Offer to suspend forbearance payments for 90 days.
-
Waive late fees.
-
Do not issue a negative credit report.
-
Suspend proceedings for debt collection.
-
Help borrowers enroll in debt relief programs.
The agreement applies to private college loans and commercially owned FFELP loans.
How To Get State Student Loan Relief
Contact your lender or service agent to find out how to get forbearance – some can do it automatically and others only on demand – and when you can expect the payment to start again.
You should also ask if the accrued interest will be capitalized – will be added to your loan balance, so that you pay interest on it – when the repayment resumes. Your lender may or may not capitalize the accrued interest.
And even if you’re not in one of the affected states, check with your lender or service agent to see if they’re listed below. Companies such as Nelnet NNI,
and Earnest are offering borrowers in all states 90 days of forbearance during which interest will accrue but not be capitalized.
Also see: Does it matter if I don’t pay off my credit card every month?
In the multi-state agreement, the following loan holders offer relief. This list includes lenders and service providers in multiple states, but it may be more specific to your state:
-
Suck up resources.
-
College Avenue.
-
Serious operations.
-
Financial.
-
Kentucky Higher Education Student Loan Corp.
-
Lendkey.
-
MOHELA.
-
Navigate.
-
Nelnet.
-
SoFi.
-
Tuition options.
-
United Guarantee Services.
-
Network upstart.
-
Utah Higher Education Aid Authority.
-
Vermont Student Assistance Corp.
Student loan relief options by state
Here’s a look at how states are helping student loan borrowers:
California: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs. People in debt cannot be given any financial assistance related to COVID-19.
Colorado: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs.
Connecticut: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs.
District of Colombia: Suspension of all debt collection activities, including student loans.
Illinois: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs. Any wage garnishment for private debts is also suspended.
Iowa: Suspension of all wage garnishment actions.
Kentucky: Suspension of all forced collection actions on debts, including student loans.
Massachusetts: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs. Debt is also deferred from April 2020 to July 2020 for borrowers who have incurred debt under the Massachusetts Department of Higher Education’s interest-free loan program. The state also suspends private loan debt collection activities for at least 90 days.
Michigan: Suspension of student debt collection serviced by the Michigan Guaranty Agency until September 30, 2020.
New Jersey: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs.
New York: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs. All collection of student debts owed to New York State is also suspended.
North Carolina: Suspension of collection of public debts, including student loans.
Texas: Collection suspended until May 7, 2020.
Vermont: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs.
Virginia: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs. The wage garnishment is suspended.
Washington: Has an agreement with private loan services to provide 90 days of forbearance; waive late fees; do not give any negative credit report; stay proceedings for debt collection; and working with borrowers to enroll in other borrower assistance programs.
Why is state aid needed?
All federal loan borrowers are entitled to six months of interest-free forbearance until September 30 (the start date is retroactive to March 13), under a provision of the coronavirus assistance program.
Read also : Smart ways to help your credit score weather a storm
But the law did not provide relief for private loans and federal loans held in commerce. This is where states fill in the gaps.
What to do if you cannot get relief
If you are in a condition where rescue options are available but you are having difficulty obtaining rescue from your service agent, contact your state attorney general’s office. Your state may also direct you to its consumer protection office, banking department, or student loan advocate.
There are additional ways to make a student loan claim, including escalation to the federal government. But your lender or manager is the best place to start.
Comments are closed.