Gov. Northam announces expanded payment relief for student loan borrowers
While the federal CARES Act allowed many people to have payments on select federal loans delayed due to the financial effects of COVID-19, it did not help many people with other kinds of student loans.
That's why, in Governor Ralph Northam's
, he announced that Virginia has secured relief options for more than 200,000 additional Virginians with other kinds of student loans
The payment relief is through a new initiative by Virginia and several other states to work with major private student loan servicers to expand protections established in the CARES Act.
“Virginians are facing unprecedented hardships as a result of this ongoing public health crisis, and student loan borrowers should not have to deal with the added pressure of how they are going to make their loan payments,” said Governor Northam. “This initiative will provide an important financial lifeline and repayment flexibility to Virginia residents who were not eligible for relief under the CARES Act.”
Under the CARES Act, students with federal loans have been eligible to have monthly payments, interest, and involuntary collection activity suspended until September 30. But borrowers with loans through private lenders and federal loans not owned by the government were left out of those options.
Under the new initiative announced by Northam, Virginians with commercially-owned Federal Family Education Loan (FFEL) loans, Perkins loans, or privately held student loans are now eligible for relief if they are struggling to make payments due to the coronavirus.
Borrowers need to immediately contact their loan servicer to identify the options for their circumstances. Options include:
• Providing a minimum of 90 days of forbearance
• Waiving late payment fees
• Ensuring that no borrower is subject to negative credit reporting
• Ceasing debt collection lawsuits for 90 days
• Working with borrower to enroll them in other borrower assistance programs, such as income-based repayment
The governor's administration says those options will provider short-term relief for borrowers who have seen income reductions or job losses due to COVID-19. Otherwise, non-payment could lead to fefaulting.
The solutions offered will impact the terms and conditions of loans, so borrowers need to carefully consider the impact of accruing interest during the 90-day forbearance and how much it will extend their repayment schedule.
“Borrowers did not have a choice in whether their FFEL loans were held by the federal government or by the commercial lender, and yet 65 percent of all FFEL loans are not eligible for the CARES Act relief,” said Secretary of Education Atif Qarni. “The principle of equity demands that we provide relief for all federal borrowers, regardless of whether the federal government or a commercial lender backs the loan.”
“As a result of this collaboration with servicers, lending institutions for privately held loans, and several other states, we are pleased to expand the relief options for Virginia’s student loan borrowers who are struggling financially during the COVID-19 pandemic,” said Virginia’s Student Loan Advocate Scott W. Kemp.
Other states in the initiative include California, Colorado, Connecticut, Massachusetts, New Jersey, Vermont, and Washington.
Private student loan servicers providing relief include:
• Aspire Resources, Inc.
• College Ave Student Loan Servicing, LLC
• Earnest Operations, LLC
• Edfinancial Services, LLC
• Kentucky Higher Education Student Loan Corporation
• Lendkey Technologies, Inc.
• Higher Education Loan Authority of the State of Missouri (MOHELA)
• Nelnet, Inc.
• SoFi Lending Corp.
• Tuition Options, LLC
• United Guaranty Services, Inc.
• Upstart Network, Inc.
• Utah Higher Education Assistance Authority (UHEAA)
• Vermont Student Assistance Corporation (VSAC)
Borrowers can visit the U.S. Department of Education’s
or call Federal Student Aid Information Center at 1-800-433-3243 or 1-800-730-8913 (TDD) to determine the types of federal loans they have and who their servicers are. Borrowers with private student loans can check their monthly billing statements for contact information. Borrowers can also file a complaint with the Consumer Financial Protection Bureau
Borrowers experiencing trouble with their student loan servicer or looking to better understand the implications of these relief options are encouraged to contact Virginia’s Student Loan Advocate at email@example.com or (804) 786-2832.