Relief for Private Student Loans During COVID-19

Borrowers with private student loans who've been affected by COVID-19 might qualify for relief from payments under agreements with various loan servicers. But many of these deals have expired.

By , Attorney · University of Denver Sturm College of Law

Some states reached deals with various servicers to help borrowers affected by COVID-19 who weren't covered by the federal student loan payment suspension. However, most of these deals have expired.

If you live in a state that's not a party to such an agreement or the agreement has expired, most private student loan lenders offer payment help to borrowers who're facing a financial hardship because of COVID.

Federal Student Loan Payment Suspension Didn't Apply to Private Student Loans

The payment pause for federal student loans applied to Federal Direct Loans and Federal Family Education Loans (FFELs), but only FFELs that the U.S. Department of Education owns, not nondefaulted FFELs that other entities hold. (Borrowers with defaulted FFELs, including FFELs held by guaranty agencies, got a 0% interest rate and a pause on collection actions.)

Borrowers with Perkins Loans held by entities other than the Department of Education and nondefaulted HEAL loans also weren't covered. Private student loan borrowers didn't get relief either.

The federal student loan payment pause that started at the beginning of the COVID-19 pandemic has ended. Interest started accruing on September 1, 2023, and payments were due in October 2023.

But after the U.S. Supreme Court struck down President Biden's debt cancellation plan for federal student loans (not private ones), the administration introduced a 12-month "on-ramp" repayment program. Beginning October 1, 2023, and for a year after that, the Education Department won't report borrowers who miss payments to the credit bureaus, consider them delinquent, place them in default, or refer them to debt collection agencies. But interest will accrue.

In addition, the Biden Administration announced that, in February 2024, it would start canceling federal student loan debts for anyone who initially borrowed $12,000 or less and has been in repayment for at least 10 years if they first enroll in the SAVE income-based repayment plan. The timeframe for loan forgiveness increases by one year with each additional $1,000 of debt. So, for example, a student who took out $14,000 in loans would have their debts canceled if they've been making payments for 12 years. It doesn't matter what repayment plan or plans you previously had, so long as you were actively repaying your loans and are enrolled in the SAVE plan. In the future, the Department of Education will continue to identify and forgive the loans of eligible borrowers on an ongoing basis.

However, on March 28, 2024, eleven Republican-led states filed a federal lawsuit arguing that President Biden overstepped his authority in creating the SAVE Plan.

Assistance for Private Student Loans and Nondefaulted Commercially-Held Federal Loans

Because the suspension under federal law didn't cover private student loans or nondefaulted commercially-held federal loans, some states filled this gap. California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, New York, Vermont, Virginia, and Washington, as well as the District of Columbia, all reached agreements with specific student loan servicers to offer forbearances of at least 90 days for private student loans and commercially-held federal loans. As part of the agreements, servicers also consented to waive late fees, temporarily stop negative credit reporting, and pause debt-collection lawsuits.

Other states temporarily suspended wage garnishment actions or suspended all collection actions on debts, including student loans.

But, again, most of these agreements have since ended.

What Should I Do If My State Is Not Offering Student Debt Relief?

If you live in a state or have a servicer not part of a student loan agreement (or the deal has expired), private student loan lenders typically offer assistance options, like short-term forbearances, fee waivers, lower interest rates, and interest-only payments. Contact your servicer to find out what alternatives the lender offers. Before agreeing to a particular relief option, verify the terms, such as whether you'll have to pay fees and how long the program lasts. Ensure you get this information in writing before enrolling in the program. Then, get confirmation that you're enrolled.

Also, be aware that if you have good credit, you might be able to refinance your loans with a new lender. If you can lower your current interest rate, you might be able to save a substantial amount of money. Your new lender might also offer more alternatives than your current lender if you eventually have trouble making the payments.

How to File a Complaint or Get Further Assistance

If you have a complaint about a student loan servicer, contact your state Attorney General's office and the Consumer Financial Protection Bureau. Also, your state could have a consumer protection office, department of banking, or student loan advocate (typically called an "ombudsman") who might be able to help you.

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