Private Student Loan Relief Announced for Borrowers in Multiple States During the Coronavirus Outbreak
Borrowers in multiple states—California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, Vermont, Virginia, and Washington state—who have private student loans and are affected by COVID-19 can get payment relief under a recent agreement.
Illinois Governor J.B. Pritzker has coordinated a multi-state agreement with over a dozen loan servicers to provide assistance to borrowers with private student loans who aren’t covered by the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act applies to Direct Loans, as well as FFEL loans, but only those FFEL loans that are owned by the U.S. Department of Education—not FFELs that are owned by other entities. Borrowers with private student loans and Perkins Loans held by entities other than the Department of Education also don’t get relief under this federal law.
Under the multi-state agreement, however, borrowers in ten states who have private student loans and commercially-held federal loans can postpone making their payments for three months.
What States Are Included in the Agreement?
This agreement provides relief for borrowers in the following states:
What Kind of Relief Is Available?
Under the agreement, borrowers who are impacted by COVID-19 can get a 90-day forbearance on payments and a waiver of late payment fees.
Also, the servicer has to:
report any missed payment that’s subject to forbearance or another repayment accommodation to the credit reporting bureaus as current
cease debt collection lawsuits for 90 days, and
work with eligible borrowers to enroll them in other applicable borrower assistance programs, like an income-based repayment plan.
Don’t just stop making your payments, though. Borrowers have to contact their student loan servicer to get relief. This requirement is a major difference between the multi-state agreement and the CARES Act. (Under the CARES Act, payment suspensions are automatic.)
Which Servicers Are Providing Relief to Borrowers?
The following servicers are currently included in the agreement (additional servicers may sign on later):