President Trump signed a bill providing financial relief for Americans struggling in the wake of the coronavirus shutting down all non-essential businesses. Part of that bill granted a six-month suspension period on federal student loan payments until September 30th. However, not all federal loans are included in the bill and loan providers are not adapting their policy quick enough. These lenders are working on a skeleton staff, and those who can be reached have a long hold period before borrowers can get answers. Lenders only have until April 11 to inform borrowers about the opportunity.
Democrats are pushing to reduce the amount of qualifications for borrowers seeking relief from their federally held student loan payments. This bill is intended to grant immunity to borrowers who would otherwise default on their loans and face consequences like wage garnishments, frozen bank accounts, or withholding tax refund. Those who are currently having funds removed due to defaulting on their student loans should have the funds released if they were taken after March 13th. Collection agencies should be prevented from calls or mail to borrowers with defaulted student loans, yet it’s more than likely that this order by the Department of Education will be ignored.
The bill would also prevent an interest occurring on the loan as it usually would when a borrower goes into forbearance. Loans that are not federally held include private loans, loans from Federal Family Education Loans, and Perkins loans, to name a few examples. According to the National Consumer Law Center, an estimated 9 million borrowers will not be able to seek relief under this bill. The bill is intended to treat student loan relief as relief packages for natural disasters. Democrats like Sen. Patty Murray on the Senate Education Committee told Buzzfeed News that she will continue to fight for the bill to expand coverage for all federal borrowers.