By Raymond AlQaisi, Policy and Advocacy Manager, and Zenia Henderson, Director of Member & Partner Engagement
Update Dec. 4, 2020: The U.S. Department of Education extends the current relief of payment, interest-accrual, and defaulted-loan collections for federal student loan borrowers through January 31, 2021. Please read the Education Department's press release.
Following the federal government’s declaration of a national emergency due to the COVID-19 pandemic in March, the Department of Education (ED) responded quickly to provide relief to federal student loan borrowers. Borrowers with loans held by ED had their loan payments and interest accrual suspended;
and ED also halted collections on defaulted loans. Though the March enactment of the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act) initially offered the relief until Sept. 30, 2020, action since taken by the president extended relief until Dec. 31, 2020.
As we approach the relief’s expiration date, and devastating economic effects persist due to an unabated spread of the coronavirus, NCAN knows this is a particularly difficult time for our member-served students who are currently in repayment on their
federal loans. This is evident in recent research published by the Pew Charitable
Trusts that found roughly 6 in 10 borrowers surveyed, who are currently benefiting from relief, said they would have difficulty affording payments if there were an immediate restart.
In advising students on this matter, NCAN encourages our member programs to create a plan to communicate three crucial messages to students.
Students should check their student loan accounts through their servicer to find out when their first payment is due. Loan servicers may already be updating payment due dates based on the expected relief expiration date.
Students should consider their options for requesting additional forbearance directly with their student loan servicer, if they are unable to make their payments, or to consider what kind of repayment plan works best for them.
Students should do what their lender indicates to do, as opposed to listening to any speculation or news about what could happen at the federal level from either the current or incoming administration. You can read more about this topic in this article from CNBC.
The expiration of federal student loan payment relief also presents challenges for the student loan servicers who assist borrowers in their repayment. The millions of borrowers who may require assistance could overwhelm servicers who need to ensure the
operational capacity to manage inquires and requests.
To address these issues, NCAN recommends the continuity of the current policy of “no payment, no interest” for federal student loan borrowers during this time of instability. Specifically, NCAN urges Congress and the current administration to act immediately to
address the relief’s expiration and provide an extension of relief for federal student loan borrowers until the national emergency is declared over.
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