The United States Public Interest Research Group announced Tuesday that a newly announced agreement will protect the finances of millions of Americans who owe money on student loans.
Last month’s CARES Act put all federally held student loans into forbearance through September, ended collections and other actions against defaulted borrowers, and stopped the accrual of interest; however, these benefits were not extended to borrowers whose loans are held by private lenders.
To protect those former students, leaders from California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, Vermont, Virginia, and Washington worked with private lenders.
At least 14 state and private lenders have agreed to help struggling borrowers, including:
- 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)
- Navient Corp.
- Nelnet, Inc.
- New Jersey Higher Education Student Assistance Authority (HESAA)
- SoFi Lending Corp.
- Tuition Options, LLC
- Utah Higher Education Assistance Authority (UHEAA)
- Vermont Student Assistance Corporation (VSAC)
Private servicers have announced the following benefits to their borrowers, generally in line with the provisions for federal loan borrowers in the CARES Act:
- Providing a minimum of 90 days of forbearance relief;
- Waiving late payment fees;
- Ensuring no borrower is subject to negative credit reporting;
- Ceasing debt collection lawsuits for 90 days; and
- Working with eligible borrowers to enroll them in other applicable assistance programs.
Abe Scarr, Illinois PIRG director, issued the following statement in response:
“We thank Governor Pritzker and IDFPR Secretary Hagan for securing this much-needed relief for student loan borrowers. Many Illinois residents were struggling to afford payments even before this pandemic, and rising unemployment is going to push many more into default. This agreement takes a big step towards providing relief to borrowers with privately held loans who the CARES Act didn’t help, but private loan servicers need to do more.
“To better provide relief to borrowers, forbearance and other benefits should be automatically applied to all loans. The high demand for payment relief will crash already-overwhelmed customer service staff at these lenders and result in borrowers being unable to access relief. We urge private lenders to follow Congress’ lead and make forbearance automatic and stop interest from accruing, and call on students’ alma maters to offer relief to students with Perkins loans.”