Student Loan Borrowers Can Breathe a Sigh of Relief, At Least Temporarily

MEGAN PENICK
MARCH 19, 2020

More than 42M borrowers have been granted at least a two-month reprieve from making payments on their student loans. President Donald Trump announced today that he will allow the nation’s student loan debtors to temporarily halt monthly payments, without incurring interest or penalties. The 60-day period is subject to extension.

Michelman & Robinson is monitoring all of the administration’s coronavirus-related moves. Here we break down the student loan relief.

Q. How do I obtain the 60-day reprieve?
A. First, it must be understood that the suspension of payments does not erase any given borrower’s debt; the President’s announcement will not lower a borrower’s payments; and the two-month relief from payments is not automatic. Borrowers holding federal loans must make a request that their loans be put in forbearance by contacting their loan servicers, such as Navient, Nelnet, FedLoan Servicing or Great Lakes, over the phone or online. Ordinarily, loans in forbearance accrue interest; however, that will not be the case here—at least over the next 60 days—under the new temporary policy.

Q. What if I’m already behind on my student loan payments?
A. For borrowers who are already more than a month behind on their monthly loan payments, the Trump administration will automatically apply the 60-day suspension.

Q. Might there be any other student debt relief in the foreseeable future?
A. Yes and perhaps. In the short-term, the Department of Education said that interest rates on all federally held student loans will be reduced to zero until at least May 12. Also, Congress is debating student debt relief as part of negotiations over it’s pending (and massive) coronavirus stimulus package. In its current form, Senate Majority Leader Mitch McConnell’s plan would allow the Education Department to suspend student loan payments for as long as six months. For his part, Senate Minority Leader Chuck Schumer has called for canceling student loan payments made by borrowers during the national emergency, and he wants to guarantee borrowers at least $10,000 each in total loan forgiveness.

Q. Does the President’s student loan announcement impact loan forgiveness?
A. Anyone that is seeking Public Service Loan Forgiveness (PSLF) may think twice about suspending their monthly payments because if they go into forbearance for the next two months, it will take them two months longer to qualify for loan forgiveness.

We will continue to report the coronavirus-related happenings in and out of Washington, D.C. that could impact you. In the meantime, remember that the attorneys at M&R are here to assist with any coronavirus-related business issues you may be facing.

We are working diligently to keep our clients up to date on coronavirus-related developments. Nevertheless, these developments are changing daily and, in some cases even hourly, so it is important that you make sure you are dealing with the most current information. That being said, this alert is not offered, and should not be relied on, as legal advice. You should consult an attorney for guidance and counsel regarding any specific concern or situation.