Written by Adam Minsky in Forbes on April 23, 2020
A few weeks ago, Congress passed the CARES Act, which suspends interest, payments, and collections on government-held federal student loans. The CARES Act was passed due to the ongoing Coronavirus pandemic and the associated economic downturn. The payment suspension is automatic and lasts through September 30, 2020.
While the CARES Act provides significant relief to millions of student loan borrowers, many student loan borrowers are left out. The CARES Act student loan provisions only apply to federal student loans held by the U.S. Department of Education.
A new bill could change that. The Equity in Student Loan Relief Act would expand the provisions of the CARES Act to apply to FFEL-program federal student loans held by private lenders and guaranty agencies. It would automatically suspend payments, interest accrual, and collections on all FFEL-program student loans through September 30, 2020 — just like the provisions under the CARES Act for government-held federal student loans. This would be accomplished by the U.S. Department of Education entering into agreements with FFEL-program lenders to cover payments.
The bipartisan bill is sponsored by Congresswoman Elise Stefanik (R-NY) and co-sponsored by Rep. Lori Trahan (D-MA-3), Rep. Lloyd Smucker (R-PA-11), Rep. Alma Adams (D-NC-12), and Rep. Susie Lee (D-NV-3).
According to Rep. Stefanik’s office, “The Equity in Student Loan Relief Act directs the Department of Education make the interest payments for FFEL borrowers and enter into agreements with the current holders of FFEL loans to suspend student loan payments obligations, as well as cease all involuntary collections, through September 30, 2020. As provided for federally held loans in the CARES Act, each month a loan payment is suspended will still be counted as a payment for the purposes of loan forgiveness programs. The participating holders will notify borrowers of the changes within 15 days and provide at least six notices prior to the return to normal payment obligations.”
The bill has not become law yet. Furthermore, the Equity in Student Loan Relief Act does not provide relief for private student loan borrowers.
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