One of the most talked about aspects of the new Coronavirus Relief Bill is the fact that many student loan borrowers will get a much needed break when it comes to paying back their debt. The $2 billion coronavirus stimulus bill, which was passed by Congress and signed by President Trump on March 27, states that all payments for federal student loans held by the federal government — also known as direct loans — will be suspended until August 31.
But those rules only apply to a subsection of all student loans in the United States. As The New York Times reports, “older Federal Family Educational Loans (F.F.E.L.) that the U.S. Department of Education does not own are not eligible, nor are Perkins loans, loans from state agencies, or loans from private lenders.”
Advocates and experts on student loan debt worry that the lack of clarity about which loans the bill applies to may lead many to skip payments they are still responsible for. “I have a huge concern about borrowers being confused about their relief options, especially borrowers with private student loans or who have commercially held student loans,” Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, told Supermajority News. “I worry about these borrowers who are in good standing, possibly accidentally not making payment.”
Yu suggests that readers who are uncertain about which category their loans fall under log into the official website for Federal Student Aid to see how their loans are classified. Those who find they have privately held federal loans should see if their lenders are offering similar relief options for borrowers. “Private lenders can choose to offer many of these options, and I think they should,” said Yu.
American women and people of color in the United States are more likely to have student debt, which means they are more likely to be struggling with paying off their loans during the coronavirus outbreak. Nontraditional students, like those who returned to school while also raising families, face heightened challenges. “This is definitely an issue that affects women and people of color much harder,” said Yu. “Especially right now while schools are closed and childcare programs are closed. Parents are being hit really hard.”
The relief bill also grants student loan borrowers who are currently in default with their federally held loans a temporary abatement from getting their wages, tax refunds and federal benefits garnished by the government if they filed their tax returns after March 15.
“There were some missed opportunities for immediate relief. We’d like them to return the money from anyone who filed in 2020,” who would have had part of their refunds garnished, said Yu, adding that many of those borrowers filed early because they need their refunds or earned income tax credits. “All borrowers need that money right now.”