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Do You Have To Keep Paying Your Student Loans During The Coronavirus Pandemic? It's Complicated.

Congress passed a law suspending payments on federally held student loans until Sept. 30, but whether your loans qualify is tough to answer on your own.

Last updated on April 20, 2020, at 12:20 p.m. ET

Posted on April 6, 2020, at 6:04 p.m. ET

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A US flag flies above a building Pasadena City College's commencement ceremony last year.

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WASHINGTON — Last month, President Donald Trump signed a bill to provide relief for struggling Americans and businesses during the coronavirus pandemic. As part of that law, all borrowers with federally held student loans will get a six-month reprieve from payments through Sept. 30, as Americans lose wages and already roughly 10 million people have filed for unemployment, a staggering all-time high in US history.

However, not all federal student loans are covered by the law, despite Democratic efforts to include all of them. Figuring out whether your loans are affected isn’t easy.

Like the rest of the law, the student loan provisions were written quickly, and many lenders have not yet updated their policies to comply with it or informed borrowers of whether they are covered (they have until April 11 to do so). BuzzFeed News has heard from dozens of borrowers in the past few days whose lenders have yet to provide guidance, and some major federal loan servicers are still working to update the correct information on their websites. Student loan servicer phone lines were already bogged down with desperate borrowers who have lost jobs or wages, and questions about the new law have only exacerbated those wait times.

If you are confused, you are not alone. Several education advocates and congressional staffers who work on education issues spoke to BuzzFeed News and acknowledged the difficulty for individual borrowers to figure out if they will get benefits under the new law, with one congressional staffer saying even they had struggled to see if their loans qualified. “It’s incredibly confusing and a problem that borrowers do not need right now,” a senior Democratic staffer said.

Here is a guide to some commonly asked questions about what loans qualify for suspended payments under the law and what borrowers can expect. These answers are meant to help borrowers figure out what is going on with their loans and what that law requires. For more information, contact your lender and/or the US Department of Education. You can also read the department’s official guidance on federal student loan relief during the coronavirus pandemic.

What does the law do?

All borrowers with federally held student loans (see below) will not have to make payments on their loans through Sept. 30. The law is retroactive to March 13, so any borrowers who have made payments since then can get them refunded. The Department of Education recommends calling your lender directly to get that refund.

During the six-month relief period, your federal loans will be put in “administrative forbearance” — but that’s not the kind of forbearance you may be used to. It means that the Department of Education is putting your payments on hold, not you, so you will not accrue new interest and not paying can’t affect your credit, the total forbearance limit you have left on your loans, or your qualifications for student loan forgiveness or a loan rehabilitation program (if you had defaulted). In other words, your lender has to treat your loans as if you’ve been paying the whole time (though your principal balance will remain the same).

Additionally, if you have defaulted on a federally held student loan, you will no longer face having your tax refund withheld, your wages garnished, or social security payments withheld through Sept. 30. If you had those payments taken from you on or after March 13, you are entitled to a refund (see more below).

Do my loans qualify?

All federally held student loans qualify under the law, but commercially held Federal Family Education Loans (FFEL) and Perkins loans owned by your school do not. That means the vast majority of federal student loans issued after June 2010 (when the government stopped issuing FFEL loans) will qualify, according to the Consumer Financial Protection Bureau. If you took out loans before that, they may or may not qualify. What you need to determine is whether your loans are “federally held.”

The National Consumer Law Center estimates that 9 million borrowers with federal student loans will not qualify under the law, either because their loans are commercially held or they are Perkins loans that are owned by their school.

There are, however, two recent exceptions that will affect some borrowers: The University of California system has granted the same relief (no payments through Sept. 30, 0% interest, and no fees) to all borrowers who took out loans from the UC system. You can learn more about that here. And New York state came to an agreement with several major student loan companies in early April allowing New Yorkers to request 90 days of forbearance on commercially held FFEL loans and private student loans. The state estimates 300,000 New Yorkers will qualify and you can find more information here.

So how do I know if my loans are “federally held”?

The question of whether your loans are federally held isn’t easily answered. Generally speaking, it’s not a particular type of loan or even which lender you have, and it’s not something you can easily look up. Borrowers basically have two options: You can call your lender and ask them, or you can call the Department of Education and have them look it up for you.

As many student loan lenders already have outrageous wait times right now, I called the Department of Education to ask about my own federal loans on Wednesday (say “agent” from the main menu to get connected with someone). Your question should be something like: “I want to know whether my federal student loans are still federally held.” If you have multiple federal student loans, make sure to ask about each of them.

Another option that may work: Borrowers can log into StudentAid.gov using their Federal Student Aid ID (you can get one from the Department of Education here if you don’t have one). Once you have that account set up, you can go to your profile and select “My Aid.” At the bottom of that page (stick with me here), it will say “Loans Serviced By” with the name of your lender. If that name begins with “DEPT OF ED/,” your loans are federally held and you qualify for suspended payments. If not, you should double-check with your lender.

If your loans are federally held, you qualify for suspended payments through Sept. 30 and will not have to pay or accrue any interest until then. If your federal loans are now commercially held, this law does nothing for you. You can contact your lender for information on your other options.

Graeme Sloan / Sipa USA via AP

A general view of the US Department of Education as seen in Washington, DC on March 30.

What about Direct Parent PLUS loans, do they qualify?

Yes, as long as they are federally held.

What about private student loans?

No, private student loans do not qualify. If you have trouble paying, contact your lender for options.

However, New York state came to an agreement with several major private student lenders in early April to allow New Yorkers to request 90 days of forbearance from their lenders. The plan also waives late fees. The state estimates that 90% of private loans in New York will be affected. The state has more information for borrowers here.

How do I figure out who my lender is?

If you don’t know who your student loan servicer is, you can contact the Department of Education.

Do I have to request that my lender suspend payments for my loans?

No, it will happen automatically if your loan qualifies. If you made a student loan payment on a federally held loan on or after March 13, you can ask your lender to refund it.

What about the interest rates on my federal student loans?

The Department of Education has set all interest rates on federally held student loans at 0% from March 13 through Sept. 30. During that time no new interest will accrue, including on defaulted student loans (as long as they are federally held). If you have outstanding interest that you haven’t paid off (from prior to March 13), that will not capitalize — meaning it will not be added to the balance of your loan, the Department of Education told BuzzFeed News. You’ll just have to pay your regular interest again after Sept. 30.

If you decide to make payments during this six-month period, they will first go toward paying off any accrued interest you have and then will be applied to the principal of your loan.

I haven’t heard anything from my lender. What’s going on?

Lenders have 15 days after the law was signed (so April 11) to inform borrowers about the payment suspension. The Department of Education has instructed lenders to notify all borrowers a day earlier, by Saturday, April 10.

Can I consolidate my federal loans to qualify for suspended payments?

Yes, for some borrowers, BUT it may not be the right solution for a few reasons. Consolidating loans typically takes 30 to 90 days, Joanna Darcus, an attorney with the Consumer Law Center told BuzzFeed News, so it may not provide the immediate relief some borrowers need.

But there can be more serious ramifications, including the possibility of borrowers having to pay higher interest rates than they do currently once the 0% interest ends in October. And if you have any accrued interest, which is interest on your loans that you had not paid prior to March 13, it will capitalize — in other words, it will be added to the balance of your loan, giving you a bigger balance to pay off (and more to pay interest on going forward). And for people who are on income-driven repayment forgiveness plans or who have been making payments toward Public Service Loan Forgiveness, Darcus warns, they’ll lose credit for the months they’ve already paid and have to start over.

“Some of them can consolidate and some of them will be consolidating to their detriment,” Darcus said.

Alexis Goldstein, a senior policy analyst for Americans for Financial Reform, agreed. “I don’t think that we would recommend that people consolidate,” she said.

What if my tax refund was already taken/my wages were garnished/my Social Security benefits were withheld?

The law is retroactive to March 13, so if you had your tax refund withheld, wages garnished, or Social Security benefits withheld “on or after March 13” because of a default on your federally held student loan, it will be returned to you, according to the Department of Education. If the money was taken prior to March 13, you will not get it back. The Department of Education recommends calling its Default Resolution Group at 800-621-3115 with additional questions.

Democrats have asked for relief for tax refund withholdings to go all the way back to the beginning of the 2020 tax season in January, but they have so far been unsuccessful in that push.

What if I’ve been sent to a collections agency for a defaulted student loan?

It should stop: The Department of Education has asked all private collections agencies it contracts with to stop all collections calls and mailers as well as auto-debits for federally held student loans through Sep. 30.

How is my credit affected?

Your credit score cannot be affected if you have a federally held student loan and your payments are suspended. Your lender has to treat your loans as if you paid on time each month during that period.

How is loan forgiveness affected?

If you have a federally held student loan and your payments are suspended, you will not lose credit for not paying through Sept. 30 — your lender has to treat your loans as if you paid on time each month during that period.

What about the guidance I’m getting from MyFedLoan?

Just to be clear: MyFedLoan is not the Department of Education, despite its name. It is one of the largest federal student loan servicers in the country. Several readers have written in with questions about the guidance on MyFedLoan’s website, which appears to have been updated over the weekend. Like many other federal student loan servicers, the company has said it is working with the Department or Education to update its guidance for borrowers.

How does this affect the recertification schedule for my income-based repayment?

If you are on an income-based repayment plan and you have an upcoming recertification (i.e., when you have to tell the government how much money you make), it will be delayed until after Sept. 30, the Department of Education told BuzzFeed News.

Caroline Brehman / Getty Images

Sen. Patty Murray speaks with reporters after a news conference in the Capitol on March 3.

Why aren’t my loans covered?

The US government has treated all federal loans the same for relief programs in the past “including during disasters so it’s a pretty glaring omission,” said Goldstein, of Americans for Financial Reform.

Earlier drafts of the CARES Act prepared by Senate Republicans also did not include commercially held FFEL and Perkins loans held by schools in the relief program, and while Democrats pushed to broaden the relief to all federal loans, they were unsuccessful. Both Darcus and Goldstein, among other student advocates, are pushing to expand the benefits as well. “All of those folks had no choice in whether their loan is held by the Department of Education,” said Darcus, of the Consumer Law Center.

Washington Sen. Patty Murray, the top Democrat on the Senate Education Committee, told BuzzFeed News in a statement that she would continue pushing to extend the student loan relief to all federal borrowers.

“Congress provided assistance to some student loan borrowers in our last relief package, but as I've made clear, it wasn’t nearly enough and this added confusion is completely unnecessary. I will keep pushing to make sure that every student in this country has the support and resources they need to recover from this crisis,” she said.

Asked whether the Senate would consider a variety of proposals to provide student loan relief to more borrowers, a spokesperson for Senate Majority Leader Mitch McConnell referred questions about why other federal loans were not included to the Education Committee. A Republican spokesperson for the committee did not respond to a request for comment.

House Democrats had proposed a separate bill that would have included relief for borrowers all student loan borrowers. A spokesperson for House Speaker Nancy Pelosi told BuzzFeed News on Friday that their next coronavirus bill “is likely to” extend the 0% interest rate to all federal student loan borrowers (including those with commercial FFEL and Perkins loans). Whether that provision will pass the House and Senate — and when — remains an open question.

I read about a plan for the Department of Education to pay $10,000 toward my loans. What happened with that?

That was also a Democratic proposal that has not passed either chamber of Congress. Democrats in the House and Senate have both proposed having the Department of Education pay people’s federal student loan payments for them each month during the coronavirus national emergency up to a minimum of $10,000 per borrower. Both the House and Senate proposals would cover all federal student loans (federally held or not), though the House’s plan goes further and would require the Department of Education to make payments on people’s private student loans as well.

Asked about those proposals, a Pelosi spokesperson would only confirm that House Democrats will likely expand the 0% interest rate provision to all federal student loan borrowers in their next coronavirus relief package, and that “other measures are under consideration for inclusion.”

Republicans have not agreed to the $10,000 proposal and neither spokespeople for McConnell nor Alexander responded to questions about whether they would support that plan.

What if I encounter other issues or questions?

You should contact your lender or the Department of Education (see the department’s guidance here). Both Goldstein and Darcus encouraged borrowers who run into issues or are not covered by the law to contact their members of Congress as well.

“This is a problem, and the only way we’re going to get it fixed is [pressure],” Darcus said, adding that a lot of people who think they are covered by the new law will soon figure out that they're not. They don’t know that they should be “doing some self-advocacy here,” she said.

UPDATE

This story was updated after New York state and the University of California system took steps to offer student loan relief.


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