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The University Of California Will Suspend Payments On Student Loans That It Holds Through Sept. 30

The UC system is also setting interest rates on its loans at 0% through the end of September, extending relief to borrowers left behind by Congress.

Posted on April 20, 2020, at 12:16 p.m. ET

Robyn Beck / Getty Images

A student walks toward Royce Hall at UCLA, March 11.

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WASHINGTON — The University of California is suspending student loan payments for some alumni of the massive state public university system during the coronavirus pandemic, allowing thousands of borrowers who were left behind by a law passed by Congress last month to take nearly six months off of payments.

Borrowers who took out student loans from the UC system will no longer have to make payments on their loans from April 15 through Sept. 30. This includes federal Perkins loans (a needs-based loan program that ended in 2017), California DREAM Loans (for undocumented students), and other institutional loans that were borrowed from the UC system.

Through Sept. 30, all UC system loans will have 0% interest rates and won’t have any penalties, fees, or collections for nonpayment. The system contacted borrowers through their loan servicer about the move on April 15.

The move lines up with benefits from the CARES Act, passed by Congress in March, which canceled payments and set a 0% interest rate for federally held student loans through the end of September. But that law left behind borrowers with some other types of federal and institutional loans, so the UC system decided to “provide some similar relief” for its own borrowers, Shawn Brick, University of California systemwide director of student financial support, told BuzzFeed News Friday.

“Our intent with this was to make sure that we did all that we could to level the playing field for students,” Brick said, estimating that $140 million in loans taken out by about 40,000 UC alumni will qualify for suspended payments. “This is small in comparison to the direct loan program,” he said, but UC wanted to extend relief to borrowers whose loans they have control over given the coronavirus pandemic.

As with federally held loans affected by the CARES Act, the UC system is putting loans in administrative forbearance. That means that not paying will not affect a borrower’s credit.

Private student loans, commercially held federal loans, and other loans that were not taken out from the UC system will not be affected. (See our guide on how to know if you qualify for federal student loan relief and what “commercially held” and “federally held” actually mean here.)

Borrowers will have to opt in to put their loan payments on hold, but Brick said anyone who misses payments during this period will have their loans automatically put in administrative forbearance and there’s no penalty for doing so. The reason the system decided to have borrowers opt-in, Brick said, is to avoid the “hassle” of having to set up automatic payments again for people who want to continue paying off their loans during this 0% interest period. The UC system plans to contact borrowers who take advantage of the suspended payments in September about reconnecting automatic payments.

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