Attorney General Denise George, along with several attorneys general throughout the nation, is urging the U.S. Senate to provide relief for all federal student loan borrowers impacted by the COVID-19 pandemic.
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) currently covers only federal student loans owned by the federal government, excluding nearly 8 million borrowers whose federal student loans are owned by private entities.
AG George joined a bipartisan coalition of 29 attorneys general, in urging the U.S. Senate to pass a new relief bill that would give parity to all federal school loan borrowers. The coalition is led by Chicago Attorney General Kwame Raoul and Alaska Attorney General Kevin Clarkston.
In March 2020, Congress passed the CARES Act, which provides financial relief for Americans impacted by the global pandemic, including student loan borrowers. Under the CARES Act, student loan borrowers do not have to make payments and interest will not accrue on their loans through Sept. 30, 2020. The CARES Act also suspends involuntary collection activities and negative credit reporting through Sept. 30, 2020. While this relief is critical, the student loan protections in the CARES Act apply only to federal student loans held by the federal government.
“During these difficult and uncertain financial times due to the pandemic, many student loan borrowers in the Virgin Islands and abroad struggle to pay their bills. However, they cannot get CARES Act protections for those student loans that are owned by private lenders,” said Attorney General Denise George. “Student loan borrowers should not have to choose between paying their loans and buying necessities, regardless of the type of school loans they have. So, we are urging the U.S. Senate to pass legislation that would bring parity by extending the protections in the CARES Act to all student loan borrowers.”
Nearly 8 million federal student loan borrowers have Perkins loans that are held by schools, or Federal Family Education Loan Program (FFEL) loans that are held by financial institutions. While the federal government supports or guarantees these loans against default, borrowers were denied CARES Act relief. As a result, these borrowers are struggling with the pandemic just as other federal student loan borrowers are, but do not have relief options under the CARES Act solely because of the entity that owns their loan.
The attorneys general coalition urges the Senate to provide the same relief currently available to borrowers whose federal student loans are owned by the federal government, including a temporary suspension of payments, a (zero) 0 percent interest rate and the suspension of involuntary collections. The coalition also calls for the relief measures to apply retroactively if borrowers have already made payments.
In addition, recognizing that the effects of the pandemic will be long-lasting, the coalition calls on Congress to implement longer-term solutions for struggling borrowers. Such measures include extending the temporary suspension of payments past Sept. 30, 2020 and requiring student loan servicers to evaluate borrowers for income-driven repayment plans once they resume payments.
Joining AG George, AG Raoul and AG Clarkson in the letter are the attorneys general of California, Colorado, Connecticut, Delaware, the District of Columbia, Guam, Hawaii, Idaho, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Wisconsin.