Attorney General Peter F. Neronha announced today that his Office has issued guidance to student loan borrowers on the new protections available to them during the COVID-19 pandemic. More than 130,000 Rhode Islanders owe more than $4.5 billion in student loan debt. The COVID-19 pandemic has compounded these challenges for those who were already struggling to keep up with their loan payments.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act recently passed by Congress provides federal student loan borrowers with certain forms of relief.
“People are suffering right now. Student loan payments can exacerbate an already stressful situation, especially if people find themselves out of work because of this crisis,” said Attorney General Neronha. “Our Office is working to make sure that people know about the protections that are available to them. Our consumer protection team is ready to assist borrowers with any dispute resolution issues they might encounter.”
The following measures last until September 30 and are retroactive to March 13 for federally held student loans:
Payment postponement: Borrowers with federally held student loans will automatically receive a six-month forbearance, retroactive to March 13. The Department of Education has indicated that any auto-debit payments, or voluntary payments made during this period, can be refunded. Contact your loan servicer to request that your payment be refunded.
Interest waiver: For the same six-month period, no new interest will accrue on federally held student loans.
Collection activities: All collection activities on eligible federal student loans, including wage garnishment and reduction of tax refunds and other governmental benefits, are suspended until September 30.
No negative credit information will be provided to Credit Reporting Agencies during the suspension period in connection with eligible loans. Servicers are not permitted to report suspended payments as “late” or “missed” payments.
Loan forgiveness program or loan rehabilitation program: Even though a borrower’s loan payment is suspended, each month will be counted as a qualifying payment.
While the CARES Act does not provide relief for non-federal loans, many holders and servicers are offering additional relief options on a voluntary basis. Borrowers should contact their servicer to find out what options are available.