Student Debt Relief During COVID-19

Millions of Americans' economic security is being threatened due to this crisis. During this difficult time no one should have to worry about going into default or making additional sacrifices to make their student loan payments. The federal emergency relief bill (the CARES Act) suspends payments and interest accrual for federal student loans through September 30th. 

I've called on the Department of Education to cancel monthly student loan payments for the duration of the national emergency, and to cancel $10,000 in student loan debt for all federal student loan borrowers. Read the letter here.

While I'm proud the CARES Act provides much needed relief for federal student loan borrowers, we must do more for the millions of Americans with private student loan payments. We must cancel all student loan payments and halt interest accrual for the duration of this crisis. As we work to address the debt crisis and immediate needs of American families during this pandemic, I will also continue to fight to make college accessible and affordable, and to cancel all student loan debt in the United States. 

What You Need to Know about Debt Relief in the Federal Stimulus Package:

• The CARES Act defers student loan payments for all federally held loans for 6 months, from March 13th to September 30th. 
  • No interest will accrue on the loans during this time period.
• Involuntary collection for defaulted loans is suspended.
• Negative credit reporting is suspended.
• Borrowers will continue to receive credit toward loan rehabilitation and loan forgiveness programs, such as the Public Service Loan Forgiveness program, Teacher Loan Forgiveness program and Income-Driven Repayment Forgiveness program.

Vermont's Response:

On April 21st, the State of Vermont announced a multi-state initiative to secure student loan relief options for Vermonters with privately held student loans. The Vermont Student Assistance Corporation (VSAC) had already extended relief options to their borrowers. I applaud the efforts of VSAC and the Vermont Department of Financial Regulation to help all student loan borrowers during this unprecedented time. This example must be followed on a national level to help the millions of borrowers struggling under student loan debt. Read the full press release about this initiative here.

How to Receive Relief on Your Student Loans:

• If you have federal student loans, your servicer will suspend interest and payments with no action required from you.
• If you have private student loans, call your lender or servicer to identify the options available to you. Your lender's contact information should be on your monthly billing statement.
  • If you are a Vermonter with private student loans, Vermont's student loan relief initiative should provide relief on your loans as well.
  • If you are having difficulties with your servicer, call the Vermont Department of Financial Regulation at 888-568-4547 or email dfr.bnkconsumer@vermont.gov
• If you have VSAC loans, call 800-798-8722 for assistance. Learn more here: https://www.vsac.org/covid-19-updates-ways-vsac-can-help

Frequently Asked Questions:

I don't know what kind of loans I have. How do I find out if I qualify for this relief?

Contact your loan servicer to determine if your loans are eligible.

If you do not know who your servicer(s) is (are) or how to contact them, visit the Department of Education's Federal Student Aid website: https://studentaid.gov/ or call their information center at 1-800-433-3243.

Will I receive confirmation from my servicer that interest and payments on my loans have been suspended? 

Servicers are required to send borrowers written notification explaining the suspension of interest and monthly payments. Notices should have been sent by servicers around mid-April. To ensure you receive the notification, provide your servicer with your up-to-date contact information. 

What types of student loans are excluded from federal relief provided by the CARES Act?

• Older Federal Family Education Loans (FFEL) held by commercial lenders
• Institution/school based Perkins loans
• Private student loans 

What if my loans are in default? 

If your federal student loans are in default, the U.S. Department of Education will not attempt to collect on your loans for six months. During this time no money will be withheld from federal income tax refunds, Social Security benefits, or other federal payments. This includes the $1,200 economic impact payment provided to qualifying individuals through the CARES Act.

Interest will also be held for federally-owned loans that are in default through September 30th, 2020.

If you are rehabilitating a defaulted student loan, any missed payment due to the coronavirus pandemic will not be considered a missed payment against rehabilitation. 

For all other defaulted loans, contact your loan holder to learn about your options. 

What if my wages are garnished due to collection on my student loans? 

Wage garnishment is prohibited between March 13th and September 30th. The U.S. Department of Education will be contacting employers instructing them to stop changing borrowers' paychecks. If your wages continue to be garnished after March 13th, contact your employer's human resources department. 

What if my loans are excluded and I cannot make payments?

Due to the Vermont state initiative to provide debt relief, if you are a Vermonter with a privately held loan, contact your lender to identify the options available to you. 

If you have a FFEL or Perkins loan, you may want to consider income-driven repayment plans. If you are already enrolled in an income-driven repayment plan, but are experiencing a change in income, ask your servicer to recalculate your monthly payment.

• You may also want to consider consolidating your loans into a Direct Consolidation Loan, which would make you eligible for the federal debt relief provided in the CARES Act.
• However, consolidation may increase your interest rate once the interest-free accrual period ends on October 1st, 2020. 

Does this affect my eligibility for a loan forgiveness program?

If your loan is eligible for a federal loan forgiveness program, all months of payment suspension will count as "qualifying payments" towards loan forgiveness programs, such as Public Service Loan Forgiveness or Income Driven Repayment, as long as the other program requirements are met.

For the Teacher Loan Forgiveness program, if your teaching was interrupted due to coronavirus, you can still receive loan forgiveness if you resume teaching and reach a cumulative total of five years. 

Can I make payments on my loans during this time?

Yes. If you are financially able to make payments on your student loans you can contact your servicer to opt out of the forbearance period and resume auto-debit payments. You also have the option of remaining in the forbearance period and making manual payments. Any payments made after March 13th will be applied directly to the loan's principal balance.

If you made a payment after March 13th, but are struggling financially, you can request a refund from your student loan servicer. 

We must do everything we can to support student loan borrowers during this crisis. And at the same time consider future actions to alleviate the serious burden of student debt for 45 million Americans. It's no secret that before this national health crisis, student debt had profound impacts on American families and our economy. If we're concerned about the successful restart of our economy as we begin to safely recover from this pandemic, we should work to cancel all student loan debt. 

The fact that so many talented, hard-working young people start their adult lives under crushing student loan debt is an outrage. I hope we emerge from this crisis agreeing that we must make fundamental changes to our society to become a fairer, more just nation. We can and must do more to ensure college is not only more accessible but also, more affordable. 

My office is here to help — do not hesitate to contact us should you need assistance by phone at 802-862-0697 or 1-800-339-9834, or on our website.