LANSING, Mich. — Michigan Attorney General Dana Nessel, alongside a coalition of 29 attorneys general, 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 only covers federal student loans that are owned by the federal government, but excludes nearly 8 million borrowers with federal student loans owned by private entities.
“For many people across this nation, paying for a college education was challenging before the onset of the COVID-19 pandemic. Now those challenges have multiplied as we continue to navigate through this crisis,” Nessel said. “The Senate in Washington D.C. needs to do the right thing and ensure relief for all students whose loans are supported or guaranteed by the federal government—regardless of who owns them. These students filled out their FAFSA forms, accepted the aid offered by the federal government, and now shouldn’t be left behind due to a technicality.”
In March Congress passed the CARES Act, which provides some 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.
This relief only applies to federal student loans held by the federal government.
Nearly 8 million federal student loan borrowers have Perkins loans that are held by schools, or commercially-held 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.
The coalition is now urging 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 0% interest rate, and the suspension of involuntary collections. They’re also calling for the relief measures to apply retroactively if borrowers have already made payments.
In addition, as it appears the impact of the pandemic will be long-lasting, the coalition is calling 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.
Attorney General Nessel joins the attorneys general of Alaska, California, Colorado, Connecticut, Delaware, the District of Columbia, Guam, Hawaii, Idaho, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, the U.S. Virgin Islands, Virginia, Washington, and Wisconsin in submitting this letter.
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