Some states are stepping in to help private student loan borrowers, who were not aided by the coronavirus relief act.
Private lenders reached an agreement in late April with the governments of California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, Vermont, Virginia and Washington state. New York, the state hardest hit by the coronavirus, had a similar initiative already in place.
The agreement calls for the involved private lenders and loan servicers to:
- Offer to pause payments via forbearance for 90 days.
- Waive late fees.
- Issue no negative credit reports.
- Pause debt collection lawsuits.
- Help borrowers enroll in debt assistance programs.
The agreement applies to private loans for college and commercially held FFELP loans.
How to get state student loan relief
Contact your lender or servicer to find out how to get the forbearance — some may do it automatically and others only by request — and when you can expect payment to restart.
You should also ask if the interest accrued will capitalize — get added to your loan balance, so that you pay interest on it — when repayment resumes. Your lender may or may not capitalize the accrued interest.
And even if you are not in one of the affected states, check with your lender or servicer if it’s listed below. Companies such as Nelnet and Earnest are offering borrowers in all states 90 days of forbearance in which interest will accrue, but will not be capitalized.
In the multistate agreement, the following loan holders are offering relief. This list includes lenders and servicers across multiple states, but there may be more specific to your state:
- Aspire Resources.
- College Ave.
- Earnest Operations.
- Edfinancial.
- Kentucky Higher Education Student Loan Corp.
- Lendkey.
- MOHELA.
- Navient.
- Nelnet.
- SoFi.
- Tuition Options.
- United Guaranty Services.
- Upstart Network.
- Utah Higher Education Assistance Authority.
- Vermont Student Assistance Corp.
Student loan relief options by stateHere’s a roundup of how states are helping student loan borrowers:
California: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs. Those with debt may not have any COVID-19-related financial assistance garnished.
Colorado: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs.
Connecticut: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs.
District of Columbia: Suspended all debt collection activity, including student loans.
Illinois: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs. All wage garnishment for private debts is also suspended.
Iowa: Suspended all wage garnishment actions.
Kentucky: Suspended all enforced collection action on debt, including student loans.
Massachusetts: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs. Debt is also deferred from April 2020 through July 2020 for borrowers with No-Interest Loan Program debt from the Massachusetts Department of Higher Education. The state is also suspending private loan debt collection activities for at least 90 days.
Michigan: Suspended collection of student debt serviced by the Michigan Guaranty Agency until Sept. 30, 2020.
New Jersey: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs.
New York: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs. All collection of student debt owed to the state of New York is also suspended.
North Carolina: Suspended collection of state-owned debts, including student loans.
Texas: Suspended debt collection until May 7, 2020.
Vermont: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs.
Virginia: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs. Wage garnishment is suspended.
Washington: Has an agreement with private loan servicers to provide 90 days of forbearance; waive late fees; give no negative credit reports; pause debt collection lawsuits; and work with borrowers to enroll in other borrower assistance programs.
Why is state relief needed?
All federal loan borrowers are entitled to six months of interest-free forbearance until Sept. 30 (the start date is retroactive to March 13), as part of a provision in the coronavirus aid package.
But the act did not provide relief for private loans and commercially held federal loans. That’s where states are filling the gaps.
What to do if you can’t get reliefIf you’re in a state with relief options available but have difficulty getting relief from your servicer, contact your state attorney general’s office . Your state may also direct you to its consumer protection office, department of banking or student loan advocate.
There are additional ways to make a student loan complaint , including escalation to the federal government. But your lender or servicer is the best place to start.
More From NerdWallet
- Federal Loans Are Paused for 6 Months — Should You Pay Anyway?
- How to Stop Student Loans From Taking Your Tax Refund
- Private Student Loan Relief for Borrowers in the Coronavirus Crisis
Anna Helhoski is a writer at NerdWallet. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.
