CARES Act Includes Support for Federal Student Loan Borrowers, But Don't Get Scammed
Thursday, April 30th, 2020 -- 9:40 AM
-The recently enacted Coronavirus Aid, Relief, and Economic Security Act helps address the economic fallout from the 2020 COVID-19 pandemic, including support for federal student loan borrowers.Under the CARES Act, borrowers with federally held student loans will automatically receive a six-month forbearance retroactive to March 13 for eligible loans. No payments will be due and no interest will accrue during this forbearance period, which lasts until September 30. All auto-debit payments will be automatically suspended, but borrowers may want to cancel their autopay via their servicer’s website to ensure money is not deducted before the suspension is implemented. If it is, then borrowers can request a refund. Due to the automatic forbearance, borrowers need to be aware that their repayment terms may be extended, so the final payment date might be six months later than originally planned. The benefits authorized by the CARES Act also do not apply to private (non-federal) student loans owned by banks, credit unions, schools, or other private entities. In addition, some federal student loans under the Federal Family Education Loan (FFEL) Program are owned by commercial lenders, including PLUS loans and Stafford loans, and some Perkins Loans are held by the institution or school attended.
The FFEL lender or school may choose to suspend interest and payments on a voluntary basis, but they are not required to do so by law. Borrowers should contact their lender or servicer to find out if these options are available to them. For a list of loan servicers, visit the Federal Student Aid website or call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243. Borrowers must watch out for offers to forgive student loan debt in its entirety or change repayment plans for a fee, as well as requests for other personal information in order to suspend payments in response to COVID-19.
DATCP offers the following tips to help borrowers protect themselves from scams, including COVID-19-related scams including do not respond to calls or texts from unknown numbers, or any others that appear suspicious; never share personal or financial information via email, text message, or over the phone; be cautious if being pressured to share any information or make a payment immediately, scammers often spoof phone numbers to trick consumers into answering or responding. Remember, government agencies will never call to ask for personal information or money; do not click any links in a text message. If a friend sends a text message with a suspicious link that seems out of character, call to make sure they weren't hacked.
For up-to-date information regarding federal student loans, visit the Federal Student Aid’s “Coronavirus and Forbearance Information for Students, Borrowers, and Parents” at StudentAid.gov or call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243. To report an issue with a student loan servicer, submit a complaint to the Consumer Financial Protection Bureau (CFPB).
Feel free to contact us with questions and/or comments.