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ATTORNEY GENERAL HERRING URGES SENATE TO PASS LEGISLATION TO ENSURE RELIEF FOR ALL FEDERAL STUDENT LOAN BORROWERS IMPACTED BY COVID-19 PANDEMIC
RICHMOND – Attorney General Mark R. Herring has joined a coalition of 28 attorneys general in 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 owned by the federal government, excluding nearly 8 million borrowers whose federal student loans are owned by private entities.
"Hundreds of thousands of Virginians and millions of Americans have found themselves navigating tough financial situations brought on by the COVID-19 pandemic and this includes difficulty paying their federal student loans,” said Attorney General Herring. "Congress has already included relief for certain federal student loans in their CARES Act but I am urging them to extend that relief to other student borrowers to alleviate some of the financial stress people are facing across the country right now.”
In March 2020, Congress passed the CARES Act, which provides financial relief for Americans, including student loan borrowers, impacted by the global pandemic. 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. While this relief is critical, the CARES Act 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. These borrowers are struggling with the pandemic just as other federal student loan borrowers are, but do not have relief options under the CARES Act solely because of the entity that owns their loan.
In the letter, the coalition urges 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. The coalition also calls for the relief measures to apply retroactively if borrowers have already made payments. Attorney General Herring and his colleagues state that members of the Senate can support added relief as part of a stand-alone bill – the Student Loan Fairness Act, S.4237 – recently introduced by Sens. Lisa Murkowski of Alaska and Jack Reed of Rhode Island, or as part of the larger coronavirus relief package currently being debated in the Senate.
In addition, recognizing that the effects pandemic will be long-lasting, the coalition calls 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.
Joining Attorneys General Herring in sending the letter are the attorneys general of Alaska, California, Colorado, Connecticut, Delaware, the District of Columbia, Guam, Hawaii, Idaho, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and Wisconsin.
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