Student loans and the COVID-19 coronavirus crisis
Federal student loans
The federal CARES Act was signed into law on March 27, 2020. It provides help for some federal student loan borrowers:
- It provides relief for federal Direct Loans and federally held FFEL (Federal Family Education Loan Program) loans.
- If your loans are covered by the law, you should have received a notice in April.
- Your Direct Loan and covered FFEL payments will now be suspended through May 1, 2022.
- While your payments are suspended, the interest rate on your covered loans will be 0%.
- Suspended loan payments will be treated as if the payment was made for purposes of loan forgiveness and loan rehabilitation.
- There will be no negative credit reporting on your loan accounts while your payments are suspended.
- For Direct Loans and federally held FFEL loans already in default, all collection activity will be suspended. This means your wages will not be garnished, taxes will not be offset, and benefits will not be offset.
- Making payments during the payment pause could help you pay down your loan balance more quickly. The full amount of your payments will be applied to your principal balance once you’ve paid all the interest that accrued prior to March 13, 2020, and any fees (for defaulted loans).
- See a list of what kinds of loans have been suspended and how to find out if your loan is included.
New: The US Department of Education is waiving income monitoring and reporting requirements during COVID for borrowers who received a discharge due to total and permanent disability (TPD). In addition, borrowers with loans that were reinstated for failure to provide earnings documentation are being restored to discharge status, and will be refunded any payments made following loan reinstatement. Learn more about this student loan help.
For more information, see the Federal Student Aid website.
Private student loans
The State of Vermont mandated that private lenders should work with student-loan holders to provide help. If you have a private student loan — including one from Vermont Student Assistance Corporation (VSAC) — contact your student loan servicer or lender to identify the options that might apply to you. They include:
- providing forbearance (postponement) of payments for at least 90 days
- waiving late-payment fees
- protecting borrowers from negative credit reporting
- ceasing debt-collection lawsuits for 90 days, and
- enrolling in appropriate assistance programs, such as income-based repayment.
Borrowers with private student loans can look for contact information on their monthly billing statements. VSAC borrowers may call 1-833-802-8722.
Learn more about this help and where to turn if you have a complaint on the Vermont Department of Financial Regulation (DFR) website.
General student loan resources
- Managing Student Loans - Student Loan Borrower Assistance website
- Discharging a Student Loan Due to Disability - Student Loan Borrower Assistance website
- Total and Permanent Disability (TPD) Discharge - disabilitydischarge.com website
- Other reasons to discharge a federal loan - Student Loan Borrower Assistance website
- Getting or Repaying Student Loans - Consumer Financial Protection Bureau website
- Studentloanify - A paid online service that helps you find and apply for the best repayment option available to you
If you have a low income and you are having trouble with your federal student loan payments, contact us. Fill out our form and we will call you back. Your information will be sent to Legal Services Vermont, which screens requests for help for both Vermont Legal Aid and Legal Services Vermont. You can also call us at 1-800-889-2047.