President Donald Trump has stopped collection of federal student loan debt.
Here’s what you need to know.
As first reported by Politico, the Trump administration has stopped collecting from borrowers who have defaulted on their federal student loans. That reprieve could impact 9 million student loan borrowers currently in default amid the coronavirus emergency.
Secretary of Education Betsy DeVos, according to Politico, has informed private collection companies to “stop calling borrowers, sending collection notices or taking steps to seize portions of their paychecks.” The restrictions will be retroactive to March 13 and last until further notice. The Education Department also plans to stop referral of defaulted student loan accounts to the Treasury Department for garnishment of wages, tax refunds and Social Security payments (which are known as “offsets”). DeVos has directed the Treasury Department to refund approximately $1.8 billion in offsets to more than 830,000 student loan borrowers.
Help Borrowers With Student Loans
Student loan borrowers want to know what to do with their student loans due to coronavirus.
These responsive measures come amid congressional proposals to help provide financial relief to student loan borrowers. For example, House Democrats proposed that every borrower receive $30,000 of student loan forgiveness. Senate Democrats unveiled a student loan forgiveness plan that would forgive at least $10,000 of federal student loans for all borrowers. Former Vice President Joe Biden supports $10,000 of student loan forgiveness.
Meanwhile, Trump has taken several steps to help student loan borrowers. Trump temporarily waived all interest on federal student loans for 60 days. The interest waiver is automatic, so you don’t need to enroll with your student loan servicer. Trump also announced that borrowers can stop paying federal student loans for 60 days. If you want to know how to suspend payment of your federal student loans for 60 days without any penalty, you can contact your federal student loan servicer to request an administrative forbearance. You don’t have to pause student loan repayment for 60 days, however; it’s completely optional.
Remember, this announcement applies only to federal student loans (not private student loans). If you want to know how to pay off your student loans, start here as all these options have no fees:
- Student loan refinancing
- Student loan consolidation
- Income-driven repayment plans
- Student loan forgiveness