Update: Since the publication of this report, the government has extended the student loan repayment pause (forbearance) and enacted a wide-sweeping debt forgiveness program. See our report for more details.
Like tackling the coronavirus pandemic itself, assisting student loan borrowers could be both a federal and state responsibility. At least, that’s how many states see it.
New York, currently the epicenter of America’s battle with COVID-19, recently reached local agreements with student loan companies to give resident borrowers a reprieve on their private loans. Meanwhile, other local governments are providing forbearance periods and resources to those who took out loans directly from their state’s higher education authority.
Let’s take a look at which states are offering help to borrowers and how to get it — specifically:
- States providing student loan relief during the coronavirus pandemic
- How to find coronavirus crisis relief for student debt in your state
- What to do if your state’s relief is lacking
The coronavirus relief act, which passed into law March 27, was a boon to most federal student loan borrowers, delivering an automatic, six-month break from their debt repayment. Unfortunately, however, the package excluded certain types of student debt, such as state-issued loans, private loans and even some federal loans.
In the weeks since, Congress has considered additional relief for the educationally indebted, with some senators urging private lenders to provide repayment options similar to those offered by the federal government.
For their own part, some of the states have stepped in to help… to varying degrees.
States offering major relief to resident borrowers
New York Gov. Andrew Cuomo announced an April 7 agreement with student loan companies to ease payments on about 90% of the privately-held education debt in the state, affecting about 300,000 residents borrowers.
As part of the deal, New Yorkers saddled with private student debt could receive 90 days of deferred payments without late penalties or negative impact to their credit. At the same time, borrowers in default wouldn’t face new debt collection lawsuits during the three-month period.
Keep in mind that rules for receiving relief from your state likely vary from the federal government’s interest rate freeze and payment suspension. In New York, for example, borrowers have to request the relief from their lender or loan servicer — it’s not automatic. Also, borrowers in this case will see interest accrue and capitalize on their balance while they’re pausing repayment.
States with forbearance options for state-held debt
While New York is leading the way in terms of aid for private student loans, others are setting up programs for those with student debt held by the state.
New Jersey Gov. Phil Murphy said on March 19 that borrowers in the New Jersey College Loans to Assist State Students (NJCLASS) program could apply for hardship forbearance related to the coronavirus crisis. Applicants would need to explain how the COVID-19 pandemic has harmed their finances in order to be eligible.
Other states have followed New Jersey’s lead. If you’re an Alaska, Pennsylvania or Texas resident, loans borrowed from your state’s education department (but not private loans) would be eligible for a disaster forbearance option. Georgia, Massachusetts, Rhode Island and Vermont are among other states providing some version of forbearance to borrowers of state-owned education debt.
Be sure you understand the terms of a deferment or forbearance before accepting the one offered by your state. Most notably, any pause or reduction in payments will prolong your loan term and increase the overall cost of your loan. To avoid accruing interest, making payments during the coronavirus pandemic could be advantageous, if possible.
States with milder measures
Some state governments, meanwhile, have yet to offer financial relief but have at least taken some initial steps to help borrowers.
Colorado Attorney General Phil Weiser, for instance, urged loan servicers and payment collection companies on March 18 from seeking dues from borrowers adversely affected by the COVID-19 pandemic.
In Minnesota and North Carolina, meanwhile, the government has expanded student loan counseling programs.
Given the impact of the coronavirus outbreak, states may continue to roll out relief plans on an ongoing basis. To determine whether your state government is among them, keep these resources bookmarked:
- The Education Department maintains a useful directory that will connect you to your state’s higher education authority.
- There’s a similar resource for finding your state attorney general’s office.
- Many states have also set up special .gov URLs that can be found easily via a search engine and are dedicated specifically to coronavirus updates.
Depending on your state’s online resources, you might be able to read up on official guidance, write to your state’s student loan ombudsman (if it has one), or file a consumer complaint.
If you have student debt ineligible for federal relief, whether they’re state loans, private loans or non-qualifying federal loans, know that there are ways to seek help, regardless of where you live. These include:
- Contacting your elected representative with your concerns.
- Submitting a complaint to the Consumer Financial Protection Bureau.
- Seeking guidance from a student loan counselor, lawyer or tax or financial professional.
- Asking your employer if it plans to offer a student loan repayment assistance benefit, as the Coronavirus Aid, Relief and Economic Security (CARES) Act has offered tax breaks to companies providing this aid.
- Consider refinancing private student loans with a lender that could offer a lower monthly payment.
Also, circle back with your existing lenders. Forbearance options from private student loan companies could have changed since your last check-in. It’s a good idea to stay on top of the news and updates, you might be in line for coronavirus pandemic refinancing relief.