Following new federal economic relief for student loan borrowers, New York state issued guidance for private student loan servicers to provide similar financial assistance for students facing economic hardships from COVID-19.
The New York Department of Financial Services announced this guidance last week, to urge regulated student loan services to allow students with private loans or loans from the Federal Family Education Loan Program, to make payments on their debts at a later date.
“At a time where many are suffering financial hardship due to COVID-19, it is imperative that all regulated industries work with consumers to provide relief,” said Superintendent of the New York DFS Linda Lacewell.
The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by the federal government late last month, includes suspending student loan repayment for millions of people who borrow federal student loans.
The office of Federal Student Aid also suspended interest on loans for the next 60 days, while allowing borrowers to defer their payments for at least two months.
However, 300,000 non-federal student loan borrowers are not covered by the federal coronavirus-aid package.
The New York guidance for state regulated student loan providers aims to assist those with no relief from their student debts.
At a minimum the state is asking student loan services to provide at least a 90-day forbearance from paying loans, waiving the late payment fee, and refraining from sending defaulted loan accounts to debt collectors.
While COVID-19 has stopped college students from physically attending school, classes continue online and so does accumulating debt.
Over 16 million people have filed for unemployment in the U.S over the last three weeks.
The state is also encouraging student loan services to provide continuous communication with borrowers on relief plan options and contacting those with missing payments in recent weeks.
Among those agreeing to the relief terms are Navient, Nelnet, the Pennsylvania Higher Education Assistance Agency, the Missouri Higher Education Loan Authority, EdFinancial, and others, which represent approximately 90 percent of the privately-held student loans in New York.
“We appreciate the largest student loan servicers and lenders in New York and the nation stepping forward with a thoughtful plan to help New York student loan borrowers,” Lacewell said.
The DFS urges individuals who are facing financial hardship as a result of COVID-19 to contact their privately-held loan servers and request relief.