#Hartford, CT– Attorney General William Tong today joined a bipartisan coalition of 28 attorneys general led by Illinois Attorney General Kwame Raoul and Alaska Attorney General Kevin Clarkson 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.
“Student loan borrowers with all types of federal loans are struggling to pay their bills just like many Americans,” said Attorney General Tong. “The Senate must pass legislation that allows all borrowers with federal loans – regardless of the type – to get much needed financial assistance. Students should not have to choose between paying their loans and buying groceries or paying rent during this unprecedented public health and economic crisis.”
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 excluded from CARES Act relief. These borrowers are struggling with the pandemic just like other federal student loan borrowers, 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 percent 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. The attorneys general ask members of the Senate to support added relief as part of a stand-alone bill – the Student Loan Fairness Act, S.4237 – recently introduced by Senators 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.
Recognizing that the effects of the 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.
This press release was made possible by:
