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Vermonters with privately held student loans will be able to get relief on payments during the Covid-19 crisis under a new initiative announced by state leaders.
Gov. Phil Scott and Department of Financial Regulation Commissioner Michael Pieciak outlined the new initiative, which expands options for Vermonters who owe payments on student loans.
The CARES Act, the sweeping federal Covid-19 relief package that Congress passed last month, gave borrowers of most federal student loans a break for the next six months. Eligible loans have automatic forbearance through Sept. 30, 2020, and interest will not accrue on those loans through that period.
But the package didn’t include any relief for privately held loans or those that aren’t held by the federal government.
Under the initiative state leaders announced Tuesday, borrowers of loans from private lenders or commercially held Federal Family Education Loan (FFEL) Program loans will have the opportunity to get a temporary break during the coronavirus emergency.
Relief measures include providing forbearance of payments for a minimum of 90 days, waiving any applicable late fees, offering protections from negative credit reporting, ceasing debt collection lawsuits for 90 days, and working with borrowers to enroll them in assistance programs like income-based repayment.
State officials said that borrowers would need to contact their loan servicer to see what specific options are available to them.
The Vermont Student Assistance Corp., or VSAC, had already announced protections for borrowers. State officials say the new initiative, which includes 13 other student loan providers, expands the options for Vermonters.
“The Covid-19 pandemic has touched the lives of every single Vermonter, and for so many, it is significantly impacting their ability to make ends meet,” Scott said in a statement this week. “Vermonters with student loans through VSAC already had the benefit of this financial flexibility, but with this initiative, we can expand these relief options to more Vermonters.”
Marilyn Cargill, a vice president at VSAC, said she supports the state’s efforts to encourage more lenders to adopt relief measures, and to advertise options for borrowers with student loans. If Vermont borrowers need assistance, Cargill said they should call VSAC. Any Vermonter with questions about their loans can call VSAC, even if their loan is with another organization, she said.
“Even if a Vermont borrower has loans that are not with VSAC and they would like to talk through their options, or how do I frame a conversation with my lender, or help me understand the best thing to do — they can call VSAC,” Cargill said. “Our job is to be here for Vermont families and Vermont students and Vermont borrowers.”
Among Vermonters who carry student debt, the average monthly student loan payment is just over $200, according to a study by LendEDU that analyzed nearly 150,000 student loan payments. During the fiscal year ending on June 30, 2020, VSAC made $50 million in student and parent private loans, according to Cargill.
Joshua Cohen, a lawyer who helps clients with student loan issues, emphasized that borrowers who need assistance with their loans during the crisis should pick up the phone.
“I hope the message that people take away from this is call VSAC or call your servicer,” Cohen said.
Cohen is glad the state is publicizing options for borrowers with student loan debt. However, he said that many of the relief options for loans not covered by the CARES Act, such as delaying payments for 90 days, feel insufficient given the magnitude of the economic crisis many Vermonters are facing.
“This is like a Band-Aid to me. I’m glad they did something but at the end of the day it’s not much,” he said. “What if things don’t get better in 90 days?”
Cargill said that VSAC’s private loans have a maximum forbearance of 24 to 36 months that borrowers can apply to their loans if necessary.
“For most of our borrowers, they have plenty of forbearance remaining, so if this stretches on for them they can tap into that,” she said.
In addition to VSAC, the loan servicers that are offering relief measures include: Aspire Resources Inc., College Ave Student Loan Servicing LLC, Earnest Operations, Edfinancial, Kentucky Higher Education Student Loan Corp., Lendkey Technologies Inc., Missouri Higher Education Loan Authority, Navient, Nelnet, SoFi Lending Corp., Tuition Options United Guaranty Services Inc., Upstart Network Inc. and the Utah Higher Education Assistance Authority.
For people who are unclear which agency services their student loans, the federal government maintains a website that provides that information.
