Student loan stimulus: Suspended payments, plus coronavirus relief from collections
WASHINGTON – Many student loan borrowers far behind on their payments will see the federal government easing collection efforts as part of its response to the financial uncertainty as coronavirus spreads.
The federal government will no longer withhold portions of borrowers’ tax returns and Social Security payments, the Education Department said Wednesday. And borrowers whose paychecks were garnished will be entitled to their full wage – although their employers must make the change to their paycheck.
That relief is mostly for people who have been missing payments for months. But more help may be coming for all borrowers with federal student loans. The roughly $2 trillion stimulus bill unveiled Wednesday would suspend federal student loan payments without interest accruing through September 30. It does not feature debt forgiveness for borrowers, which had been pushed by some Senate Democrats.
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The government has already set the interest rate on federal student loans to zero for at least two months. Borrowers with federal loans also may suspend their payments for at least two months.
The latest directive on collecting on defaulted loans will last at least 60 days, and it's backdated to start on March 13. More than 830,000 borrowers will also receive a refund of $1.8 billion in money already in the process of being seized as of March 13 by the federal government.
“Americans counting on their tax refund or Social Security check to make ends meet during this national emergency should receive those funds, and our actions today will make sure they do,” said Betsy DeVos, the U.S. education secretary.
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A borrower's wages or tax returns aren't immediately seized when a payment is first missed. Rather, borrowers who haven't made a payment in more than 270 days are the ones likely to see this type of wage garnishment and benefit from the newly announced relief.
The relief isn't automatic, however. Employers will have to make the changes to borrowers’ paychecks, the Education Department said Wednesday. Borrowers should contact their human resources department if their wage continues to be garnished.
Private collectors working for the government have also been told to stop collection calls and letters.
The future of college is uncertain: Colleges scrambled to react to coronavirus pandemic. Now their existence is in jeopardy.
Education coverage at USA TODAY is made possible in part by a grant from the Bill and Melinda Gates Foundation. The Gates Foundation does not provide editorial input.
This article originally appeared on USA TODAY: Coronavirus student loan stimulus: Payments suspended and more relief
