Private student borrowers may have options during the coronavirus pandemic – with some restrictions

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The CARES Act – the largest stimulus bill ever passed in American history – provides critical relief for student loans in the face of the economic downturn caused by the coronavirus pandemic. However, this relief is limited to student loan borrowers whose state student loans are held by the government. Other borrowers – especially borrowers who have private student loans – do not get direct student loan relief from the bill.

Individual private student loan lenders have made efforts to offer borrowers a few options, usually in the form of temporary deferrals or payment changes. This relief is not required by any law or ordinance; rather, it is purely voluntary on the part of the individual lender. And the facilities available are pretty limited. Here are some examples:

  • Citizens Bank offers emergency omissions of up to 90 days.
  • CommonBond offers emergency omissions of up to 90 days.
  • Discover may provide potential relief to private student loan borrowers, although it does not provide details.
  • serious offers emergency omissions of up to 90 days.
  • Massachusetts Educational Finance Authority (MEFA) may provide potential relief to private student loan borrowers, although it does not provide details.
  • Navient offers disaster risk reduction for up to 90 days.
  • Sallie Mae may provide potential relief to private student loan borrowers, although it does not provide details.
  • SoFi may provide potential relief to private student loan borrowers, although it does not provide details.
  • Wells Fargo may provide potential relief to private student loan borrowers, although it does not provide details.

Private student loan borrowers seeking relief should be aware that any temporary deferral or suspension of payments is likely to continue to accrue interest, leading to balance increases. Accrued interest could also be capitalized (meaning that it is added back to the principal balance). This could increase the overall cost of the repayment in the long run.

In addition, after a deferral or change, the normal monthly payments may increase or the repayment period may increase, or both. Borrowers should discuss the implications of a forbearance, suspension or change with their lenders in detail and, if possible, request written confirmation.

In addition, some government agencies are temporarily suspending the recovery of defaulted government and private student loans. For example:

Borrowers should contact the Attorney General’s Office for more information on suspension initiatives.

Updates: Sallie Mae got in touch, stating, “Customers who have gotten into financial trouble due to the pandemic can request a three-month suspension of student loan payments.” SoFi said it has created an application for borrowers to postpone payments apply for. Wells Fargo stated that they offer a 90 day grace period.

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