ED: Borrowers With Privately-Held FFEL Loans Will Receive Retroactive Relief
Related Topics in the Ref Desk: Discharge, cancellation, forgiveness; Forbearance
By Owen Daugherty, and Hugh T. Ferguson, NASFAA Staff Reporters
Borrowers with Federal Family Education Loans (FFEL) who haven’t received relief amid the ongoing coronavirus pandemic will now experience a reprieve, as the Department of Education (ED) on Tuesday announced a pause on interest accumulation and collections on all defaulted loans for those in the FFEL program.
Since those loans are guaranteed by the federal government but held by the private sector, borrowers with FFEL have been excluded from ED’s relief measures up to this point.
“At a time when many student loan borrowers have faced economic uncertainty, we’re ensuring that relief already provided to borrowers of loans held by the department is available to more borrowers who need the same help so they can focus on meeting their basic needs,” Education Secretary Miguel Cardona said in a statement announcing the action. “Our goal is to enable these borrowers who are struggling in default to get the same protections previously made available to tens of millions of other borrowers to help weather the uncertainty of the pandemic.”
The move extends relief to more than 1.1 million borrowers who defaulted on a privately-held FFEL Program loan, ED announced, adding that the move will ensure more than 800,000 borrowers who were previously at risk will not have their federal tax refunds seized to repay a defaulted loan.
Notably, the action announced Tuesday is retroactive to March 13, 2020, the day the national emergency went into effect. ED added that it will work with borrowers who over the past year had their tax refunds seized or wages garnished to have those funds returned.
Additionally, borrowers who voluntarily made any payments on these loans over the past year will have the option to request a full refund of those payments.
In order to administer this relief, ED is relying on the authority granted to the department during the Trump administration, which offered a federal student loan administrative forbearance period, the pause in interest accrual, and the suspension of collections activity.
This action follows the department’s move earlier this week in which ED waived documentation requirements for borrowers with total and permanent disability discharges.
The current federal relief on student loans is available through Sept. 30, 2021 but before repayment begins NASFAA is urging ED to make a number of considerations before transitioning borrowers back into repayment.
Publication Date: 3/30/2021
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