Assistance for Student Borrowers During the COVID-19 Pandemic
During this time of crisis, students are navigating educational and financial burdens and uncertain futures. The federal government, the North Carolina Department of Justice, and North Carolina colleges and universities have taken steps to help student borrowers address these economic strains. If you hold federal student loans, here’s what you need to know about economic relief during the pandemic. As state and federal partners continue to take action to respond to the pandemic, we will continue updating this page with relevant information.
Six-month pause on monthly payments for federal student loan borrowers
Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), most borrowers with federally-held loans are automatically entitled to no monthly payments or interest until Sept. 30, 2020. Learn more about this action from the Office of Federal Student Aid.
Additional things to know about this pause:
- If you are eligible for this relief, you do not have to take any action.
- Some borrowers who were eligible for the six-month payment pause still had their April auto-payments drafted. If your payment was drafted incorrectly, you should contact your servicer directly to request a refund.
- Before Sept. 30, 2020, you should receive a communication from your servicer about the resumption of payments.
- The six months should count as qualifying payments for both borrowers pursuing loan forgiveness programs (including under the Public Service Loan Forgiveness program) and borrowers rehabilitating a defaulted loan. This means you should still make progress towards these programs during the pause.
Are you eligible for this six-month pause on payments?
If you have a federal student loan made after July 1, 2010 (other than a Perkins Loan), you are likely eligible for this relief and do not have to take any action. (While an earlier 60-day administrative forbearance action required borrowers to affirmatively opt in, the six-month payment pause does not.)
If you have a direct federal student loan made before July 1, 2010, you are likely eligible for this relief. Contact your loan servicer to determine whether this relief applies to your loan.
If you have a loan from the Federal Family Education Loan (FFEL) program through the U.S. Department of Education, you may be eligible for this relief, if it is held by the federal government. Contact the Department to confirm.
If you have a loan from the Federal Family Education Loan (FFEL) program that is held by a commercial lender, you are not automatically eligible for this relief. Contact your loan servicer about your options – the owners of these loans have the flexibility to grant the six-month pause, but it is not mandatory.
If you have a campus-based Perkins loan, you are not eligible for this relief. Contact your school directly to see if they have any programs for their Perkins loan borrowers.
If you have a private student loan, you are not eligible for this relief. You should check directly with your lender or servicer for details on the help they can offer you. Some private student lenders are offering borrowers varying degrees of assistance or relief during the COVID-19 emergency. Before accepting this assistance, closely evaluate the short-term and long-term effects.
If you are unsure what type of loan you have, check your statements or look up the loan via National Students Loan Data System.
Pause on Involuntary Debt Collection
If you have a defaulted student loan, the federal government cannot garnish your wages or withhold other benefits (Social Security, tax refunds, etc.) for the duration of the pandemic. The CARES Act also temporarily suspends involuntary collection actions on defaulted federal student loans. [CARES Act § 3513(e)] Borrowers should know that this is a temporary pause – these collection actions will resume at some point in the future, absent additional legislative action.
In North Carolina, Attorney General Stein suspended the collection of state debts until further notice. This includes the suspension of collections activities for agencies and universities that the department represents, including the University of North Carolina system.
Additional School Assistance for Current Students
Some North Carolina schools, including the UNC System and Davidson College, have announced that they will be issuing prorated refunds to students for unused prepaid dining and housing services. You should consult your campus’ resources to determine whether these refunds are available to you.
The CARES Act gives campuses flexibility to offer students emergency financial help and almost $7 billion in emergency student aid for expenses due to the disruption caused by COVID-19. The availability of this help depends on each individual school, so you should consult your individual campus resources to learn more about the availability of such aid and closely evaluate the short-term and long-term effects of accepting any such help.
- Coronavirus and Forbearance Info for Students, Borrowers, and Parents, Office of Federal Student Aid, U.S. Department of Education
- College Foundation of North Carolina
- Student Loan Repayment During the Coronavirus Pandemic, Student Borrower Protection Center
- National Consumer Law Center, Student Loan Borrower Assistance Project (blog)