These Student Loans Need More Relief

If you've got these student loans, this new congressional bill may give you some student loan relief.

Here’s what you would like to understand.

Student Loans

Rep. Elise Stefanik (R-NY) introduced new bipartisan congressional legislation that may expand protections for Perkins student loan borrowers who are excluded under the Cares Act, the $2.2 trillion financial stimulus package. The COVID-19 Perkins Loan Relief Act would allow nearly 2 million student loan borrowers with Perkins loans to defer student loan payments through September 30, 2020.

“COVID-19 presented significant challenges and uncertainty...with student loan payments,” Stefanik said. “This bipartisan legislation closes a niche within the CARES Act and allows those with Perkins loans to defer payments until October as we endure the COVID-19 crisis.”
Why Perkins loans are excluded from the Cares Act

Why Perkins loans are excluded from the Cares Act

The Cares Act provides several protections for federal student loan borrowers through September 30, 2020, including:

However, the Cares Act doesn’t help all student loan borrowers nor does it cancel student loan debt. Under the Cares Act, “federal student loans” only includes federal student loans that are owned by the U.S. Department of Education. This includes Direct Loans like Stafford Loans, as an example, but excludes other variety of federal student loans that don't seem to be owned by the central like FFELP loans and Perkins loans. Perkins loans are typically owned by colleges and universities and aren't eligible for student loan deferment or 0% interest through the Cares Act. As a result, these student loan borrowers must make student loan payments during the Covid-19 pandemic with none student loan debt relief. If passed, this legislation would protect Perkins borrowers and supply the identical financial relief enjoyed by Direct student loan borrowers.

How the coed loan bill works

The bill, which isn't currently law, would likely mirror the Cares Act and work like this:

  • the U.S. Department of Education, led by Betsy DeVos, would enter into agreements with the owners of the Perkins loans (namely colleges and universities).
  • The agreements would stipulate that each one student loan payments would be suspended through September 30, 2020.
  • The Department of Education would pay any interest payments during this era.
  • All involuntary student loan debt collection of Perkins loans also would stop during this era.

Similar to the Cares Act, Perkins loans borrowers likely would be notified within 15 days of those changes, and also would receive a minimum of six notices before regular student loan payments would return after September 30, 2020. The legislative proposal also would, kind of like the Cares Act, “count” non-payment of Perkins loans toward student loan forgiveness programs. The bill is co-sponsored by Rep. Katie Porter (D-CA), Rep. Susie Lee (D-NV), Rep. Lori Trahan (D-MA) and Rep. Alma Adams (D-NC). In April, Stefanik also introduced the Equity in Student Loan Relief Act, which might help FFELP borrowers who also are not noted of the Cares Act receive student loan debt relief under the Cares Act.