Coronavirus/COVID-19: Student Loan Relief - Financial Regulation
Last reviewed/updated: August 16, 2021
If you anticipate having trouble making a loan payment because of COVID-19 related circumstances, notify your student loan servicing company as soon as possible to discuss your options. Early and regular communication could mitigate the impact of any trouble you may be having. You should also regularly visit your servicer’s website to keep up with the latest developments and keep a written record of all your interactions with your servicer. Visit StudentAid.gov/coronavirus for forthcoming details.
On this page:
- Federal Student Loan COVID-19 Announcements
- General Repayment Information
- Student Loan Scams
- Inaccurate Credit Reporting
- More Resources
FEDERAL STUDENT LOAN COVID-19 ANNOUNCEMENTS
The federal government has announced a number of initiatives and actions to assist student loan borrowers.
Included in this assistance is the following:
- Borrowers with a federally held Direct, Federal Family Education Loan (FFEL) Program and Perkins student loans will automatically have their interest rates set to 0% from March 13th to January 31, 2022. Defaulted and non-defaulted loans both qualify.
In addition, borrowers who defaulted on their privately-held FFEL loans now also qualify for relief. This relief, announced by the U.S. Department of Education (Department) on March 30, 2021, will be made retroactive to March 13, 2020 and will protect borrowers who were at risk of having their federal tax refunds seized to repay on their defaulted loan. The Department will work to automatically return any tax refunds seized or wages garnished over the past year. In addition, borrowers who made voluntary payments on any of these loans during the past year will have the option to request a refund of those amounts. The Department will also work with the guaranty agencies, who hold these defaulted private FFEL loans, to implement the 0% interest rate for these borrowers. Private FFEL loans that went into default since March 13, 2020, will be returned to good standing. Guaranty agencies that hold those loans will assign them to the Department and request that the credit reporting agencies remove the record of default. Borrowers who did not default on their privately-held FFEL loans do not qualify for relief. Contact your loan servicer online or by phone to determine if your loan qualifies.
- The U.S. Department of Education is automatically placing all student loan borrowers into administrative forbearance from March 13 to January 31, 2022. During the 0% period, all payments made will be applied to your principal once all interest that accrued prior to March 13 is paid. Thus all auto-debit payments will be suspended for that period. In addition, the Department also authorized an automatic suspension of payments for any borrower more than 31 days delinquent as of March 13, 2020, or who becomes more than 31 days delinquent. If you wish to opt out of the administrative forbearance and continue to make your payments contact your loan servicer online or by phone.
- Suspended payments in Income Driven Repayment (IDR) plans during this period will still count towards IDR forgiveness. Suspended payments from March 13 to January 31, 2022 will also be given credit toward Public Service Loan Forgiveness (PSLF) as if the borrower has made on time payments. The borrower must already have a Direct Loan, be in a qualified repayment plan and be working full-time for a qualifying employer.
- Borrowers who want to continue making payments, like those seeking Public Service Loan Forgiveness (PSLF) or those enrolled in a repayment plan with a manageable monthly payment, can do so and the full amount of their payment will be applied to the principal amount of their loan once all interest accrued prior to the March 13, 2020 announcement is paid. Contact your loan servicer online or by phone if you wish to opt out of the automatic forbearance and continue to make your payments.
- The Department will suspend collection actions and wage garnishments from March 13 to January 31, 2022 and will send a letter to your employer’s human resources department. Borrowers should contact their employers' human resources department to check that wage garnishments have ceased. If your wages have been garnished during that period you can seek a refund.
- Student loan servicers have been instructed to halt all proactive collection activities, including making phone calls to borrowers and issuing collection letters and billing statements.
- Borrowers with defaulted student loans, a current relationship with a private collection agency, and an interest in continuing a prior payment arrangement, consolidating their loans, or beginning a loan rehabilitation arrangement with their private collection agency, should contact the Department's Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923). Private collection agencies are permitted to provide assistance upon the borrower's request.
- Borrowers with defaulted student loans will not have their federal tax refund or their Social Security payment (including disability benefit) withheld for the period of March 13 until January 31, 2022. If your refund, Social Security payment or disability benefit has been taken, you should contact the Department's Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923).
Private Student Loans (including some FFEL and Perkins loans owned by private lenders) do not qualify for these programs. Private student loan borrowers should discuss their personal situation with their student loan servicer.
Whether you have private student loan or a federal student loan, when you speak with your student loan servicer ask about the most current interest or payment suspension/waiver programs.
Visit StudentAid.gov/coronavirus for the latest details about the Education Department’s guidance on student loan repayment.
GENERAL REPAYMENT INFORMATION
Federal Student Loans
For federal student loans, there are several repayment plans available to reduce your payments, including:
- Income-driven repayment plans, like Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), or Income-Contingent Repayment (ICR)
- Graduated repayment
- Extended repayment
Private Student Loans
Unlike federal student loans, there are no standard options to lower your monthly payments on a private student loan. Every lender is different and some will offer modified repayment plans that are similar to the federal programs, particularly graduated repayment. If you are worried about missing payments, then contact your servicer or visit the servicer’s website to see what options you may have. If you know you can’t make a payment, call the loan servicer as soon as possible to discuss the situation.
STUDENT LOAN SCAMS
Beware of companies or fraudsters posing as purported “government agencies” contacting you by email, text or phone calls promising to help with student loan relief or resolve issues on your behalf. Here are some tips to avoid student loan repayment scams:
- Never pay an upfront fee. It’s illegal for companies to charge you in advance before helping you to reduce or eliminate your student loan debt. Do not pay any company an upfront fee. Paying a company a fee is no guarantee that they will be successful in getting assistance for you. If you do pay an upfront fee you might lose your money.
- Only scammers promise fast loan forgiveness. Scammers might say they can quickly get your loans forgiven through a loan forgiveness program but they can’t.
- Don’t share your Federal Student Aid (FSA) ID with anyone. Scammers could use it to take control of your personal financial aid information on U.S. Department of Education websites.
INACCURATE CREDIT REPORTING
The Student Loan Servicing Bill of Rights, enacted in 2019, makes it a violation of Maryland law for a student loan servicer to knowingly or recklessly provide inaccurate information to a consumer reporting agency, or refuse to correct inaccurate information provided to a consumer reporting agency. Further, the law states that any such violation of this provision should be immediately and expeditiously corrected so as to limit the harm caused to Maryland consumers.
In addition, credit reporting agencies, when aware of the furnishing of inaccurate information (especially in the face of a systemic error that could harm Maryland consumers), must take immediate action to limit the harm to consumers and to correct the inaccurate information furnished to them. Here are some tips to avoid or correct inaccurate reporting on your student loans:
- Pull your Credit Report. Check to see if your student loan status has been accurately reported by pulling a copy of your credit report. Under the Fair Credit Reporting Act, you are entitled to one free credit report annually from each of the three major credit agencies (Equifax, Experian, and TransUnion). However, due to COVID-19, Annual Credit Report is offering free weekly online reports through April 2022.
- Contact your lender or servicer to resolve reporting errors. If you see inaccurate negative information on your credit report, contact your lender or servicer that is reporting the information in writing and request that they correct the reporting.
- File a formal complaint with the credit agencies. If your lender or servicer does not act on your request, you can file a dispute directly with Equifax, Experian, or TransUnion and request a correction of the incorrect information.
- Contact Our Office. If your dispute is unsuccessful and your credit has been impacted negatively you can contact our office and we can investigate.
The U.S. Department of Education, Office of Federal Student Aid has coronavirus and forbearance information for students, borrowers, and parents.
The Consumer Financial Protection Bureau has information on protecting your finances during the coronavirus pandemic and student loans and the coronavirus pandemic.
See Maryland Attorney General’s warning to consumers about COVID-19 scams.
If you believe that you have been a victim of a financial scam related to student loan debt you can contact our office to file a fraud reporting form.