The grave effects of the coronavirus or COVID-19 pandemic extend a multitude of concerns, including its impact on post-secondary education. While institutions continue to come up with their own solutions to assist students, the U.S. Department of Education is also taking measures to ease the financial burden of students, especially those with federal loans during this crisis. Some of those measures are highlighted below.
EMERGENCY STUDENT CASH GRANTS
On April 9, 2020, the U.S. Department of Education announced the release of $6.28 billion to colleges and universities to provide direct emergency cash grants to students whose lives and educations have been disrupted by the COVID-19 outbreak. The funding is available through the Higher Education Emergency Relief Fund authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Eligible student expenses related to the pandemic may include food, housing, course materials, technology, health care, and child care. HPEAP will provide emergency grant related contact information for Hawaii’s institutions as it becomes available.
See the contact list: https://cca.hawaii.gov/hpeap/main/emergency-cash-grant-contact-list/
For now, students can read more, including a list of allocation amounts and a letter from U.S. Secretary of Education Betsy DeVos to school presidents, at https://www2.ed.gov/about/offices/list/ope/caresact.html.
Also see the USDE news release here.
FEDERAL LOAN HELP
On March 20, 2020, the U.S. Department of Education announced that all borrowers with federal student loans will automatically have their interest rates set to 0% for a period of at least 60 days. In addition, each borrower will have the option to suspend their payments for at least two months. This allows the borrower to temporarily stop payments without worrying about accruing interest.
Federal student loan servicers have been directed to grant an administrative forbearance to any borrower who requests one. The forbearance will be in effect for at least 60 days, beginning March 13, 2020. There is also an automatic suspension of loan re-payments by any borrower more than 31 days delinquent as of March 13, 2020, or who becomes more than 31 days delinquent, giving borrowers a safety net during this national emergency.
Borrowers should contact their loan servicer online or by phone to determine if their loan is eligible. Your servicer is the entity to which you make your monthly payment. If you do not know who your servicer is or how to contact them, visit StudentAid.gov/login or call 1-800-4-FED-AID (1-800-433-3243; TTY for the deaf or hearing-impaired 1-800-730-8913) for assistance.
Students should visit https://studentaid.gov/announcements-events/coronavirus for more detailed information and check that website frequently for updates.
On March 31, 2020, the U.S. Department of Education provided an update on its response to the national emergency. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, that was signed into law on March 27, is a federal emergency relief package that seeks to stem the economic fallout from the pandemic. The Act includes provisions to help student loan borrowers weather the effects of the virus on household budgets. It suspends all involuntary collections of defaulted student loans, including wage garnishments, Social Security garnishments, and tax refund offsets. Further, the Act directs the U.S. Department of Education to automatically suspend payments on most federal student loans (not commercially held FFELP or private student loans) through September 30, 2020.
• Interest is waived for the duration of the suspension.
• The suspended payments count as if the borrower had made a payment for the purpose or any loan forgiveness or loan rehabilitation program.
• For the purpose of reporting information about a loan to a consumer reporting agency, any payment that has been suspended is treated as if it were a regularly scheduled payment made by the borrower.
• Involuntary collection of loans is suspended during the suspension period.
The Secretary of Education is given a timeline to notify borrowers. There are many questions regarding the implementation of this Act. At present, there is no additional detail in the legislation. We anticipate that clarifying commentary from the U.S. Department of Education will be forthcoming.
The Consumer Financial Protection Bureau also provided answers to some frequently asked questions that student borrowers may have. Please visit: https://www.consumerfinance.gov/about-us/blog/what-you-need-to-know-about-student-loans-and-coronavirus-pandemic/