Following up on the good news that the White House has extended suspension of student loan repayments until May 1, the Federal Trade Commission (FTC) is offering borrowers some help in figuring out exactly what’s available and how to take advantage of it.
In reviewing the agencies guidance, ConsumerAffairs found these tips:
Use government resources: The FTC says consumers should avoid companies that make repayment a hassle and use government resources that are currently available. “The program is already in place and there’s nothing you need to do to enroll,” said Ari Lazarus, a Consumer Education Specialist at the FTC. “Anyone who tells you they can help you sign up for this program for a fee is a scammer.”
Make sure your loan is eligible: Unfortunately, payment relief options do not cover all types of student loans. The program gives temporary payment relief to borrowers with qualifying “federal” student loans, but the word “federal” can be misleading. For example, older Family Federal Education Loan (FFEL) program loans don’t qualify, nor do Perkins Loans that are owned by the school someone attended.
The FTC advises consumers to check if their loan is eligible by contacting their federal loan servicer online or by phone. It might be helpful to check out ConsumerAffairs’ list of student loan lenders to find out what the best method of contacting them is.
“If your federal loans are covered, the U.S. Department of Education has automatically placed your loans into what’s called ‘administrative forbearance.’” Lazarus said. “That means you can stop making payments on those loans right away, up through May 1, 2022. If your payments automatically come out of your bank account, check if any payments have been processed since March 13, 2020. If they have, you may be able to get a refund as part of administrative forbearance.”
Lazarus says student loan holders can make sure they’ve got all lenders covered by taking a look at their credit reports, which are available for free every week through April 20, 2022. “Read through it and find your student loans, taking note of the companies that are your lenders or loan servicers,” he said.
To help, StudentAid.org offers a complete list of federal loan servicers. Consumers can contact the Federal Student Aid Information Center (FSAIC) by phone at 1-800-433-3243.
Take advantage of good interest rates. To encourage borrowers to proactively pay back their student loans, the FTC’s program is offering a nice 0% interest rate through May 1st. To find out if someone is on an income-based repayment program and/or forgiveness program, all they need to do is check out Federal Student Aid's Coronavirus page to see which option makes the most sense.
Don’t cave in to collectors. The Department of Education is giving loan holders who are in default a little breathing room by forcing collection agencies to stand down during the extension. That means no collection calls, no letters, and no billing statements through May 1, 2022. According to the extension, borrowers can receive a refund if their student loans are in default and their employer has garnished their wages.
Check your options for loan forgiveness. The Biden administration has also added public service loan forgiveness (PSLF) or Temporary Expanded Public Service Loan Forgiveness (TEPSLF) as additional options for consumers. There are several provisions, but consumers can learn more about all of their forgiveness options by checking out this government resource.