The Coronavirus Debt Collection Suspension Program
Today, the Department of Education announced that it will be suspending debt collection for some borrowers who have Defaulted on Federal Student Loans.
This is one of the many assistance programs being offered to Federal borrowers in the wake of the coronavirus pandemic, and includes a halt on seizures of wages, tax refunds and Social Security benefits for people in default status on Federal debt.
I’ll give the specific details of the update below, but I want to make sure you’re also aware of two other important benefits programs currently on offering, including:
- The Coronavirus Student Loan Payment Suspension Program – This program allows you to pause your Federal student loan payments if your income has been impacted by the coronavirus pandemic
- The Coronavirus Student Loan Interest Waiver Program – This program allows you to avoid interest accumulation on Federal student loans if you’ve been impacted by the coronavirus pandemic
Essentially, anyone who’s income has been impacted by the coronavirus will have access to these Federal Student Loan Relief Programs, which are being put in place for as long as the public health emergency lasts.
Initially, they programs are set to run for 2 months, but they could last for many, many more months if the coronavirus pandemic continues to drag on to and through the Summer.
Please review this post, and my post covering Questions About the Coronavirus and Student Loan Debt, then if you still have any additional questions, feel free to post them in the Comments section below.
I’ll do my best to get you a reply within 24 hours!
Collection is Paused, But Some Will Also Receive Refunds
As part of the program, Department of Education announced that at least $1.8 BILLION in funds already collected with Federal Student Loan Wage Garnishments, Federal Student Loan Social Security Garnishments, and Federal Student Loan Tax Refund Garnishments will be returned to borrowers!
This includes any garnishments that were taken since March 13th, so if you’ve lost money to the Federal Government over defaulted Federal student loans since that date, then you may be looking at getting a refund under this program.
To find out if you may be included in this program, contact the Department of Education, your Student Loan Servicing Company or the Student Loan Debt Collection Agency handling your account and ask them if you’re eligible for the refund.
Private Debt Collectors Should Also Stop Calling
The Department of Education also announced that they’ve requested all Federal Student Loan Debt Collection Agencies to STOP calling borrowers, issuing notices that they owe money, or sending billing statements.
Which means that if you’ve been getting harassed by debt collectors of your defaulted Federal student loans, things are probably about to get strangely quiet for as long as the coronavirus pandemic lasts.
You can still contact the debt collection agency to ask about your loan, and get details about how much you owe, etc., however, so don’t be afraid to contact them if you have questions as they have been ordered to continue offering customer service during this time period.
No New Loans will Be Moved Into Default Either
Finally, Department of Education said that it’s requested that no new defaulted loans will be moved into default status, with the loans transferred to debt collectors for AT LEAST 60 days from March 13th.
What this means is that if you default during the coronavirus pandemic, you’ll at least get a bit of breathing room where you won’t start getting harassed by debt collectors.
However, no one should default during this time, because thanks to the Trump programs allowing you to suspend payments and avoid interest capitalization, there’s no reason to fall into delinquency or default for as long as this crisis continues!
More Help COULD Be on the Way Too!
It’s possible we’ll see even more assistance offered to Federal borrowers in the next couple days/weeks/months as well, because congress is discussing all sorts of additional proposals, including:
- Joe Biden’s Proposal to Cancel $10,000 in Federal Student Loans
- Rep Ilhan Omar’s Proposal to Cancel $30,000 in Federal Student Loans
- Senator Bernie Sanders Proposal to Cancel ALL Federal Student Loans
- Senator Elizabeth Warren’s Proposal to Cancel ALL Federal Student Loans
Keep checking back regularly here for updates as I will make sure this site gets the latest information out as soon as any news is released regarding any of these pending proposals.
And in the meantime, if you want to look at other assistance programs currently available, check out the programs outlined below!
Help With Federal Student Loans
There are already all sorts of existing benefits programs available to help people with Federal student debt, and now is a great time to read up about them!
I’ve spent the past decade writing over 100 articles on these programs, so you’re bound to find something that can help by checking out the other pages of my site.
For Help with Federal Student Loans, check out my Guides on:
- Federal Student Loan Forgiveness
- Federal Student Loan Bankruptcy
- Federal Student Loan Consolidation
- Federal Student Loan Delinquency & Default
- The Federal Student Loan Rehabilitation Program
- Federal Student Loan Wage Garnishment
- Federal Student Loan Deferment
- Federal Student Loan Forbearance
- Federal Student Loan Repayment Plans
Help With Private Student Loans
And if you have private student loans, the bad news is that there aren’t as many benefits or assistance programs available, but that doesn’t mean you should give up entirely!
If you need Help with Private Student Loans, take a look at my Guides on them, including:
- Private Student Loan Forgiveness Programs
- Private Student Loan Consolidation
- Private Student Loan Bankruptcy
- Private Student Loan Defaults
If you have any other questions about student loans, please post them in the Comments section below and I’ll try my hardest to get you a response within 24 hours!
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Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.