April 07, 2020
DFS OBTAINS RELIEF FOR APPROXIMATELY 300,000 NY STUDENT LOAN BORROWERS NOT COVERED BY FEDERAL CARES ACT
Agreement Reached with Navient, Nelnet, PHEAA, MOHELA and Others, Representing Over 90% of Privately-Held Student Loans
Agreement Includes Deferred Collection of Payments for 90 Days and Waived Late Fees Upon Borrower Request, No Negative Data Reported to Credit Bureau Agencies, and Other Relief to New York State Student Borrowers Impacted by COVID-19
DFS Urges All Student Loan Borrowers Impacted By COVID-19 to Contact Their Student Loan Servicer to Receive Relief
The New York State Department of Financial Services (DFS) today announced it reached an agreement with the lion’s share of the private student loan industry. Based on this agreement, which provides relief to as many as 300,000 New Yorkers, borrowers facing financial hardship due to the Coronavirus (COVID-19) pandemic may contact their student loan servicer to defer student loan payments for 90 days and obtain other relief, including no late payment fees and no negative data reported to credit bureau agencies.
The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act provides relief for millions of student loan borrowers; however, it only covers loans owned by the federal government, leaving out as many as 300,000 New Yorkers with either commercial Federal Family Education Loan Program (FFELP) loans or private student loans owned by private lenders. DFS’ agreement announced today provides much-needed relief to these outstanding borrowers.
“At a time where many are suffering financial hardship due to COVID-19 it is imperative that all regulated industries work with consumers to provide relief,” said Superintendent Linda A. Lacewell. “We appreciate the largest student loan servicers and lenders in New York and the nation stepping forward with a thoughtful plan to help New York student loan borrowers.”
Among those agreeing with this relief are Navient, Nelnet, the Pennsylvania Higher Education Assistance Agency (PHEAA), the Missouri Higher Education Loan Authority (MOHELA), EdFinancial, and others, which represent approximately 90% of the privately-held student loans in New York.
Pursuant to DFS’ agreement with the student loan industry, New Yorkers with privately-held loans who are impacted by COVID-19 should contact their student loan servicer to request relief, which includes:
- Providing a minimum of 90 days of forbearance relief for borrowers;
- Waiving late payment fees for borrowers;
- Ensuring no borrower is subject to negative credit reporting;
- Ceasing debt collection lawsuits for 90 days; and
- Working with eligible borrowers to enroll them in other applicable borrower assistance programs.
DFS urges all student loan borrowers experiencing financial hardship due to COVID-19 to ask their student loan servicers for relief, as all servicers are providing varying levels of support during this time. DFS also urges all student loan servicers to proactively contact New York borrowers to offer assistance to those in need, and reminds student loan servicers to quickly and appropriately implement the relief provided by the federal CARES Act for borrowers whose loans are federally owned.
This builds on Governor Cuomo’s announced relief to temporarily halt the collection of student debt owed to the State of New York and referred to the Office of the Attorney General for collection for at least a 30-day period due to COVID-19, and the Governor’s signed FY 2021 budget, which sets standards for the student loan debt relief industry in New York to protect borrowers from abusive debt relief scams.
DFS continues to #StepUpForStudents by ensuring that NY borrowers with privately-held loans, not just those whose loans are owned by the federal government, receive the relief they need during this pandemic.
For additional DFS regulatory actions on the COVID-19 Pandemic, visit www.dfs.ny.gov/industry/coronavirus.
Student loan borrowers can visit the DFS website to learn more about their relief options.