Senator Elizabeth Warren, joined by a group of other Democratic Senators and Senator Bernie Sanders, sent a series of letters to companies that service private student loans requesting “a detailed report of the steps your company is taking in response to the COVID-19 pandemic and economic emergency to mitigate the financial burden facing your student loan borrowers.”

The Senators urge the companies to immediately take the following steps “to ensure that your private student loan borrowers are best positioned to weather the economic fallout of the coronavirus pandemic”:

  • Allow borrowers to suspend payments without fees or consequence. Companies should suspend payments without fees, restrictions, or consequences to borrowers’ credit, and make this relief automatic for all borrowers, but at a minimum, for all delinquent borrowers, to ensure that interest does not accrue or capitalize, and provide notice and guidance to borrowers to help them resume repayment once the pandemic subsides.
  • Ensure that payment suspension does not trigger cosigner consequences. Companies should suspend monthly payments for borrowers without any penalties (financial or otherwise), payment obligations, or credit consequences for cosigners (who tend to be older Americans most vulnerable to COVID-19).
  • Immediately halt all involuntary collection efforts. Companies should immediately halt all involuntary debt collections efforts, including any lawsuits against borrowers who have defaulted or are delinquent on their loans.
  • Cancel or discharge loans of distressed borrowers. Companies should cancel or discharge as many delinquent loans as possible during the pandemic, and especially the loans of borrowers who have filed for bankruptcy or who are otherwise in clear financial distress that will inhibit their ability to ever fully repay their loans.
  • Expand loan modification and affordable repayment options. Companies should permanently provide additional, affordable repayment and loan modification options for private student loan borrowers, including options for borrowers who see long-term changes in their income.

While the Senators point to the protections provided by the CARES Act for federal student loan borrowers, the ability of servicers to provide similar protections in the private student loan context is more complicated due to securitizations, bond issuances, and the need to get consent from trustees, investors, and bondholders,

The Senators ask the companies to provide their reports by April 20, 2020 and to include in the reports details about a company’s “specific plans” to address each of the steps that the Senators are urging companies to take.