Massachusetts, New Jersey, Connecticut, Illinois, Colorado, California, Washington, and Vermont have announced that they are participating in a multi-state initiative to provide relief to borrowers whose student loans are not covered by the CARES Act through agreements with certain student loan servicers. The announcements indicated that Virginia is also participating in the initiative.
The initiative provides relief to borrowers with Federal Family Education Loan Program (FFELP) loans that are commercially-owned (i.e., not federally-owned) and borrowers with private student loans. The relief options available to borrowers include a minimum 90-day forbearance, waiver of late fees, no negative credit reporting, a 90-day moratorium on collection lawsuits, and enrollment in assistance programs such as income-based repayment, where available.
The Connecticut, New Jersey, Colorado, and Vermont announcements acknowledge that the ability of student loan servicers to take these actions may be limited by investor restrictions or contractual obligations and encourage servicers to work with loan holders whenever possible to relax such restrictions or obligations. Borrowers with loans serviced by servicers who have agreed to participate in the initiative must contact the servicer to determine appropriate relief options.