Multiple relief programs are established for student loan borrowers during the COVID-19 outbreak providing financial aid to students. Betsy DeVos, the Secretary of Education, has been petitioned for stopping relief funds for federal student loans relief by the judiciary. Betsy Devos and the education department were accused of seizing payment from student loan borrowers during this distressing situation. And the federal court judge has ordered not to limit the COVID -19 relief assistance.
List of contents
- Relief programs
- Court statements
- Paying off student loans quickly
- General information
A restrictive clause was made by DeVos stating that students who are eligible under Title IV of the Higher Education Act are the ones to be receiving financial aid and rest are denied from these relief programs. 2.2 dollars were released by the CARES Act to provide help to students with financial aid during the COVID 19 outbreak. If you have federal student loans owned by the department of education your default loans and all federal student loan payments are paused, student loans interest rates are reduced to 0% from March 13 to September 30th, 2020. The department of education is keeping a close track of the situation to further extend the relief program. Higher Education Emergency Relief Funds have been given 12.6 billion dollars for community colleges and schools. And the school/college can decide to whom and what basis these funds can be distributed among students who need help.
Betsy DeVos wants the students' loan relief to be limited only to a set of students. Students with undocumented, international, and DACA recipient students with low grades claimed not to be eligible for this Act. Though the prosecutor argued informing that the act must be applicable for all the students who have federal student loans. There were cases reported for collecting fees from defaulted loan students, and the judge held DeVos in the offense for doing so. And the prosecutor filed a case so that the department of education does not continue to take wages from these students who are already in an economic dilemma.
The CARES Act provided funds to cover requirements like rent, child care, technology, groceries, housing, education, etc, to which limitations were set. In response to the eligibility criteria set by Betsy Devos, the prosecutor Eloy Ortiz, the chancellor of California colleges, told that CARES Act must provide funds for the whole community college system, the US has more than 2.1 million students studying in more than 100 colleges across the country, all students with federal loans owned by ED must be eligible. And that these funds were separately set for such students who are in financially disabled situations. And that the main purpose of the CARES Act is to assist workers, families, and businesses, and preserve jobs for all American industries. And, such limitations must be removed, as it's not helping.
Finally, after reviewing the concerns of the defendant and prosecutor, the district judge Yvonne granted an order to not limit the COVID 19 relief. Since the CARES Act is published to provide protection, it cannot be limited to only a few sets of students and that will act unfairly in this global pandemic situation. HEERF funds are to be given to provide relief. And withholding these emergency funds is illegal.
Ways to pay student loans quickly
It is always good to consider paying your student loans faster. Below are a few ways to do so
Refinancing student loans: Due to the changes in our global economic conditions, refinancing your student loans can happen at lower rates. If you have a good credit score, employed, you can apply to refinance your loans to a lower interest rate and save a lot of money. Refinancing federal loans is not advised as you will lose benefits like interest-free forbearance and income-driven plans and of course offers the government provides during the pandemic.
Consolidation student loans: All federal student loans owned by ED, will be in administrative forbearance, which will temporarily suspend your monthly payments. This was introduced in the CARES Act as a protection for borrowers paying loans during the pandemic, from March 13, 2020, till Sept. 30, 2020. If you have chosen auto-debit payments, during the administrative forbearance, your money will be refunded back to you. If not it is advised to contact your servicer for the same, also if you wish to still make manual payments, you are given the option to do so. Continuing making payments will always help you lower your loan balance and this will get you closer to options to apply for loan forgiveness etc. If you continue to make payments during the administrative forbearance, you can either opt-out and continue the payment or you can make payments while staying in administrative forbearance. If your student loans are not owned by ED, then this relief Act does not apply to you. In such cases, you can consolidate your loans into federal student loans, which will help you manage your payments, and also you will have a few interest rates which will be lower than the earlier interest rate after the administrative forbearance period.
IDR Repayment plans: IDR will help you pay lesser monthly repayment for your student loans, and also by making 120 consecutive payments you will be eligible for loan forgiveness. So opting for an IDR repayment plan is advised. Since the rate of interest is decided based on family size, residence and income received, it provides you with lower interest rates. Therefore choosing an IDR plan is helpful.
Loan forgiveness: Borrowers in an income-driven repayment plan, during this period all your suspended payments will be counted in IDR forgiveness. PSLF and other forgiveness programs are still available in the relief program. If you make 120 consecutive payments and are employed you will still be eligible for PSLF not otherwise.
More information on Loan forgiveness
ED announced more education policies for disruptions caused by the coronavirus. Waiving off student loans for all students without discriminating or bringing any more limitations. All federal student loans to be under administrative forbearance have to be subjected to pay 0 % interest and loan payments will not be collected for 2 months and no interest will be accrued till September 2020. Even the servicers and private lenders have come up with relief programs to help the borrowers during this period. For more details, you can check COVID 19 information by ED