Federal Student Loan Debt Relief in the August 24, 2020 Context of COVID-19 Alexandra Hegji The Higher Education Act of 1965 (HEA; P.L. 89-329, as amended) authorizes the operation of Analyst in Social Policy three federal student loan programs: the William D. Ford Federal Direct Loan (Direct Loan) program, the Federal Family Education Loan (FFEL) program, and the Federal Perkins Loan program. As of December 31, 2019, $1.5 trillion in such loans, borrowed by or on behalf of 42.8 million individuals, remained outstanding. In response to the current coronavirus disease 2019 (COVID-19) pandemic, numerous questions have arisen regarding student loan repayment flexibilities and debt relief that may be available to individuals to alleviate potential financial effects related to COVID-19.

The HEA authorizes several flexibilities that may be relevant to individuals facing financial difficulties resulting from COVID-19. These include the following:

•  Loan deferment and forbearance options offer a borrower temporary relief from the obligation to make monthly payments. In certain instances, interest does not accrue during deferment periods; although interest does accrue during forbearance periods. Periods of deferment or forbearance do not count toward the 120 monthly payments required to qualify for Public Service Loan Forgiveness (PSLF), nor do they count toward the 20- or 25-year repayment periods under the income-driven repayment plans.
•  Income-driven repayment (IDR) plans afford borrowers the opportunity to make payments in amounts that are capped at a specified share or proportion of their discretionary income over a repayment period not to exceed 20 or 25 years, depending on the plan. At the end of the repayment period, the remaining balance of an individual'’s loans is forgiven.

Recent administrative and congressional actions, including the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), ), provide additional student loan relief measures:

• Interest rates  The accrual of interest on federally held student loans are being set to 0%is suspended from March 13, 2020, through September 30, 2020.
• through December 31, 2020.  Federally held student loans are being placed in a special administrative forbearance for March 13, 2020, through September 30 through December 31, 2020. During this time, borrowers will not be required to make payments due on their loans. This special administrative forbearance will count toward the 120 monthly payments required to qualify for PSLF, the 20- and 25-year repayment periods under the IDR plans, and the nine voluntary payments required for individuals to rehabilitate their defaulted loans.
•  Debt collections activities, including involuntary collection activities such as wage garnishment and offset of certain federal benefits (e.g., federal income tax return benefits, Social Security benefits) are being suspended on federally held student loans for March 13, 2020, through September 30December 31, 2020. Congressional Research Service link to page 4 link to page 5 link to page 5 link to page 6 link to page 6 link to page 7 link to page 7 link to page 7 link to page 8 link to page 8 link to page 9 link to page 9 link to page 9 link to page 10 link to page 10 link to page 11 link to page 12 link to page 14 link to page 15 link to page 16 link to page 16 link to page 16 link to page 17 link to page 17 link to page 19 Federal Student Loan Debt Relief in the Context of COVID-19 Contents Introduction ................................................................................................................... 1 Pre-existing Loan Terms and Conditions............................................................................. 2 Deferment ................................................................................................................ 2 Unemployment Deferment..................................................................................... 3 Economic Hardship Deferment............................................................................... 3 Forbearance .............................................................................................................. 4 General Forbearance ............................................................................................. 4 Student Loan Debt Burden Forbearance ................................................................... 4 Income-Driven Repayment Plans ................................................................................. 5 Administrative and Congressional Actions Taken in Response to COVID-19 ........................... 5 Returning Direct Loans .............................................................................................. 6 Failure to Begin Attendance ................................................................................... 6 Withdrawal.......................................................................................................... 6 Direct Subsidized Loan Limitations.............................................................................. 7 Entering Repayment................................................................................................... 7 Interest Accrual ......................................................................................................... 8 Cessation of Payments................................................................................................ 9 Loan Default and Collections .................................................................................... 11 Collection of Defaulted Loans .............................................................................. 12 Satisfactory Repayment Arrangements, Loan Rehabilitation, and Consolidation Out of Default ................................................................................................. 13 Reporting to Consumer Reporting Agencies................................................................. 13 Teacher Loan Forgiveness......................................................................................... 14 Additional Flexibilities .................................................................................................. 14 Contacts Author Information ....................................................................................................... 16 Congressional Research Service Federal Student Loan Debt Relief in the Context of COVID-19 Introduction , 2020.

The Higher Education Act of 1965 (HEA; P.L. 89-329, as amended) authorizes the operation of three federal studentstudent loan programs: the William Wil iam D. Ford Federal Direct Loan (Direct Loan) program, the Federal Family Education Loan (FFEL) program, and the Federal Perkins Loan program.¹1 While new loans are authorized to be made only through the Direct Loan program, FFEL and Perkins Loan program loans remain outstanding and borrowers of such loans remain responsible for repaying them.

As of December 31, 2019, $1.5 trilliontril ion in these loans, borrowed by or on behalf of 42.8 million mil ion individuals, remained outstanding.²

• 2  Direct Loan program loans are owned by the U.S. Department of Education (ED). As of December 31, 2019, approximately 35.3 millionmil ion borrowers owed about $1.3 trilliontril ion in Direct Loan debt.³
• 3  FFEL program loans may be held by private lenders, guaranty agencies, or ED. As of December 31, 2019, approximately 11.8 millionmil ion borrowers owed about $257.2 billion bil ion in FFEL program debt. Of that, approximately $87.7 billionbil ion was held by ED, representing between 3.3 million and 6 million borrowers,⁴mil ion and 6 mil ion borrowers,4 and $169.3 billion bil ion was held by private lenders or guaranty agencies, representing debt for between 6.0 million and 7.2 million borrowers.⁵
• mil ion and 7.2 mil ion borrowers.5  Perkins Loan program loans may be held by institutions of higher education (IHEs) that made the loans or by ED. As of December 31, 2019, about 1.9 millionFor award year 2018-2019 (July 1, 2018-June 30, 2019), approximately 2.0 mil ion borrowers owed approximately $5.9 billion in Perkins Loans.⁶

7 bil ion in Perkins Loans. Of that, ED held nearly $1 bil ion, representing debt 1 For additional information on loans made under these programs, see CRS Report R45931, Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program : Term s and Conditions for Borrowers; CRS Report RL31618, Cam pus-Based Student Financial Aid Program s Under the Higher Education Act; and CRS Report R40122, Federal Student Loans Made Under the Federal Fam ily Education Loan Program and the William D. Ford Federal Direct Loan Program : Term s and Conditions for Borrowers (archived). 2 T his number represents an unduplicated number of federal student loan recipients. Some individuals may have borrowed from more than one federal student loan program. As such, the numbers of recipients for the various federal student loan programs presented herein sum to greater than 42.8 million. U.S. Department of Education, Office of Federal Student Aid, Federal Student Aid Data Center, “ Federal Student Aid Portfolio Summary,” https://studentaid.gov/sites/default/files/fsawg/datacenter/library/PortfolioSummary.xls, (hereinafter, ED, “ Federal Student Aid Portfolio Summary”). 3 ED, “Federal Student Aid Portfolio Summary.” 4 Approximately 3.17 million borrowers have FFEL program loans placed with ED-contracted loan servicers, and approximately 2.9 million borrowers have FFEL pro gram loans placed with the ED-contracted Default Management System. An individual may have FFEL program loans placed with both ED-contracted loan servicers and the Default Management System; thus, the unduplicated count of FFEL program borrowers with loans held by ED is unknown. U.S. Department of Education, Office of Federal Student Aid, Federal Student Aid Data Center, “Location of Federal Family Education Loan Program Loans,” https://studentaid.gov/sites/default/files/fsawg/datacenter/library/LocationofFFELPLoans.xls. 5 Approximately 6 million borrowers have FFEL program loans held by commercial lenders, and approximately 1.2 million borrowers have FFEL program loans held by guaranty agencies. An individual borrower may have FFEL program loans held by a commercial lender and a guaranty agency ; thus, the unduplicated count of FFEL program borrowers with loans that are not held by ED is unknown . U.S. Department of Education, Office of Federal Student Aid, Federal Student Aid Data Center, “Location of Federal Family Education Loan Program Loans,” https://studentaid.gov/sites/default/files/fsawg/datacenter/library/LocationofFFELPLoans.xls. Congressional Research Service 1 Federal Student Loan Debt Relief in the Context of COVID-19 owed for approximately 375,000 borrowers, and IHEs held about $4.7 bil ion, representing debt for approximately 1.6 mil ion borrowers.6 In response to the current coronavirus disease 2019 (COVID-19) pandemic, numerous questions In response to the current coronavirus disease 2019 (COVID-19) pandemic, numerous questions have arisen regarding student loan repayment flexibilities and debt relief that may be available to individuals to alleviate to individuals to al eviate potential financial effects related to COVID-19. The HEA generally general y authorizes several options for qualifying individuals. Recent administrative and congressional action, including the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), provide additional student loan relief measures.

This report provides an overview of student loan repayment flexibilities and debt relief provisions that may be available to borrowers facing financial difficulties resulting from the pandemic. It first lists some pre-existing loan terms and conditions (authorized through statute and regulations) that may be available to individuals. It then discusses specific administrative and congressional actions taken to address student loan debt in the context of COVID-19. The report concludes with a brief description of additional existing authorities that could be utilized to address other aspects of student loan relief.

Pre-existing Loan Terms and Conditions

Several loan terms and conditions that offer forms of repayment relief to borrowers were authorized in statute and regulations prior to the onset of the COVID-19 pandemic. These include periods of deferment and forbearance, which offer borrowers temporary relief from the obligation to make monthly payments; and the availability of income-driven repayment (IDR) plans (e.g., income-based repayment, Pay As You Earn [PAYE]), which afford borrowers the opportunity to make payments in amounts that are capped at a specified share or proportion of their discretionary income, for a maximum repayment period of 20 or 25 years.

Deferment

A deferment is a temporary period during which a borrower'’s obligation to make regular monthly payments of principal or interest is suspended, and during which an interest subsidy (i.e., interest does not accrue) may be provided on certain types of loans. Where an interest subsidy is not provided, unpaid interest that has accrued on a borrower'’s loan during a deferment is capitalized (i.e., added to the principal) at the expiration of the deferment period. Periods of deferment do not count toward the 120 monthly payments required to qualify for Public Service Loan Forgiveness (PSLF),⁷7 and most are not included in a borrower'’s repayment period (e.g., periods of unemployment deferment do not count toward the maximum repayment periods of 20 or 25 years under the IDR plans). In most instances, a borrower must proactively apply for and request a deferment.

A deferment may be granted for a variety of reasons. Unemployment deferment and economic hardship deferment (described below) may be especiallyespecial y relevant to individuals facing financial difficulties due to COVID-19. These types of deferment are available to borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs.

Unemployment Deferment

6 CRS communication with U.S. Department of Education, Office of Legislative and Congressional Affairs, May 22, 2020. 7 For additional information on PSLF, see CRS Report R45389, The Public Service Loan Forgiveness Program: Selected Issues. Congressional Research Service 2 Federal Student Loan Debt Relief in the Context of COVID-19 Unemployment Deferment A borrower who is seeking to obtain full-time employment and is either not employed or employed less than full-time may be granted an unemployment deferment.⁸8 To be eligible, a borrower must either be receiving unemployment benefits or document that he or she has registered with a public or private employment agency (if one is available within 50 miles) and is diligently diligently seeking to obtain full-time employment.

The deferment may be granted for an initial six-month period, and may be extended in six-month increments.⁹9 A borrower may receive the deferment for a maximum cumulative period of three years, which may include one or more episodes of unemployment.¹⁰

10 During an unemployment deferment, an interest subsidy is provided on Direct Subsidized Loans, the subsidized component of Direct Consolidation Loans, FFEL Stafford (Subsidized) Loans, the subsidized component of FFEL Consolidation Loans, and Perkins Loans.

Economic Hardship Deferment

A borrower may qualify for a deferment during periods while he or she is experiencing an economic hardship.¹¹11 To qualify, a borrower must be (1) receiving payments under a federal or state public assistance program (e.g., Temporary Assistance for Needy Families [TANF], Supplemental Security Income [SSI], Supplemental Nutrition Assistance Program [SNAP], state general public assistance, other means-tested benefits), or (2) working full-time and have a monthly income that does not exceed an amount equal to 150% of the poverty line applicable to the borrower'’s family size, as calculated on a monthly basis.¹²

12 The deferment may be granted for periods of up to one year at a time, and may be extended up to a cumulative maximum of three years.¹³13 Periods of up to three years while a borrower qualifies for an economic hardship deferment may be counted as part of the repayment period for eacheac h of of the IDR plans.

During an economic hardship deferment, an interest subsidy is provided on Direct Subsidized Loans, the subsidized component of Direct Consolidation Loans, FFEL Stafford Loans, the subsidized component of FFEL Consolidation Loans, and Perkins Loans.

Forbearance

8 34 C.F.R. §§674.34(d), 682.210(h) and (s)(5), 685.204(f); U.S. Department of Education, Office of Federal Student Aid, “ Unemployment Deferment Request,” OMB No. 1845-0011, https://studentloans.gov/myDirectLoan/downloadForm.action?searchT ype=library&shortName=unemploy&localeCode=en-us&_ga=2.212772371.684834368.1556119313 -753213604.1539381477. 9 For Perkins Loan program loans, IHEs must reaffirm continued deferment eligibility on at least an annual basis; 34 C.F.R. §674.38(d). 10 After a period of unemployment deferment, a Perkins Loan borrower is entitled to a post -deferment grace period of six consecutive months; 34 C.F.R. §674.34(k). 11 34 C.F.R. §§674.34(e), 682.210(s)(6), 685.204(g); U.S. Department of Education, Office of Federal Student Aid, “Economic Hardship Deferment Request,” OMB No. 1845-0011, https://studentloans.gov/myDirectLoan/downloadForm.action?searchT ype=library&shortName=ecohardshp&localeCode=en-us&_ga=2.9995570.684834368.1556119313-753213604.1539381477. 12 A borrower may also qualify for an economic hardship deferment if he or she is serving as a volunteer in the Peace Corps. 13 After a period of economic hardship deferment, a Perkins Loan borrower is entitled to a post -deferment grace period of six consecutive months; 34 C.F.R. §674.34(k). Congressional Research Service 3 Federal Student Loan Debt Relief in the Context of COVID-19 Forbearance Forbearance constitutes permission for a borrower to temporarily cease making monthly Forbearance constitutes permission for a borrower to temporarily cease making monthly payments, to make payments in reduced amounts, or to make payments over an extended period of time. During periods of forbearance, no interest subsidies are provided (i.e., interest continues to accrue) and borrowers ultimately remain responsible for paying all al of the interest that accrues on their loans. Borrowers may pay the interest as it accrues during forbearance. At the end of the forbearance period, any unpaid accrued interest is capitalized into the principal balance of Direct Loan program and FFEL program loans; it is not capitalized (but remains due) for Perkins Loan program loans.¹⁴14 Periods of forbearance do not count toward the 120 monthly payments required to qualify for PSLF,¹⁵15 and are not included in a borrower'’s repayment period (e.g., periods of student loan debt burden forbearance do not count toward the maximum repayment periods of 20 or 25 years under the IDR plans). GenerallyGeneral y, borrowers must apply for forbearance.

General forbearance and student loan debt burden forbearance (described below) may be especiallyespecial y relevant to individuals facing financial difficulties due to COVID-19. These types of forbearance are available to borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs.

General Forbearance

A borrower may request a general forbearance (sometimes referred to as a discretionary forbearance) on the basis of experiencing a temporary hardship due to financial difficulties, a change in employment, medical expenses, or other reasons.¹⁶

16 General forbearance may be granted for an initial period of up to 12 months, renewed upon the borrower'borrower’s request, and limited to a maximum of 36 months.¹⁷17 At the end of the forbearance period, any unpaid interest that accrued during the period is capitalized.

Student Loan Debt Burden Forbearance

A borrower may receive a forbearance on the basis of having a federal student loan debt burden that equals or exceeds 20% of his or her total monthly taxable income.¹⁸18 To qualify, a borrower must demonstrate that his or her required monthly payments on HEA Title IV federal student loans (e.g., loans made under the Direct Loan, FFEL, or Perkins Loan programs) equal or exceed that amount.

14 34 C.F.R. §§674.33(d), 382.211(a)(4), 385.205(a). 15 For additional information on PSLF, see CRS Report R45389, The Public Service Loan Forgiveness Program: Selected Issues. 16 34 C.F.R. §§674.33(d)(f)(ii), 682.211(a)(2)(i), 685.205(a)(1); U.S. Department of Education, “General Forbearance Request,” OMB No. 1845-0031, https://studentloans.gov/myDirectLoan/downloadForm.action?searchType=library&shortName=general&localeCode=en-us&_ga=2.218639505.986094327.1560875974 -753213604.1539381477. 17 U.S. Department of Education, “General Forbearance Request,” OMB No. 1845-0031, https://studentloans.gov/myDirectLoan/downloadForm.action?searchType=library&shortName=general&localeCode=en-us&_ga=2.218639505.986094327.1560875974 -753213604.1539381477; U.S. Department of Education, Office of Federal Student Aid, “Student Loan Forbearance,” https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief/forbearance (accessed March 31, 2020). 18 34 C.F.R. §674.33(d)(5)(i), 682.211(h)(2)(i)(B), 685.205(a)(6); U.S. Department of Education, Mandatory Forbearance Request, “ Student Loan Debt Burden,” OMB No. 1845-0018, https://studentloans.gov/myDirectLoan/downloadForm.action?searchT ype=library&shortName=student&localeCode=en-us&_ga=2.148341183.986094327.1560875974 -753213604.1539381477. Congressional Research Service 4 Federal Student Loan Debt Relief in the Context of COVID-19 Student loan debt burden forbearance may be granted for an initial period of up to 12 months, Student loan debt burden forbearance may be granted for an initial period of up to 12 months, may be renewed upon the borrower'’s request, and is limited to a maximum of 36 months.

Income-Driven Repayment Plans

IDR plans19IDR plans¹⁹ afford borrowers the opportunity to make payments in amounts that are capped at a specified share or proportion of their discretionary income²⁰ over a repayment period not to exceed 20 to 25 years, depending on the plan. At the end of the repayment period, the remaining balance of an individual'’s loans is forgiven. Under these plans, it is possible for a borrower's ’s monthly payment to equal $0.

There are several IDR plans currently available to borrowers: the Income-Contingent Repayment (ICR) plan, the Income-Based Repayment (IBR) plans (one version of which is available to individuals to individuals who qualify as a new borrower on or after July 1, 2014; and another which is available available to individuals who do not qualify as a new borrower as of that date), the Pay As You Earn (PAYE) repayment plan, and the Revised Pay As You Earn (REPAYE) repayment plan. In general, Direct Loan borrowers (other than Parent PLUS Loan borrowers) are eligible for any of these plans.²¹21 FFEL program borrowers (other than Parent PLUS loan borrowers) are only eligible for the IBR plans.²²22 Perkins Loan borrowers are not eligible for any IDR plan.

Individuals must apply to repay their loans according to an IDR plan.²³23 In addition, they must annuallyannual y provide documentation of their income and family size to remain eligible for IDR repayment.²⁴ repayment.24 Borrowers may update their income and family size at any time if either changes. Upon submission of such information, a borrower'’s monthly payment amount will be wil be recalculated accordingly.

Administrative and Congressional Actions Taken in Response to COVID-19

Recently, ED and Congress have taken steps to provide additional forms of relief to federal student loan borrowers. This includes cancellingThese include cancel ing Direct Loans for payment periods during which qualifying individuals withdrew from their course of study due to COVID-19, waiving Direct Subsidized Loan limitations for students affected by COVID-19, temporarily settingsuspending interest rates to 0%accrual on qualifying loans, expanding the instances under which a forbearance may be available 19 For additional information on the IDR plans, see U.S. Department of Education, Office of Federal Student Aid, “Income-Driven Repayment Plans, https://studentaid.gov/manage-loans/repayment/plans/income-driven (accessed March 31, 2020) and CRS Report R45931, Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program : Term s and Conditions for Borrowers. 20 Discretionary income is defined as the portion of a borrower’s adjusted gross income that is in excess of a specified multiple of the federal poverty guidelines applicable to the borrower’s family size. 21 34 C.F.R. §685.208. 22 34 C.F.R. §682.215. 23 U.S. Department of Education, “Income-Driven Repayment (IDR) Plan Request,” OMB No. 1845-0102, https://studentaid.gov/app/images/idrPreview.pdf. 24 On December 19, 2019, the Fostering Undergraduate T alent by Unlocking Resources for Education Act (the FUT URE Act; P.L. 116-91) was enacted. Among other provisions, P.L. 116-91 authorizes the Internal Revenue Service to share relevant tax return information with ED for the purpose of determining a Direct Loan borrower ’s eligibility for and repayment obligations under IDR plans. As of the publication date of this report, it appears these procedures have not yet been operationalized. Congressional Research Service 5 Federal Student Loan Debt Relief in the Context of COVID-19 on qualifying loans, expanding the instances under which a forbearance may be available to borrowers of qualifying loans, and temporarily ceasing collectionscol ections on qualifying defaulted loans.

loans. Returning Direct Loans

Under the HEA, a Direct Loan borrower may be required to return or repay all al or part of the Direct Loans borrowed if the student does not complete a payment or enrollment period at an IHE for which the loan was received. Required procedures for such returns or repayments vary depending on whether a student did not begin attendance at an IHE or whether he or she withdrew.

withdrew. Failure to Begin Attendance

If a student does not begin attendance at an IHE in a payment or enrollment period, Title IV funds (including Direct Loan funds) must be returned to ED by the IHE and/or the student according the regulatory provisions.²⁵25 For Direct Loan amounts required to be returned by the student, the IHE must immediately notify ED (or its loan servicers) when it becomes aware that the student will wil not begin or has not begun attendance. Loan servicers then issue a final demand letter to the borrower. The demand letter requires the borrower to repay any loan principal and accrued interest within 30 days from the date the letter is mailed.²⁶26 If the borrower fails to comply with the demand letter, he or she is considered in default on the loan.

In March 2020, ED issued guidance²⁷guidance27 to IHEs specifying some flexibilities that may be used to address the return of Direct Loans by recipients who did not begin attendance at an IHE due to COVID-19. ED stated that if a student was unable to begin attendance due to a COVID-19- related school closure, the IHE is not required to notify the loan servicer of the student'’s failure to begin attendance. By waiving this requirement, loan servicers would not issue demand letters, and borrowers would be able to repay any loans according to the terms of the promissory note, including receiving a six-month grace period prior to the start of repayment.

Withdrawal

HEA Withdrawal HEA Section 484B specifies that when a Title IV aid recipient withdraws from an IHE before the end of the payment or enrollment period for which funds were disbursed, Title IV funds (including any Direct Loans received) must be returned to ED by the IHE and/or aid recipient according to statutorily prescribed rules (this is often referred to as Return of Title IV Aid). If an aid recipient is required to return any portion of a Direct Loan, he or she repays it in accordance with the terms of the loan.²⁸

28 The CARES Act authorizes several waivers with respect to Return of Title IV Aid procedures. Specific to Direct Loan borrowers, the act requires ED to cancel a borrower'’s obligation to repay 25 34 C.F.R. §668.21. 26 34 C.F.R. §685.211(e)(2). 27 U.S. Department of Education, Office of Postsecondary Education, “ Guidance for interruptions of study related to Coronavirus (COVID-19),” electronic announcement, March 5, 2020 (updated June 16, 2020), https://ifap.ed.gov/electronic-announcements/030520Guidance4interruptionsrelated2CoronavirusCOVID19 . 28 34 C.F.R. §668.22(h)(3)(i). Congressional Research Service 6 Federal Student Loan Debt Relief in the Context of COVID-19 s obligation to repay the entire portion of a Direct Loan associated with a payment period during which the student withdraws from an IHE as a result of a qualifying emergency.²⁹

29 Direct Subsidized Loan Limitations

Since July 1, 2013, a student who is a first-time borrower³⁰ may only borrow Direct Subsidized Loans for a period that may not exceed 150% of the published length of the academic program in which he or she is currently enrolled (e.g., six years for enrollment in a four-year bachelor's ’s degree program). This is referred to as the Direct Subsidized Loan maximum eligibility period.³¹

31 If a Direct Subsidized Loan borrower subject to this provision remains enrolled beyond the applicable maximum eligibility period, he or she will wil lose the interest subsidy and will wil become responsible for paying the interest that accrues on his or her Direct Subsidized Loans after the date that the maximum eligibility period is exceeded.

The CARES Act specifies that ED shall shal exclude from the maximum eligibility period any semester (or equivalent) that the student does not complete due to a qualifying emergency, if ED is “is "able to administer such policy in a manner that limits complexity and the burden on the student."³²

student.”32 Entering Repayment

In general, borrowers of Direct Loan, FFEL, and Perkins Loan program loans are required to make payments on the loans during a repayment period. The repayment period for Direct Subsidized Loans, Direct Unsubsidized Loans, FFEL Stafford Loans, FFEL Unsubsidized Loans, and Perkins Loans begins after a grace period.³³33 The grace period begins after the borrower ceases to be enrolled in an eligible postsecondary program on at least a half-time basis (enrollment on at least a half-time basis is often referred to as in-school status for federal student loan purposes). The repayment period for Direct PLUS Loans (to graduate students and to parents of dependent undergraduate students), Direct Consolidation Loans, FFEL PLUS Loans, and FFEL Consolidation Loans is required to begin when the loan is fully disbursed. However, borrowers of these loans, along with borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, FFEL Stafford Loans, FFEL Unsubsidized Loans, and Perkins Loans, may qualify for a deferment on the basis of their in-school status (or the in-school status of the student on whose behalf a PLUS Loan was made to a parent borrower), during which time they are not required to make payments on their loans but during which interest may accrue.³⁴34 A borrower qualifies for such an in-school 29 T he CARES Act defines a qualifying emergency as (1) “a public health emergency related to the coronavirus declared by the Secretary of Health and Human Services pursuant to section 319 of the Public Health Service Act ”; (2) an event related to the coronavirus for which the President declared a major disaster or an emergency under section 401 or 501, respectively, of the Robert T . Stafford Disaster Relief and Emergency Assistance Act”; or (3) “ a national emergency related to the coronavirus declared by the President under section 201 of the National Emergencies Act.” 30 A first-time borrower means “an individual who has no outstanding balance of principal or interest on a Direct Loan Program or FFEL Program loan on July 1, 2013, or on the date the borrower obtains a Direct Loan Program loan after July 1, 2013”; 34 C.F.R. §685.200(f)(1)(i). 31 HEA §455(q); 34 C.F.R. §685.200(f). 32 P.L. 116-136, §3506. 33 34 C.F.R. §§674.31, 682.209, 685.207. For Direct Loan program and FFEL program loans, the grace period typically lasts six months. For Perkins Loan program loans, the grace period typically lasts nine months. 34 34 C.F.R. §§674.33, 682.210, 685.204(b). Congressional Research Service 7 Federal Student Loan Debt Relief in the Context of COVID-19 A borrower qualifies for such an in-school deferment if he or she, or the student on whose behalf a PLUS Loan is made, is enrolled on at least a half-time basis.

ED has announced some flexibilities for borrowers of Direct Loan and FFEL program loans whose loan status was in-school on the date the student'’s attendance at an IHE was interrupted due to COVID-19. The loan status of such borrowers will wil continue to be reported as in-school until the IHE determines that the student has withdrawn from it.³⁵35 ED has permitted IHEs to defer reporting a student'’s withdrawn status if the IHE has a reasonable expectation that it will wil reopen at the start of a payment period that begins no later than 90 days following its COVID-19-related closure and that the student will wil resume attendance when the IHE reopens.³⁶

36 ED guidance does not address Perkins Loans.

Interest Accrual

Interest is charged on loans made under the Direct Loan, FFEL, and Perkins Loan programs. TypicallyTypical y, under a limited set of circumstances the federal government subsidizes some or all of al of the interest that would otherwise accrue on certain Direct Subsidized Loans, FFEL Stafford Loans, and Perkins Loans.³⁷

37 For March 13, 2020, through September 30, 2020, the Administration has set interest rates on federallyDecember 31, 2020, the accrual of interest on federal y held student loans (e.g., all al Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED) is suspended.38ED) to 0%. The CARES Act specifies that during this time interest will not accrue.³⁸ This means borrowers will wil not be responsible for paying interest on their ED-held loans for this period. This will (In practice, ED-held student loan interest rates have been effectively set to 0% during this time period.) This wil permit borrowers to enter into a period of deferment or forbearance without concern for whether interest would accrue and capitalize. Borrowers who 35 U.S. Department of Education, Office of Postsecondary Education, Electronic Announcement, “UPDAT ED Guidance for interruptions of study related to Coronavirus (COVID-19),” April 3, 2020, https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19 . 36 U.S. Department of Education, Office of Postsecondary Education, Electronic Announcement, “ Guidance for interruptions of study related to Coronavirus (COVID-19),” March 5, 2020 (updated March 20, 2020), https://ifap.ed.gov/electronic-announcements/030520Guidance4interruptionsrelated2CoronavirusCOVID19 . 37 Periods of interest subsidy include, but are not limited to, in-school periods while a borrower is enrolled in an eligible program on at least a half-time basis, during a grace period following enrollment on at least a half -time basis, and during periods of authorized deferment . 38 T his policy was originally put in place via administrative action by ED on March 20, 2020. Under the policy, interest rates for ED-held loans were to be set to 0% for a 60-day period, beginning March 13, 2020. U.S. Department of Education, “ Delivering on President T rump’s Promise, Secretary DeVos Suspends Federal St udent Loan Payments, Waives Interest During National Emergency,” press release, March 20, 2020, https://www.ed.gov/news/press-releases/delivering-president -trumps-promise-secretary-devos-suspends-federal-student -loan-payments-waives-interest-during-national-emergency. Subsequently, the CARES Act specified that “ interest shall not accrue” on Direct Loan program loans and ED-held FFEL program loans “ for which payment was suspended” (discussed later in this report) through September 30, 2020. Following enactment of the CARES Act, ED updated it s guidance to borrowers, stating that the 0% interest applies to all ED-held loans, including ED-held Perkins Loans, from March 13, 2020 , to September 30, 2020. U.S. Department of Education, Office of Federal Student Aid, “ Coronavirus and Forbearance Info for Students, Borrowers, and Parents,” https://studentaid.gov/announcements-events/coronavirus#student -questions (accessed April 14, 2020) (hereinafter, ED, “ Coronavirus and Forbearance Info for Students, Borrowers, and Parents”). On August 8, 2020, President T rump directed ED to extend the “waiver of all interest” on federally held student loans through December 31, 2020. U.S. President (Donald T rump), “Continued Student Loan Payment Relief During the COVID-19 Pandemic: Memorandum for the Secretary of Education,” 85 Federal Register 49585, August 13, 2020. Subsequently, ED updated its guidance to borrowers, stating that to effectuate the President’s direction, the 0% interest rate would be extended through December 31, 2020. ED “ Coronavirus and Forbearance Info for Students, Borrowers, and Par ents” (accessed August 24, 2020). Congressional Research Service 8 Federal Student Loan Debt Relief in the Context of COVID-19 or forbearance without concern for whether interest would accrue and capitalize. Borrowers who continue making payments on their loans during this time of 0% interest will interest suspension wil not have decreased monthly payments. They will wil have the full amount of the payments applied toward loan principal.³⁹39 Borrowers who are eligible for this benefit need not apply for it; ED will automaticallywil automatical y adjust their accounts to reflect the 0% interest.

interest suspension. In addition, ED has authorized FFEL program lenders and institutions that hold Perkins Loans to provide the same 0% interest rate on these nonfederally“zero interest” benefit on these nonfederal y held loans on a voluntary basis.⁴⁰ 40 Borrowers who are ineligible for the 0% interest ratezero interest benefit because their FFEL program loan holder or Perkins Loan program IHE is not providing it may take advantage of the 0% interest interest suspension period by consolidating such loans into a Direct Consolidation Loan, which is eligible for the 0% interest rate.⁴¹

This 0% interest rate for the interest suspension benefit.41 This interest suspension, coupled with the various options for temporary cessation of payments (e.g., forbearance, deferment) discussed throughout this report, means that qualifying borrowers may temporarily cease making payments on their loans without interest accruing or being subject to capitalization when they begin to make payments again at a later point in time.

Cessation of Payments

In addition to the pre-existing deferment and forbearance options available to borrowers, ED and Congress have recently taken further steps to enable borrowers to temporarily cease making payments on their qualifying loans.

For March 13, 2020, through September 30, 2020, federallyDecember 31, 2020, federal y held student loans (e.g., all al Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED) will wil be placed in an administrative forbearance.⁴²42 During this time, borrowers will wil not be required to make payments 39 ED, “Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020). 40 ED guidance specifies that the FFEL and Perkins Loan program loan holders may provide “the same zero interest” benefit to the loans they hold on a voluntary basis. T he guidance references the zero interest accrual benefit applicable from March 13, 2020, to September 30, 2020. It is unclear whether FFEL and Perkins Loan program loan holders are authorized to extend the payment suspension through December 31, 2020. U.S. Department of Education, Office of Postsecondary Education, Electronic Announcement, “UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19),” April 3, 2020, https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19. Some IHEs have suspended payments on their Perkins Loans in response to COVID-19. See, for example, Danielle Douglas-Gabriel, “ University of California offers Perkins Loan borrowers relief. Will other colleges follow?” The Washington Post, April 20, 2020. 41 ED, “Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed April 14, 2020). 42 An administrative forbearance is a type of forbearance that ED grants without required documentation from a borrower. Among other qualifying circumstances, ED may grant an administrative forbearance due to a local or national emergency. 34 C.F.R. §§674.33(d)(5), 682.211(i)(2)(i), 685.205(b)(8). Congressional Research Service 9 Federal Student Loan Debt Relief in the Context of COVID-19 not be required to make payments due on their loans.⁴³43 Borrowers who are eligible for this benefit need not apply for it; ED will automatically suspend payments.⁴⁴

wil automatical y suspend payments.44 In implementing these provisions, ED has indicated that borrowers may opt out of this special administrative forbearance by contacting their loan servicer. In addition, any payments made on a borrower'borrower’s account between March 13, 2020, and September 30December 31, 2020, can be refunded to the borrower. A borrower must contact his or her loan servicer to request a refund.⁴⁵

45 ED has also authorized FFEL program lenders and institutions that hold Perkins Loans to provide thisthe special administrative forbearance to borrowers on a voluntary basis.⁴⁶46 Borrowers who are ineligible ineligible for this benefit because their FFEL program loan holder or Perkins Loan program IHE is not providing it may take advantage of the benefit by consolidating such loans into a Direct Consolidation Loan.

Generally General y, periods of deferment and forbearance do not count toward the 120 monthly payments required to qualify for PSLF, and are not included in a borrower'’s repayment period⁴⁷period47 (e.g., periods of unemployment deferment do not count toward the maximum repayment periods of 20 or 25 years under the IDR plans). However, for Direct Loan borrowers (the only borrowers 43 On March 20, 2020, ED announced it had directed all federal student loan servicers to grant a 60-day administrative forbearance (beginning March 13, 2020) to any borrower of a federally held student loan who requested one. In addition, ED authorized loan servicers to automatically place into a 60 -day administrative forbearance any borrower of a federally held loan who is more than 31 days delinquent on his or her loans as of March 13, 2020, or who becomes 31 days delinquent thereafter. U.S. Department of Education, “ Delivering on President T rump’s Promise, Secretary DeVos Suspends Federal Student Loan Payments, Waives Interest During National Emergency,” press release, March 20, 2020, https://www.ed.gov/news/press-releases/delivering-president -trumps-promise-secretary-devos-suspends-federal-student-loan-payments-waives-interest-during-national-emergency. Subsequently, the CARES Act was enacted, which requires that ED automatically suspend all payments on Direct Loans and ED-held FFEL program loans through September 30, 2020. While the CARES Act did not provide for a suspension of payments on ED-held Perkins Loan program loans, ED has applied a similar suspension to such loans. U.S. Department of Education, Office of Postsecondary Education, “ UPDAT ED Guidance for interruptions of study related to Coronavirus (COVID -19),” electronic announcement, April 3, 2020, https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19 ; and ED, “ Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed April 2, 2020). On August 8, 2020, President T rump directed ED to take action “to continue the temporary cessation of payments” on federally held student loans through December 31, 2020. U.S. President (Donald T rump), “Continued Student Loan Payment Relief During the COVID-19 Pandemic: Memorandum for the Secretary of Education,” 85 Federal Register 49585, August 13, 2020. Subsequently, ED updated its guidance to borrowers, stating that to effectuate the President’s directive, the administrative forbearance would be extended through December 31, 2020. ED, “ Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020). 44 ED, “Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020) 45 ED, “Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020). 46 ED guidance specifies that the FFEL and Perkins Loan program loan holders may provide “the same … cessation of payment benefits” to the loans they hold on a voluntary basis. T he guidance references the payment suspension applicable from March 13, 2020, to September 30, 2020. It is unclear whether FFEL and Perkins Loan program loan holders are authorized to extend the payment suspension through December 31, 2020. U.S. Department of Education, Office of Postsecondary Education, Electronic Announcement, “UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19),” April 3, 2020, https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19 . Some commercial FFEL program loan holders have voluntarily provided borrowers with additional forbearance options in response to the COVID -19 pandemic. See, for example, Marie Albiges, “ Virginia offers temporary relief on some private loans during coronavirus, ” The Virginian-Pilot, April 30, 2020. Some IHEs have suspended payments on their Perkins Loans in response to COVID -19. See, for example, Danielle Douglas-Gabriel, “ University of California offers Perkins Loan borrowers relief. Will other colleges follow?”, The Washington Post, April 20, 2020. 47 For additional information on PSLF, see CRS Report R45389, The Public Service Loan Forgiveness Program: Selected Issues. Congressional Research Service 10 Federal Student Loan Debt Relief in the Context of COVID-19 eligible for PSLF) suspended payments that would have been made during the special administrative forbearance wil count toward the 120 monthly payments required to qualify for PSLF if the borrower works full-time in qualifying employment during the suspension.48 For borrowers of federal y held loans, the suspended payments wil also count toward the 20- and 25-year repayment periods under the IDR plans, and toward the nine voluntary payments within 10 consecutive months required for individuals to rehabilitate their defaulted loans.49 It is unclear whether suspended payments on nonfederal y held FFEL program loans whose lender has authorized this special administrative forbearance would count toward the 20- and 25-year repayment periods under applicable IDR plans. Perkins Loans, regardless of whether they are held by ED or an IHE, are ineligible for IDR plans. In addition, ED recently authorized institutions that hold Perkins Loans to grant a forbearance to borrowers who are in repayment and are unable to make payments due to COVID-19. Under this forbearance, interest would continue to accrue. The initial forbearance period may not exceed three months, but it may be extended upon a borrower providing supporting documentation. Borrowers must request the forbearance from the IHE. This period of forbearance counts toward the three-year maximum limit on the number of years of forbearance that may be granted to a Perkins Loan borrower.50 Loan Default and Collections Defaulting on a federal student loan can result in a number of adverse consequences for a borrower. Upon default, the borrower’s obligation to repay the loan is accelerated (i.e., the entire unpaid balance of principal and interest becomes due in full).51 In addition, the borrower loses eligibility for certain borrower benefits (e.g., deferment, loan forgiveness), as wel as eligibility to receive additional Title IV federal student aid. A defaulted borrower may have his or her student loan account transferred to an ED-contracted private collection agency (PCA) that wil contact the borrower and offer him or her options for voluntary debt resolution, such as loan rehabilitation, consolidation out of default, or entry into a voluntary repayment agreement. If such 48 Prior to enactment of the CARES Act, the ED-authorized administrative forbearance did not address whether periods of such forbearance would count toward PSLF’s 120-monthly payment requirement. Subsequently, Section 3513(c) of the CARES Act stated that “ED shall deem each month for which a loan payment was susp ended” under the CARES Act “as if the borrower of the loan had made a payment for the purpose of any loan forgiveness program.” Following enactment of the CARES Act, ED updated its guidance to borrowers, stating that payments suspended between March 13, 2020, and September 30, 2020, would count toward PSLF’s 120 -required monthly payments. ED, “ Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed April 14, 2020). T he August 8, 2020, presidential memorandum entitled “Continued Student Loan Payment Relief During the COVID-19 Pandemic: Memorandum for the Secretary of Education,” (85 Federal Register 49585, August 13, 2020) did not address whether payment suspension would count toward the PSLF 120 -monthly payment requirement. Subsequently, ED updated its guidance to borrowers, stating that payments suspended through December 31, 2020, would count toward PSLF’s 120 -required monthly payments. ED, “ Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020). 49 ED, “Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020). Loan rehabilitation is the process by which a borrower may bring a loan out of default by adhering to specified repayment requirements. 34 C.F.R. §§674.39, 682.405, 685.211(f). The history described in footnote 49 similarly applies to suspended payments’ application to the forgiveness period under the various IDR plans and their application to loan rehabilitation. 50 U.S. Department of Education, Office of Postsecondary Education, “UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19),” electronic announcement, April 3, 2020, https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19 . 51 34 C.F.R. §§674.31(b)(5), 6823411(f), 685.211(d). Congressional Research Service 11 Federal Student Loan Debt Relief in the Context of COVID-19 voluntary debt resolution attempts do not succeed, involuntary collection practices may be utilized, which include administrative wage garnishment; offset of federal income tax returns, Social Security benefits, and certain other federal benefits; and civil litigation.52 Collection of Defaulted Loans For March 13, 2020, through December 31, 2020, ED wil halt the above-described involuntary debt collection practices, and ED-contracted PCAs wil stop proactive collection activities (i.e., stop making collection cal s and sending letters or bil ing statements to defaulted borrowers) for al federal y held student loans (e.g., al Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED).53 However, borrowers may contact PCAs to continue repayment arrangements they had made prior to implementation of this policy or to consolidate their loans out of default.54 Borrowers of federal y held loans whose federal tax refund or Social Security benefits were in the process of being withheld on or after March 13, 2020, and before December 31, 2020, wil have any offset portion returned to them. Borrowers whose wages were garnished between March 13, 2020, and December 31, 2020, wil have their wages refunded.55 In addition, ED has authorized institutions to stop collection activities on defaulted Perkins Loans that they hold through September 30, 2020, upon notification from a borrower, a member of the borrower’s family, or another reliable source that the borrower has been affected by COVID-19.56 52 For additional information, see 34 C.F.R. Parts 30, 31, 34; and CRS Report R44845, Administration of the William D. Ford Federal Direct Loan Program . 53 On March 25, 2020, ED announced that, effective March 13, 2020, it would halt involuntary collection activities and PCAs would stop all proactive collection activities on all federally held student loans for 60 days. U.S. Depart ment of Education, “ Secretary DeVos Directs FSA to Stop Wage Garnishment, Collections Actions for Student Loan Borrowers, Will Refund More T han $1.8 Billion to Students, Families,” press release, March 25, 2020, https://www.ed.gov/news/press-releases/secretary-devos-directs-fsa-stop-wage-garnishment -collections-actions-student-loan-borrowers-will-refund-more-18-billion-students-families. Subsequently, the CARES Act was enacted, which required ED to suspend all involuntary collectio n activities on Direct Loans and ED-held FFEL program loans through September 30, 2020. While the CARES Act did not provide for the suspension of proactive collection activities on any federally held student loan, nor the suspension of involuntary collection activities on federally held Perkins Loans program loans, ED suspended both proactive and involuntary collection activities for all federally held loans (including federally held Perkins Loan programs loans) through September 30, 2020. ED, “ Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed April 14, 2020). T he August 8, 2020, presidential memorandum entitled “Continued Student Loan Payment Relief During the COVID-19 Pandemic: Memorandum for the Secretary of Education,” (85 Federal Register 49585, August 13, 2020) did not address whether ED should suspend proactive or involuntary collection activities for federally held student loans. Subsequently, ED updated its guidance to borrowers, stating that both proactive and involunt ary collection activities would be suspended through December 31, 2020. ED, “ Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020). 54 ED, “Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020). 55 Ibid. 56 U.S. Department of Education, Office of Postsecondary Education, Electronic Announcement, “UPDAT ED Guidance for interruptions of study related to Coronavirus (COVID-19),” April 3, 2020, https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19 . Congressional Research Service 12 Federal Student Loan Debt Relief in the Context of COVID-19 Satisfactory Repayment Arrangements, Loan Rehabilitation, and Consolidation Out of Default To regain Title IV student aid eligibility, a defaulted federal student loan borrower must make six on-time, voluntary monthly payments on a defaulted loan.57 In addition, loan rehabilitation offers defaulted borrowers an opportunity to have their loan(s) reinstated as active and to have other borrower benefits and privileges restored. To rehabilitate a loan, Direct Loan, FFEL, or Perkins Loan program borrowers must make nine on-time payments according to general y applicable procedures.58 Alternatively, a borrower may use the proceeds of a new Direct Consolidation Loan to pay off one or more defaulted Direct Loan, FFEL, and Perkins Loan program loans. To become eligible to do so, a borrower must make three consecutive, on-time, full monthly payments on a defaulted loan.59 ED has stated that for specified periods, if a borrower of a defaulted Direct Loan, FFEL, or Perkins Loan program loan fails to make any of the consecutive monthly payments required to re-establish eligibility for Title IV federal student aid,60 to rehabilitate such defaulted loans,61 or to consolidate such defaulted loans out of default,62 the borrower shal not be considered to have missed any of those payments. Reporting to Consumer Reporting Agencies Information about a borrower’s federal student loans is reported to nationwide consumer reporting agencies on a regular basis. Information reported includes items such as loan amount and repayment status (e.g., whether a borrower is current on making payments).63 The CARES Act specifies that through September 30, 2020, ED shal ensure that any payment that has been suspended under the special administrative forbearance described above shall be 57 34 C.F.R. §§674.9(k), 682.200(b), 685.102(b). 58 34. C.F.R. §§674.39, 682.405, 685.211(f). 59 34 C.F.R. §685.102(b). 60 T his policy applies to Direct Loan, FFEL, and Perkins Loan program loans through June 30, 2020. U.S. Department of Education, Office of Postsecondary Education, “UPDAT ED Guidance for interruptions of study related to Coronavirus (COVID-19),” electronic announcement, April 3, 2020, https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19 . 61 T his policy applies to federally held Direct Loan, FFEL, and Perkins Loan program loans through December 31, 2020. ED, “Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020). T his policy applies to nonfederally held FFEL and Perkins Loan program loans through June 30, 2020. U.S. Department of Education, Office of Postsecondary Education, “UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19),” electronic announcement, April 3, 2020, https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19 . 62 T his policy applies to Direct Loans and federally held FFEL and Perkins Loans through June 30, 2020. ED, “Coronavirus and Forbearance Info for Students, Borrowers, and Parents” (accessed August 24, 2020). T he policy applies to nonfederally held FFEL program loans through June 30, 2020. It appears this policy applies to nonfederally held Perkins Loan program loans through June 30, 2020.or 25 years under the IDR plans). However, the CARES Act specified that ED "shall consider each month for which a loan payment was suspended" under this special administrative forbearance "as if the borrower of the loan had made a payment for the purpose of any loan forgiveness program or loan rehabilitation program." Thus, for Direct Loan borrowers (the only borrowers eligible for PSLF) this special administrative forbearance will count toward the 120 monthly payments required to qualify for PSLF if the borrower was in a qualifying repayment plan prior to the payment suspension and also works full-time in qualifying employment during the suspension.

Loan Default and Collections

Collection of Defaulted Loans

Satisfactory Repayment Arrangements, Loan Rehabilitation, and Consolidation Out of Default

Reporting to Consumer Reporting Agencies

Teacher Loan Forgiveness

Additional Flexibilities