The Higher Education Act of 1965 (HEA; P.L. 89-329, as amended) authorizes the operation of 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:
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:
The Higher Education Act of 1965 (HEA; P.L. 89-329, as amended) authorizes the operation of 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.1 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 trillion in these loans, borrowed by or on behalf of 42.8 million individuals, remained outstanding.2
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 generally 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.
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.
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. 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),7 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 especially 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.
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.8 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 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.9 A borrower may receive the deferment for a maximum cumulative period of three years, which may include one or more episodes of unemployment.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.
A borrower may qualify for a deferment during periods while he or she is experiencing an economic hardship.11 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
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.13 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 each 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 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 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.14 Periods of forbearance do not count toward the 120 monthly payments required to qualify for PSLF,15 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). Generally, borrowers must apply for forbearance.
General forbearance and student loan debt burden forbearance (described below) may be especially 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.
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
General forbearance may be granted for an initial period of up to 12 months, renewed upon the borrower's request, and limited to a maximum of 36 months.17 At the end of the forbearance period, any unpaid interest that accrued during the period is capitalized.
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.18 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.
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.
IDR 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 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 who qualify as a new borrower on or after July 1, 2014; and another which is 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.21 FFEL program borrowers (other than Parent PLUS loan borrowers) are only eligible for the IBR plans.22 Perkins Loan borrowers are not eligible for any IDR plan.
Individuals must apply to repay their loans according to an IDR plan.23 In addition, they must annually provide documentation of their income and family size to remain eligible for IDR 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 recalculated accordingly.
Recently, ED and Congress have taken steps to provide additional forms of relief to federal student loan borrowers. This includes cancelling 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 setting interest rates to 0% on qualifying loans, expanding the instances under which a forbearance may be available to borrowers of qualifying loans, and temporarily ceasing collections on qualifying defaulted loans.
Under the HEA, a Direct Loan borrower may be required to return or repay all 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.
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.25 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 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.26 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 guidance27 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.
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
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 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
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 degree program). This is referred to as the Direct Subsidized Loan maximum eligibility period.31
If a Direct Subsidized Loan borrower subject to this provision remains enrolled beyond the applicable maximum eligibility period, he or she will lose the interest subsidy and will 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 exclude from the maximum eligibility period any semester (or equivalent) that the student does not complete due to a qualifying emergency, if ED is "able to administer such policy in a manner that limits complexity and the burden on the student."32
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.33 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 interest may accrue.34 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 continue to be reported as in-school until the IHE determines that the student has withdrawn from it.35 ED has permitted IHEs to defer reporting a student's withdrawn status if the IHE has a reasonable expectation that it will 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 resume attendance when the IHE reopens.36
ED guidance does not address Perkins Loans.
Interest is charged on loans made under the Direct Loan, FFEL, and Perkins Loan programs. Typically, under a limited set of circumstances the federal government subsidizes some or all of the interest that would otherwise accrue on certain Direct Subsidized Loans, FFEL Stafford Loans, and Perkins Loans.37
For March 13, 2020, through September 30, 2020, the Administration has set interest rates on federally held student loans (e.g., all Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED) to 0%. The CARES Act specifies that during this time interest will not accrue.38 This means borrowers will not be responsible for paying interest on their ED-held loans for this period. This will permit borrowers to enter into a period of deferment 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 not have decreased monthly payments. They will have the full amount of the payments applied toward loan principal.39 Borrowers who are eligible for this benefit need not apply for it; ED will automatically adjust their accounts to reflect the 0% interest.
In addition, ED has authorized FFEL program lenders and institutions that hold Perkins Loans to provide the same 0% interest rate on these nonfederally held loans on a voluntary basis.40 Borrowers who are ineligible for the 0% interest rate benefit because their FFEL program loan holder or Perkins Loan program IHE is not providing it may take advantage of the 0% interest period by consolidating such loans into a Direct Consolidation Loan, which is eligible for the 0% interest rate.41
This 0% interest rate, 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 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.
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, federally held student loans (e.g., all Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED) will be placed in an administrative forbearance.42 During this time, borrowers will not be required to make payments due on their loans.43 Borrowers who are eligible for this benefit need not apply for it; ED will automatically 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's account between March 13, 2020, and September 30, 2020, can be refunded to the borrower. A borrower must contact his or her loan servicer to request a refund.45
ED has also authorized FFEL program lenders and institutions that hold Perkins Loans to provide this special administrative forbearance to borrowers on a voluntary basis.46 Borrowers who are 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, periods of forbearance do not count toward the 120 monthly payments required to qualify for PSLF, and are not included in a borrower's repayment period47 (e.g., periods of unemployment deferment do not count toward the maximum repayment periods of 20 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.
For borrowers of federally held loans, the suspended payments will 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.48 It is unclear whether suspended payments on nonfederally 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.49
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).50 In addition, the borrower loses eligibility for certain borrower benefits (e.g., deferment, loan forgiveness), as well 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 will 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 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.51
For March 13, 2020, through September 30, 2020, ED will halt the above-described involuntary debt collection practices, and ED-contracted PCAs will stop proactive collection activities (i.e., stop making collection calls and sending letters or billing statements to defaulted borrowers) for all federally held student loans (e.g., all Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED).52 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.53
Borrowers of federally 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 September 30, 2020, will have any offset portion returned to them. Borrowers whose wages were garnished between March 13, 2020, and September 30, 2020, will have their wages refunded.54
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-19.55
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.56 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 generally applicable procedures.57 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.58
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,59 to rehabilitate such defaulted loans,60 or to consolidate such defaulted loans out of default,61 the borrower shall not be considered to have missed any of those payments.
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).62
The CARES Act specifies that through September 30, 2020, ED shall ensure that any payment that has been suspended under the special administrative forbearance described above shall be reported to a consumer reporting agency as if it were a regularly scheduled payment made by the borrower.
The Teacher Loan Forgiveness63 program provides loan forgiveness benefits to borrowers of qualifying Direct Loan and FFEL program loans.64 To qualify for benefits, a borrower must serve as a full-time teacher for at least five consecutive complete academic years in a qualifying school or public education service agency that serves children from low-income families.
The CARES Act specifies that ED shall waive the requirement that years of qualifying teaching service be consecutive if an individual's service was temporarily interrupted due to a qualifying emergency, and after such temporary disruption the borrower resumes teaching and ultimately completes a total of five years of qualifying service. Qualifying service may include service performed before, during, and after the qualifying emergency.
In addition to the above-described administrative and congressional actions that have been taken in response to COVID-19, further flexibility and authority is provided through the Higher Education Relief Opportunities for Students Act (HEROES Act).65 The HEROES Act can only be implemented, however, in connection with a war or other military action or a national emergency declared by the President.66 The HEROES Act provides the Secretary with authority to waive or modify statutory and regulatory requirements that apply to the HEA Title IV student aid programs in an effort to help affected individuals. There are three categories of affected individuals:
Examples of support that may be available to student loan borrowers under the HEROES Act include the following:
Author Contact Information
| 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: Terms and Conditions for Borrowers; CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act; and CRS Report R40122, Federal Student Loans Made Under the Federal Family Education Loan Program and the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers (archived). |
| 2. |
This 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. |
| 3. |
Ibid. |
| 4. |
Approximately 3.17 million borrowers have FFEL program loans placed with ED-contracted loan servicers, and approximately 2.9 million borrowers have FFEL program 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. |
| 6. |
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. |
| 7. |
For additional information on PSLF, see CRS Report R45389, The Public Service Loan Forgiveness Program: Selected Issues. |
| 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?searchType=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?searchType=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). |
| 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, visited 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?searchType=library&shortName=student&localeCode=en-us&_ga=2.148341183.986094327.1560875974-753213604.1539381477. |
| 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, visited March 31, 2020 and CRS Report R45931, Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program: Terms 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 Talent by Unlocking Resources for Education Act (the FUTURE 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. |
| 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 March 20, 2020), https://ifap.ed.gov/electronic-announcements/030520Guidance4interruptionsrelated2CoronavirusCOVID19. |
| 28. |
34 C.F.R. §668.22(h)(3)(i). |
| 29. |
The 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). |
| 35. |
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. |
| 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. |
The 0% interest 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 Trump'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 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 its 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). |
| 39. |
U.S. Department of Education, "Coronavirus and Forbearance Info for Students, Borrowers, and Parents," https://studentaid.gov/announcements-events/coronavirus#borrower-questions (accessed April 14, 2020). |
| 40. |
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. |
| 41. |
U.S. Department of Education, "Coronavirus and Forbearance Info for Students, Borrowers, and Parents," https://studentaid.gov/announcements-events/coronavirus#borrower-questions (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). |
| 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 Trump'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, "UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19)," electronic announcement, April 3, 2020, https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19; and 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, visited April 2, 2020. |
| 44. |
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). |
| 45. |
Ibid. |
| 46. |
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. |
| 47. |
For additional information on PSLF, see CRS Report R45389, The Public Service Loan Forgiveness Program: Selected Issues. |
| 48. |
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). 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). |
| 49. |
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. |
| 50. |
34 C.F.R. §§674.31(b)(5), 6823411(f), 685.211(d). |
| 51. |
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. |
| 52. |
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. Department of Education, "Secretary DeVos Directs FSA to Stop Wage Garnishment, Collections Actions for Student Loan Borrowers, Will Refund More Than $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 collection 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. 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). |
| 53. |
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). |
| 54. |
Ibid. |
| 55. |
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. |
| 56. |
34 C.F.R. §§674.9(k), 682.200(b), 685.102(b). |
| 57. |
34. C.F.R. §§674.39, 682.405, 685.211(f). |
| 58. |
34 C.F.R. §685.102(b). |
| 59. |
This policy applies to Direct Loan, FFEL, and Perkins Loan program loans through June 30, 2020. |
| 60. |
This policy applies to Direct Loan, FFEL, and Perkins Loan program loans through June 30, 2020. |
| 61. |
This policy applies to Direct Loans and federally held FFEL and Perkins Loans through September 30, 2020. The policy applies to nonfederally held Perkins Loan through June 30, 2020. It appears this policy applies to nonfederally held FFEL 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. |
See, for example, U.S. Department of Education, "Master Promissory Note: Direct Subsidized Loans and Direct Unsubsidized Loans, William D. Ford Federal Direct Loan Program," OMB No. 1845-0007, https://studentaid.gov/app/subUnsubHTMLPreview.action. |
| 63. |
HEA §§428J, 460. |
| 64. |
For purposes of the Teacher Loan Forgiveness program, qualifying loans include Direct Loan program and FFEL program Subsidized Loans, Unsubsidized Loans, and Consolidation Loans (to the extent they are used to repay a Subsidized or Unsubsidized Loan). Borrowers must have had no outstanding balance on any federal student loan made through a program authorized under HEA Title IV on October 1, 1998, or as of the date the borrower first borrowed such loan after October 1, 1998. |
| 65. |
The provisions were originally enacted by the Higher Education Relief Opportunities for Students Act of 2001 (2001 HEROES Act; P.L. 107-122; 20 U.S.C. 1070 note) with an expiration date of September 30, 2003. The Higher Education Relief Opportunities for Students Act of 2003 (2003 HEROES Act; P.L. 108-76; 20 U.S.C. 1070 note), provided for waiver authority and regulatory flexibility from FY2003-FY2005; it was extended by P.L. 109-78 to September 30, 2007, and finally made permanent by P.L. 110-93 (20 U.S.C. 1098aa et seq.). For additional information on these waiver authorities, see CRS Report R42881, Education-Related Regulatory Flexibilities, Waivers, and Federal Assistance in Response to Disasters and National Emergencies. |
| 66. |
On March 13, 2020, President Trump declared a national emergency concerning COVID-19; "Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak," March 18, 2020, 85 Federal Register 15337. |
| 67. |
For information on the current waivers and modifications issued, see Office of Postsecondary Education, Department of Education, "Federal Student Aid Programs (Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and the Federal Direct Loan Program)," 82 Federal Register 45465-45471, September 29, 2017. These currently available waivers and modifications will expire on September 30, 2022. |
| 68. |
34 C.F.R. §§674.39, 682.405, 685.211(f). |