News: Watch out for student debt relief scams!
Federal student loans
The federal CARES Act provides help for some federal student loan borrowers:
- It provides relief for federal Direct Loans and federally held FFEL (Federal Family Education Loan Program) loans.
- If your loans are covered by the law, you should have received a notice.
- Your Direct Loan and covered FFEL payments are now suspended BEYOND December 31, 2022. The U.S. Department of Education made an announcement in late-November. The date when those payments will start again is up in the air. It depends on some litigation and the Biden Administration's debt relief program. For the latest information, visit the studentaid.gov website.
- While your payments are suspended, the interest rate on your covered loans will be 0%.
- Suspended loan payments will be treated as if the payment was made for purposes of loan forgiveness and loan rehabilitation.
- There will be no negative credit reporting on your loan accounts while your payments are suspended.
- For Direct Loans and federally held FFEL loans already in default, all collection activity will be suspended. This means your wages will not be garnished, taxes will not be offset, and benefits will not be offset.
- Making payments during the payment pause could help you pay down your loan balance more quickly. The full amount of your payments will be applied to your principal balance once you’ve paid all the interest that accrued prior to March 13, 2020, and any fees (for defaulted loans).
- See a list of what kinds of loans have been suspended and how to find out if your loan is included.
- Learn more about the removal of default status on these loans.
News: TPD reporting
The US Department of Education is waiving income monitoring and reporting requirements during COVID for borrowers who received a discharge due to total and permanent disability (TPD). In addition, borrowers with loans that were reinstated for failure to provide earnings documentation are being restored to discharge status, and will be refunded any payments made following loan reinstatement. Learn more about this student loan help.
New: Student loan forgiveness for some Americans
On August 24, 2022, the U.S. Department of Education (DOE) announced student loan forgiveness of up to $20,000 for eligible Americans.
- To be eligible, your annual income must be below $125,000 (for individuals) or $250,000 (for married couples or heads of households).
- If you got a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt cancellation.
- If you did not get a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt cancellation.
- Nearly 8 million borrowers may be eligible to get relief automatically because the US Department of Education has their income data already.
- If they don't have your income data - or if you don't know - the DOE will launch a simple application in the coming weeks.
- If you want to be notified by the U.S. DOE when that application is open, sign up at the DOE's subscription page. https://www.ed.gov/subscriptions
- Also, learn about the Public Service Loan Forgiveness program. It forgives the remaining balance on your federal student loans after 120 payments when you work full-time for:
- federal, state, Tribal or local government
- the military, or
- a qualifying nonprofit.
For more information, see the Federal Student Aid website.
Private student loans
The State of Vermont mandated that private lenders should work with student-loan holders to provide help. If you have a private student loan — including one from Vermont Student Assistance Corporation (VSAC) — contact your student loan servicer or lender to identify the options that might apply to you. They include:
- providing forbearance (postponement) of payments for at least 90 days
- waiving late-payment fees
- protecting borrowers from negative credit reporting
- ceasing debt-collection lawsuits for 90 days, and
- enrolling in appropriate assistance programs, such as income-based repayment.
Borrowers with private student loans can look for contact information on their monthly billing statements. VSAC borrowers may call 1-833-802-8722.
Learn more about this help and where to turn if you have a complaint on the Vermont Department of Financial Regulation (DFR) website.
General student loan resources
- Managing Student Loans - Student Loan Borrower Assistance website
- Discharging a Student Loan Due to Disability - Student Loan Borrower Assistance website
- Total and Permanent Disability (TPD) Discharge - disabilitydischarge.com website
- Other reasons to discharge a federal loan - Student Loan Borrower Assistance website
- Getting or Repaying Student Loans - Consumer Financial Protection Bureau website
- Studentloanify - A paid online service that helps you find and apply for the best repayment option available to you
If you have a low income and you are having trouble with your federal student loan payments, contact us. Fill out our form and we will call you back. Your information will be sent to Legal Services Vermont, which screens requests for help for both Vermont Legal Aid and Legal Services Vermont. You can also call us at 1-800-889-2047.