Democrats Call for Relief for Private Loan Borrowers

April 7, 2020
 

Senator Elizabeth Warren and 11 other Democratic and Independent senators have written to student loan companies to urge them to offer help to borrowers with private student loans.

Private loan borrowers were left out of the $2.2 trillion federal stimulus bill, which allowed most other student loan borrowers to skip making payments for six months without interest. Congress also suspended involuntary collections of late payments, like garnishing wages, tax refunds and Social Security benefits.

In addition to suspending payments for an unspecified “parallel” amount of time to what other borrowers received, the senators urged the 14 companies in the letters to not seize payments, to discharge as many loans as possible of borrowers in bankruptcy or fiscal distress and to expand loan modification and affordable repayment options.

The Student Loan Servicing Alliance last week said nearly all private lenders are offering borrowers up to a three-month suspension from making payments.

The letter urges companies to cancel or discharge as many delinquent loans as possible during the crisis, especially for borrowers who have filed for bankruptcy or who are otherwise in clear financial distress that will inhibit their ability to ever fully repay their loans. It also calls for the companies to permanently provide additional, affordable repayment and loan modification options for private student loan borrowers, including options for borrowers who see long-term changes in their income.

"The outbreak of COVID-19 has resulted in an unprecedented and widespread public health and economic crisis, significantly upending life for every American," the lawmakers wrote. "For private student loan borrowers, these economic disruptions will be uniquely devastating due to private student loan borrowers' lack of critical protections, forgiveness programs, and repayment options available to federal student loan borrowers."

In addition to Warren, of Massachusetts, the letters were signed by Senators Sherrod Brown, of Ohio, Massachusetts’ Edward Markey, California’s Kamala Harris, Hawaii’s Brian Schatz and Mazie Hirono, Illinois’s Richard Durbin, Maryland’s Chris Van Hollen, New Jersey’s Cory Booker, Minnesota’s Amy Klobuchar and Tina Smith, and Vermont’s Bernie Sanders.

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