Dear Secretary DeVos:
We write in response to the Administration’s announcement it would waive interest accumulation for certain federal student loan borrowers in response to the novel coronavirus (COVID-19) pandemic. The U.S. Department of Education (“Department") has indicated borrowers of both Direct Loans and Department-held Federal Family Education Loans (FFEL) will receive this waiver for the foreseeable future. While we appreciate the step to waive interest and soften the longer-term financial burden on student loan borrowers, we believe there are better ways to help those with student debt that will provide immediate financial benefits to borrowers and the economy. We strongly urge the Administration to take additional steps, including those outlined below, to help federal student loan borrowers impacted by COVID-19 and to help stabilize the economy.
Federal student loan borrowers face a range of severe challenges in the coming weeks and months. Those who become infected and cannot work temporarily, lose their jobs, have their work hours cut, juggle increased child care needs, or struggle to afford medical treatment will face significant economic strain as a result of COVID-19. These concerns, however, are not isolated to individual borrowers. As economic concerns about the impact of the virus continue to mount, the country could soon face substantial job losses and the dramatic erosion of family wealth. This confluence of events has a proven and dramatic impact on the ability of federal student loan borrowers to manage or repay their loans, driving up both student loan delinquency and default.[1] At this critical time, providing immediate relief to the borrowers of the nation’s $1.5 trillion student debt balance also would provide a much-needed lift to the economy that would benefit all of us.
Congress is currently considering measures to provide additional relief to federal student loan borrowers. However, it is critical the Department also act immediately to use available Administrative authorities that protect borrowers from unnecessary harm. Accordingly, we urge the Department to take the following actions to provide relief to federal student loan borrowers:
The Department should immediately direct all servicers to notify borrowers who place inbound calls to servicers about the opportunity for IDR and provide borrowers with an estimated payment amount if they provide their income and family size. If borrowers inquire about the President’s announcement on interest accrual, ask about deferment or forbearance, or indicate any difficulty in making payments for any reason, servicers should use a standard call script to ask borrowers if they would be interested in lowering their monthly payments through IDR to as low as $0, including that individuals who recently lost their job due or saw their income reduced are eligible to have payments that reflect their current financial circumstances. Additionally, borrowers should be notified that, consistent with the President’s March 13 announcement, no interest will accumulate on the borrower’s loans under an IDR plan, even with a low or $0 payment and regardless of the borrower’s outstanding balance, for the foreseeable future.
The Department has numerous tools at its disposal to mitigate the effects of COVID-19 and the resulting damage to our economy. The President’s announcement that student loan interest will be waived is simply not enough. The outbreak of this global pandemic necessitates bold action to provide real and timely relief to students, borrowers, and their families. As Congress considers current proposals to provide additional support to struggling student loan borrowers, we urge you to also take swift action to implement these requests using the statutory and regulatory flexibilities afforded to the Secretary during a time of national emergency. Thank you for your consideration of these requests and your timely response.
Sincerely,
