As the coronavirus pandemic and its related economic consequences continue to affect millions of Americans, elected officials strive to protect people from financial harm.
Congress recently passed the CARES bill, which suspends payments, interest, and recoveries on state-held federal student loans. However, the provisions of the CARES Act do not apply to federal loans held by other institutions or to private student loans.
Because of the loopholes in the CARES Act, states have stepped in to provide some relief to student loan borrowers and other consumers. The result is a patchwork of protective measures with varying degrees and effectiveness. Here is a breakdown.
Illinois has issued an executive order suspending garnishment of wages and payment review meetings for personal debt.
Massachusetts has issued emergency ordinances that suspend the collection activities of personal loans – including new collection suits, attachments and garnishments – for at least 90 days. The rules also restrict debt collection communications and provide redress for borrowers who are subject to debt collection activities in violation of the urgency rules.
Texas has issued a state court order limiting wage garnishment actions for defaulting debts until after May 7, 2020.
Washington, DC has issued an order prohibiting debt collection activities until at least June 12th, 2020.
Additionally, many states have suspended collections (to varying degrees) on state dates, including some state student loans. The following states have issued such an order:
- new York
- North Carolina
In addition, there is a nationwide regulation according to which payment suspension periods for undisputed debts must be reported to credit reporting agencies in the same way as if payments were still being made.
If you have personal student loans, your lender or service provider may also offer temporary payment changes or deferrals due to the ongoing crisis.
This information is current as of April 20, 2020. You can view subsequent changes here.