Private student lenders offer debt relief to borrowers in the middle of the coronavirus, or COVID-19, outbreak. “Data-reactid =” 16 “type =” text “> Democratic lawmakers are urging private lenders to offer debt relief to borrowers in the middle of coronavirus, or COVID-19, outbreaks.
In a series of letters to lenders – from Navient to LendKey to the Pennsylvania Higher Education Assistance Agency – Senators Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Edward Markey (D-MA), Kamala Harris (D-CA) , Brian Schatz (D-HI), Dick Durbin (D-IL), Chris Van Hollen (D-MD), Cory Booker (D-NJ), Mazie Hirono (D-HI), Tina Smith (D-MN) , Bernie Sanders (I-VT) and Amy Klobuchar (D-MN) asked them to help borrowers through the financial crisis.
“In light of the global public health crisis caused by the new pandemic coronavirus (COVID19) … we are writing to request information on what steps your company is taking to mitigate the financial burden on your company’s private student loan during this crisis … [and] urges you to take specific steps to provide immediate relief to your company’s private borrowers affected by COVID-19, ”they wrote on Tuesday.
They noted that the global financial crisis in 2008 had resulted in student loan borrowers “being hit particularly hard due to rising college costs in a historically weak labor market”, and thus “millions of private borrowers who have never fully recovered from the recent economic crisis, and they stand now face another financial disruption when they can least afford it. “
according to an estimate. “Data-reactid =” 41 ″ type = “text”> Private loan debt represents a fraction of $ 1.5 trillion in outstanding loans held by 43 million Americans (7.7% in 2019), but it is still significant: more than 100 billions of dollars are in the private student loan market, according to an estimate.
Some relief for borrowers – from allowing a 6-month freeze on payments to repayment of those who had repayments or payroll taxes by the government – it did not provide the same benefits for Americans who have private student loans. “data-reactid =” 42 “type =” text “> While the stimulus package provided some relief to borrowers – from allowing a 6-month freeze of payments to repayment of those who had repaid taxes or wages by the government – it did not contain the same benefits for Americans who have private student loans.
“Although federal student loans make up a large portion of the student loan market, private loan companies should work in good faith with their borrowers and offer relief – including the temporary suspension of payments without penalties, fees and consequences,” Center for Responsible Lending Director of Federal Advocacy Ashley Harrington told Yahoo Finance. “Private student loan companies must do more to provide relief so that borrowers can weather this storm.”
With private borrowers omitted, the senators said: “We are deeply concerned that millions of private borrowers, who are currently experiencing some of the most risky conditions for all student borrowers, will be pushed to the brink of financial devastation as a result of COVID- 19th ”
The senators urged the student loan companies to “cancel or provide as many criminal loans as possible” during the coronavirus outbreak, especially for those “who have filed for bankruptcy or who are otherwise in clear financial distress that will hamper their ability to ever repay their loans.”
The senators also called for immediate cessation of all involuntary debt collection efforts, “including any lawsuits against borrowers who have paid or have defaulted on their loans.”
The senators also wrote that private borrowers should be able to set up payments “without fees or consequence”, and that this should be automatic.
In addition, they asked companies to “permanently provide additional, affordable repayment and loan modification options for private borrowers, including options for borrowers who see long-term changes in their income.”
Borrowers are still suing
debtors are still suing – at a time when many are out of work or struggling to keep one. “Data-reactid =” 52 ″ type = “text”> Consumer advocates have in recent weeks brought up cases where debtors are still suing – at a time when many are unemployed or struggling to keep one.
In a case shared with Yahoo Finance, such as when the number of coronavirus cases began to rise in New York, “SLM Private Education Loan Trust 2012-C,” took legal action against a borrower owed nearly $ 60,000 in Far Rockaway, Queens, New York, March 9.
tasks. It is essentially a securities security (ABS) supported by a pool of private student loans. The trust earns money from collecting these loans, according to a SEC filing from 2012. “data-reactid =” 54 ″ type = “text”> This trust is owned or managed by Navient, according to Navient records. It is essentially a securities security (ABS) supported by a pool of private student loans. The trust earns money from collecting these loans, according to a 2012 SEC filing.
According to the suit, the borrower was in default and was called to answer the complaint in the action “within 20 days.” If the borrower failed to respond, it would have resulted in a standard assessment, which could then lead to situations such as salary garnishment. And since the borrower received the documents, the number of cases of people with coronavirus infection in New York has exploded.
Navient spokesman Paul Hartwick emphasized to Yahoo Finance that the company had stopped filing new cases in mid-March.
“It is imperative that private borrowers do not have the greatest amount of financial disruption caused by the pandemic,” he said. “These senators are fighting on behalf of the private borrowers who were shut down by the stimulus agreement.”
Others urged the government’s relationship with private lenders.
“I’ve never understood why the government allows officials to collect federal student loans with their right hand and collect private student loans with their left hand,” Austin Smith, a lawyer who specializes in student debt and bankruptcy at Smith Law Group, told Yahoo Finance. “It’s clearly a conflict of interest.”
said that the service workers had contractual obligations towards the commercial banks that owned the private loans that must first be respected. This is actually not true given their administrative duties to the government. And anyone who watched the apprentice knows that you are not playing fast and loose with fiduciary information to Trump. “Data-reactid =” 106 ″ type = “text”> Smith continued: “When asked if the service workers would honor the spirit of the president’s order and stop collecting on private loans, the head of the loan service lobby said the service workers had contractual obligations to the commercial banks that owned the private loans that must first be respected. This is actually not true given their administrative duties to the government. And anyone who watched the apprentice knows that you are not playing fast and loose with fiduciary information for Trump. “
@aarthiswami. “Data-reactid =” 108 ″ type = “text”>Aarthi is a writer for Yahoo Finance. She can be reached at [email protected] Follow her on Twitter @aarthiswami.
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