For Immediate Release November 13, 2001
Assistance for Student Loan Borrowers
The Federal Family Education Loan Program (FFELP) community wishes to extend its heartfelt sympathies to all those who have suffered from the devastating attacks of September 11, 2001. This is a time when everyone must work together to help individuals who are in need. FFELP providers are working closely with Congress and the Department of Education to provide relief for student loan borrowers. As we continue to face threats to our nation’s institutions and challenges to our economy, it is important for borrowers to understand the options available to assist them in repaying their student loans. Below is information about the relief available to borrowers affected by the events of September 11 and general information about options for repaying student loans. If you believe that you have been impacted by the events of September 11, either directly or indirectly, but don't seem to fit into the categories below, we urge you to contact your student loan servicer (the organization to which you send education-loan payments). Customer service staff is trained to help borrowers fully understand the terms of their loans and may be able to offer a temporary postponement or reduction of payments. For example, if you have lost your job, you may qualify for an unemployment deferment. However, your loan servicer can’t help you if they don't know your special circumstances, so please contact them for more information. For assistance in contacting your provider, the National Student Clearinghouse operates a LoanLocator service (www.loanlocator.org) that identifies your primary loan contacts, if they participate in this service. For information about provisions specific to individual states, visit your guaranty agency’s Web site (which can be accessed at www.mapping-your-future.org/about/sponsors.cfm). Disaster Relief 1) Borrowers who work and live in New York City
The Department of Education (DOE) has authorized service providers to grant a “Disaster Forbearance" on all FFELP, Perkins and Direct loans for borrowers who reside or work in the designated disaster area (New York City). A forbearance is a period of time during which the borrower is permitted to temporarily cease making payments. The following guidelines apply: · Monthly payments are not due by the borrower during this time period, but borrowers may make payments if they choose. · Interest continues to accrue on all loans. · Forbearance does not affect a borrower's credit. This special forbearance period begins September 11, 2001 through January 31, 2002. Beyond that date, borrowers may request a forbearance agreement from their loan servicer based on supporting documentation.
2)
Borrowers who reside outside New York City
Borrowers who were affected by the September 11, 2001 attacks, but whose permanent home address zip codes are not in the designated disaster areas, may request forbearance from their lender or loan servicer to postpone or reduce their education-loan payments between September 11, 2001 and January 31, 2002. 3) Borrowers called to active military duty
Certain borrowers who were called to active military duty or reassigned to other duty stations as a result of the September 11, 2001, attacks may be eligible for payment relief. To qualify, borrowers must be members of the National Guard or Reserves who were ordered to active duty as a result of the terrorist attacks, or active-duty members of the Armed Forces who were reassigned to other stations. The call to active duty or reassignment must be for more than 30 days. The benefits are as follows: For borrowers that are in school, in-school deferment, or in grace period status: Borrowers are eligible to remain in their current status during the period of their active duty or reassignment, plus the time necessary to resume enrollment in the next regular enrollment period that is reasonably available, not to exceed a total of three years. If a borrower is currently in a grace period, the borrower will receive the full grace period in the future. To qualify for this option, borrowers may need to provide their loan servicer with a copy of their military orders and request a delay in repayment of their education loans as a result of their assignment. For borrowers in any other status: Borrowers may be eligible for a "Military Mobilization Forbearance" that can be granted for the expected period of their active duty service, beginning the first day of active duty, not to exceed one year. Borrowers do not require any documentation to receive this forbearance. The Congress and the Secretary of Education have requested that schools work closely with students who are called to military service during the academic year. If you leave school for this reason, please be sure to inform the school of the reason for your withdrawal so that the school can apply any special policies that it has regarding tuition, fees, or other amounts owed to the school. 4) Children and Spouses of Victims
Several companies and organizations have established Scholarship Funds to provide tuition assistance to the children and spouses of victims of the events of September 11. The National Association of Student Financial Aid Administrators has compiled a list of scholarships, which is available at: www.nasfaa.org/publications/2001/nvictimscholarships092501.html. General Loan Repayment Information Below is general information about options for all borrowers in repaying their loans and the types of assistance available:
2
1)
Payment Options
If borrowers are concerned about sending student loan payments through the mail, there may be other options for repayment. Many loan servicers have electronic payment programs where monthly payments can be automatically deducted from a checking or savings account or where payments can be made over the telephone. Contact your loan holder to find out about these options. In addition, many lenders offer services that allow their customers to make bill payments by using telephone payment systems or the Internet. Contact your lender about these options. 2) Deferment
A deferment allows borrowers to postpone the payment of their student loan when certain eligibility criteria are met and a deferment is requested. The Federal Government pays interest that accrues on “subsidized” loans during deferment periods. There are eight deferment forms available that cover sixteen deferment types. The most common deferments are in-school, unemployment, economic hardship, graduate fellowship, and rehabilitation training. More information is available from the borrower’s lender, servicer, or guaranty agency. 3) Forbearance
Forbearance is usually granted at the discretion of the lender. In special administrative cases, such as the one described above, lenders are required to grant forbearance. Forbearance is a period of time during which a borrower is permitted to temporarily cease making payments, to make reduced payments, or to delay payments. The borrower is responsible for the interest that accrues; and, if unpaid, the interest may be capitalized (added to the principal balance of the loan). Forbearance is often used to bring delinquent loans up to date in situations where there is a legitimate financial hardship, but the borrower doesn't qualify for a deferment.
For further information on Disaster Forbearance, Military Mobilization, Loan Discharge due to Death or Disability, or additional assistance in repaying your loan, please contact your loan service provider, who will have the most current details on all available benefits.
FFELP Contacts: Consumer Bankers Association – Fritz Elmendorf (703-276-3879) Education Finance Council – Conwey Casillas (202-466-8621) National Council of Higher Education Loan Programs – Karen Lanning (202-822-2106) Student Loan Servicing Alliance – Patty Sullivan (202-466-3639) 3