Congress recently passed emergency legislation called the CARES Act, which provides many benefits to help federal student loan borrowers during this challenging time. Unfortunately, that legislation only applies to loans that are “federally held” and does not extend to borrowers with Perkins loans being serviced at the school level. In an effort to provide maximum relief to borrowers with Perkins loans, COHEAO recommends that schools continue to follow the program guidelines and leverage the inherent and unique benefits of the Perkins loan program.
For Perkins borrowers who are impacted by the pandemic and contact the school, or servicer, expressing a financial hardship, the following benefits provide similar relief, and are subject to eligibility:
All options listed above are limited to 36-months of eligibility. Economic hardship and unemployment deferments require the borrower to provide the school with supporting documentation on an OMB-approved deferment form. Forbearance may be granted through a verbal request. For more details on these benefits, please refer to the Department’s Federal Student Aid Handbook on the IFAP website.
What about Consolidation? Borrowers who consolidate will be eligible for the CARES Act relief benefits. When the borrower consolidates, the statutory rate will be reported and used as part of the weighted average interest rate of the consolidation loan. However once the loan is booked, the TIVA will automatically put the borrower in a forbearance and 0% interest rate until September 30, 2020 per the CARES Act legislation. Please note: Borrowers who plan to utilize the Federal Perkins cancellation benefits should not consolidate their loan.
In order to remain in compliance, COHEAO recommends that the following activities continue to take place, tempered with an understanding of the ongoing pandemic:
COHEAO will continue to monitor developments and provide additional updates as they are announced. The response to the pandemic continues to be fluid making it critically important that we stay connected as a community and continue to advocate for our borrowers and the Perkins program.