DHHS Clarifies Student Loan Interest Waiver and Forbearance Option; House Democrats Introduce Legislation

The Health Resources and Services Administration (HRSA), an office of the U.S. Department of Health and Human Services (HHS), has released information regarding Health Profession and Nurse Faculty Loan programs and their eligibility for the interest fee waiver and administrative forbearance options that have been announced by the Trump Administration and provided through the CARES Act. These provisions run through September 30, 2020.

COHEAO has been working on this issue with HRSA and had requested it release this important information as it is of crucial importance to COHEAO member institutions who have students in medical programs with the loans below.

The benefit of having interest waived through September 30 and having the option to enter into administrative forbearance has been available to all borrowers of federally-held student loans for the past two months during the ongoing coronavirus crisis. There was a question about whether or not the nursing programs listed below would be eligible for the interest waiver and administrative forbearance option because they are not federally held, but held by grantee institutions. The loans include:

• Health Professions Student Loan (HPSL);
• Primary Care Loan (PCL);
• Loans for Disadvantaged Students (LDS);
• Nursing Student Loan (NSL); and
• Nurse Faculty Loan Program (NFLP).

In the Memo which is attached, HRSA has announced:

“While these provisions do not apply to the NSL, PCL, HPSL, LDS and NFLP programs, HHS has authority to take certain action in light of the COVID-19 national emergency. Utilizing this authority, HHS is instructing loan servicers for loans made through the HPSL, PCL, LDS, NSL, and NFLP programs to waive interest on those loans from March 13, 2020 through September 30, 2020.” 

The Loan FAQs are attached here.

Earlier this afternoon, House Democrats released the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, H.R. 6800, a second major stimulus package in response to the Coronavirus pandemic. The 1,800-page legislation contains several provisions impacting student loans, including  making Perkins Loans and HHS loans subject to the same pause in payments and forgiveness of interest as is now applied to federally held student loans.  The Department of Education would pay Perkins Loan interest and the Department of Health and Human Services would pay HHS loan interest to schools on behalf of borrowers.

The bill would extend the pause for all federal loans, regardless of holder, through Sept. 30, 2021, with interest paid for Perkins and HHS borrowers whose loans are held by schools. It continues to prohibit “involuntary” collection of defaulted loans, and like the CARES Act passed in March, would require credit bureau reporting and progress towards loan forgiveness to be continued as if the borrower is making payments.

The House is coming back into session on Friday and will probably pass the bill. It is expected to get few if any Republican votes in the House, relying almost entirely on the majority Democrats.  Senate Republicans have already said they are opposed to moving forward with another big, expensive legislative package at this time, so it is highly unlikely this bill will pass, although parts of it could be incorporated into future legislation.  Notably, the guidance provided by the HRSA remains in effect.

COHEAO continues to talk to Congressional offices about Perkins and HHS loans in an attempt to find workable solutions that are good for borrowers and that schools can administer.  We welcome comments from COHEAO members, and we will be discussing the guidance and the legislation on Thursday, May 21st on the membership Town Hall Meeting. 

The text of the House Democrats’ legislation can be found here:  https://files.constantcontact.com/1d652835401/2032c41d-66e3-4db5-bc91-4c01149b9765.pdf

The student loan relief section starts on Page 1384.