The purpose of the symposium is to discuss, with those who serve student loan borrowers, various topics on how to manage student loans during the COVID-19 pandemic. I’d like to welcome our guests and panelists. They consist of a variety of stakeholders who serve student loan borrowers. They include a consumer advocacy group, state government, the Department of Education, and a trade association. I would also like to thank the members of the public who are listening to the symposium. Thank you all for taking the time to join us to discuss the impact the Coronavirus is having on student loan borrowers.
We look forward to hearing your perspectives. As background, the Private Education Loan Ombudsman position was created by Dodd-Frank in 2010, and among other things, works with a variety of student loan internal and external stakeholders. This includes offices and sections internally at the Bureau regarding students and student loans, and externally with the Department of Education’s Student Loan Ombudsman.
Now I’d like to go over what you can expect on this call. Today’s meeting will run from approximately 2:00 pm and conclude at approximately 2:35pm. We will start with remarks from Director Kathleen Kraninger. Our first agenda item is an overview of benefits provided by the CARES Act which will be presented by Joyce DeMoss, the Department of Education’s Student Loan Ombudsman.
The next agenda item will be a panel discussion with moderated questions and answers. The final agenda be an overview of resources for consumers presented by Kristen Evans, the CFPB’s Section Chief for students. I am now pleased to introduce Director Kraninger. Director Kraninger became the second confirmed Director of the Consumer Financial Protection Bureau in December 2018.
From her early days as a Peace Corps volunteer to her role establishing the Department of Homeland Security, to her policy work at the Office of Management and Budget (OMB) to the CFPB, Director Kraninger has dedicated her career to public service and it is my privilege to welcome her to today’s symposium.
The pandemic crisis and the necessary response to mitigate health risks has had a dramatic and abrupt impact on all of our lives. Right now more than ever, consumers need access to trusted information to know where to turn for help and steps to take to manage their finances. As soon as the outbreak hit, the Bureau reached out to engage with all stakeholders for their perspectives.
We tapped into insights into our consumer complaint system. To monitor the challenges that people are experiencing in the marketplace. We quickly shifted to adjust accordingly through all of our activities such as research, market monitoring, and consumer response. All of these efforts have informed our education and empowerment tools such as blogs, symposia, and videos and we continue to update these materials as new developments come in.
For student loan borrowers, the Bureau is working to help them understand their options to mitigate the financial impact of coronavirus. We are letting student loan will borrowers know that the Department of Education and the CARES Act have provided certain protections for borrowers with federally owned direct loans and federally owned Federal family education loans.
This includes suspension of principal and interest for these federally held loans through September 30, 2020. Interest rates on the federally held student loans have been set at 0%. There is now a temporary hold on collection of defaulted loans held by the federal government. For other federal loans, the CARES Act makes similar benefits available but does not require services to provide them.
Regarding private student loans, some lenders are offering assistance to borrowers in need, including short-term forbearance options, many for up to 90 days, waving late fees, and offering their own reduced payment options. Again, the Bureau aims to be a trusted place where student loan borrowers of all kinds of loans can come for accurate, up-to-date information.
We have introduced a number of new capabilities to help students, including our Paying for College tool. Notably the CARES Act benefits plan to expire this fall. There will be another significant transition for student loan borrowers and the Marketplace. But taking a proactive approach, closely monitoring markets and complaints, applying available analytic tools and predictive manner, and engaging directly with stakeholders, we can continue to provide consumer information and tools to anticipate the challenges in this transition.
Now we will get started with the first item on the agenda: an overview of the CARES Act and the benefits available for Federal Student loan borrowers who have federally held loans. Joyce DeMoss, the student loan ombudsman at Federal Student Aid within the Department of Education will present the overview. Joyce.
The benefits that have been authorized by the CARES Act for federal student loan borrowers. The CARES Act authorizes most importantly and most prominently, the automatic suspension of principal and interest payments on federally held loans from the period of March 13 until September 30, 2020. That means that federal student loan borrowers will not have to worry about making payments during this broad economic impact of the pandemic.
Additionally, the interest rate on these loans has been set to zero. So no interest will accrue during this period. And in addition, if there is an interest that is on the balance of the account, even before March 13, that interest will not capitalize at the end of the suspension period.
Thereby, borrows may not be surprised by an increased monthly payment amount at the end of the suspension period because of interest capitalization. Suspended payments during this period are not considered as missed payments. Borrowers are not subjected to delinquency or collection efforts. And payments are reported to credit bureaus as fulfilled payments.
This in particular is important for borrowers who might be in the defaulted loan portfolio, who are engaged in loan rehabilitation with the objective of regaining eligibility for federal Title 4 student loan assistance. But also for loan rehabilitation to remove a loan out of default at the end of the loan rehabilitation.
Additionally, suspended payments will count toward loan forgiveness programs. Most commonly in the public service loan forgiveness program. That means for PSLF borrowers who are aiming for forgiveness under PSLF, payments that would have otherwise been made during the suspension period will take forward toward that 120 months of payments that are required for PSLF forgiveness.
For student loan borrowers, I urge you to take advantage of the resources available to assist you during the pandemic. The Bureau and Department of Education, Federal Student Aid has many resources available online that are regularly updated. If you have questions about your options, don’t hesitate to contact your servicer or the financial aid office at your school. Remember benefits under the CARES Act are free. There is no charge to access.