After staying in a hotel for a week because Hurricane Harvey flooded her Texas hometown, Patience Wieland was relieved to find out that her student loan servicer had placed her monthly payments on hold.
Some lenders, including the Department of Education’s student loan service providers, are offering hurricane-affected borrowers forbearance as a short-term form of financial relief. Forbearance allows borrowers to either stop making payments temporarily or reduce a monthly payment on a short-term basis.
“I found it refreshing that the federal loan programs automatically arranged a month’s forbearance for hurricane-damaged areas like Houston for my loan,” says Wieland, from Friendswood, Texas, where many residential homes flooded. “I didn’t have to call. I received an email and a paper notice from my student loan service provider Great Lakes.”
Wieland says the service provider must have enacted the payment option based on her ZIP code.
“Forbearance extended my loan a little. And I’ll pay a little more interest, but it also means one less thing to worry about when other people’s needs are more pressing,” says Wieland, who has several friends and neighbors with a long recovery ahead of them.
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The Department of Education gives student loan borrowers who are impacted by recent hurricanes a couple of financial support options, such as forbearance and ceasing collections.
“Borrowers in impacted areas are provided forbearances upon request for up to 90 days. In the event a borrower is or becomes delinquent, we will automatically place them on a forbearance and make it retroactive to before the delinquency, and place it on their account for up to 30 days,” a Department of Education spokesperson said via email.
While the natural disaster-related forbearance option is not new to federal student loans, the government was more proactive about communicating this protection to borrowers after Harvey, says Jovan Hackley, a spokesman from Student Loan Genius, an Austin-based student loan benefits provider. “These protections for federal loan borrowers have been in place for some time.”
For borrowers in impacted areas who are in default, the Department of Education said in an email to U.S. News that collection activities will cease upon request.
Borrowers can request forbearance or to stop collection activities on a federal student loan via the web or — for those without internet access — phone.
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And it isn’t just the Department of Education that is offering relief for student loan borrowers. A few major banks — such as Wells Fargo, JPMorgan Chase & Co. and Bank of America, to name a few — as well as other private lenders are offering payment relief options to affected customers.
“Many providers like College Ave Student Loans may already have taken steps to assist you or will be ready to work with you during this difficult time,” said Joe DePaulo, CEO and cofounder of College Ave Student Loans.
But Hackley cautions hurricane-affected borrowers to only request forbearance if they need it, because interest still accrues on the loan balance, even if the pending payment has been halted temporarily.
“Forbearance stops the payment but doesn’t stop the interest accrual and doesn’t lower your balance. Those payments will have to be made eventually, and that interest adds up over time,” he says.
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Help for Hurricane-Affected Student Loan Borrowers originally appeared on usnews.com
