topic Re: SLs went into default DURING the CARES ACT?? in Student Loans

SLs went into default DURING the CARES ACT??

quikj9 — Thu, 03 Dec 2020 00:50:37 GMT

Hello myFICO fam.

My DS unwittingly missed a few payments and got slapped with a 90d late in February of this year. Thankfully the CARES ACT was passed and her loans were placed in forebearance. She's gotten credit for those payments on her credit reports, so I didn't think anything of it. These are federal Perkins Loans.

I go to put her on an IBR today and notice that 2 of her loans have somehow gone into default during the period when they supposedly should have been covered under the CARES Act.

How is this possible?

The servicer listed is her school. Is there any recourse?

Re: SLs went into default DURING the CARES ACT??

thornback — Thu, 03 Dec 2020 01:25:31 GMT

Unfortunately, it seems you may not have much recourse - but you can contact the institution to see if they'll make an exception due to the misunderstanding (i would) --- or maybe they'd be willing to do a retroactive forbearance which would remove the default. The student loan payment and interest suspension of the Cares Act apparently only applied to federal student loans held by the Department of Education. Institutions and schools holding Perkins loans could have chosen to suspend interest and payments on a voluntary basis, but they were not required by law to do so.

Per CFPB:

"Perkins loan borrowers can request forbearance from their institution, not to exceed three months. This forbearance counts toward the cumulative three-year maximum allowed for Perkins loan forbearance. Additionally, you are not required to provide documentation to be considered for forbearance."

More: https://www.consumerfinance.gov/coronavirus/student-loans/

Sorry.

Re: SLs went into default DURING the CARES ACT??

quikj9 — Thu, 03 Dec 2020 02:30:38 GMT

@thornback Thank you very much for that explanation. I wasn't aware of Perkins Loans having that distinction.

I'll have my DS contact the school to see if they'll make an exception or seek retroactive forbearance. I really appreciate this information.

Re: SLs went into default DURING the CARES ACT??

thornback — Thu, 03 Dec 2020 03:38:36 GMT

@quikj9 wrote:
@thornback Thank you very much for that explanation. I wasn't aware of Perkins Loans having that distinction.

I'll have my DS contact the school to see if they'll make an exception or seek retroactive forbearance. I really appreciate this information.

Good Luck!! I hope they are willing and able to work with your DS.

Re: SLs went into default DURING the CARES ACT??

calyx — Mon, 07 Dec 2020 16:18:17 GMT

Perkins loans are also treated differently under the HEA, FYI.

I would definitely contact them and talk to them about the situation - I'm sure this is not an uncommon occurrence, and they might have procedures already in place. They should have also contact you/DS about the failure to pay, though.