BOSTON (WBZ NewsRadio) — As some Boston-area colleges welcome students back to campus, a plan from the U.S. Department of Education aims to help those facing student loan debt during the coronavirus pandemic.
The department announced plans earlier this month to extend student loan relief to most borrowers through Dec. 31, 2020.
Under the order signed by President Donald Trump, those with federal student loans will have their payments automatically suspended without penalty, and the interest rate on all loans will be set to 0% throughout the end of the year.
"Borrowers will continue to have the option to make payments if they so choose," the Department of Education said in a statement. "Doing so will allow borrowers to pay off their loans more quickly and at a lower cost."
Massachusetts students also received some financial relief in late July when Attorney General Maura Healey announced that Nevada-based debt buyer Troy Capital, LLC would discharge $298,000 in loan debt.
Healey said borrowers were misled by the College Network, Inc. — a for-profit company that provided online study guides and education service with the promise that students would pass equivalency exams and earn credit towards degrees.
“Borrowers who are misled by for-profit education companies should not be buried in debt because of high cost, low quality education services,” Healey said. “With this settlement, Massachusetts students who were harmed will receive the relief they need.”
Scott Buchannan, Executive Director of the Student Loan Servicing Alliance, said that regardless of the Department of Education’s plan, borrowers should still be thinking proactively about their loan balances.
"Just because it's in suspension, doesn't mean that now's not a good time to take a step back, take a look and see what payment plan you're in," Buchannan said. "Now is the best time to get in touch with your servicer because it will probably be easier to reach us today than it will be come January when we have 35 million borrowers all beginning repayment at one time."
Buchananan suggests all borrowers contact their lenders especially if their income has been impacted by COVID-19.
"People have been impacted financially by the pandemic, and are in a different financial position today or in January than they were at the beginning of the pandemic," he said. "They should reach out to their servicer and talk about is there a better repayment option for them to be in than the one that they were in before."
WBZ's Chris Fama (@CFamaWBZ) reports