Bad surprise: Many student loan borrowers don’t qualify for coronavirus relief

Some 7.2 million Americans left out of plan aimed at easing finance crunch as economy craters.



Emily Talcott breathed a sigh of relief last month when she heard that federal student loan borrowers would get some relief under the $2 trillion CARES Act, which President Donald Trump signed March 27 to help Americans financially affected by the coronavirus pandemic.

But that relief soon turned to panic when Talcott learned that she’s one of millions of Americans whose student loans aren’t addressed by the current federal relief program.

Since graduating from veterinary school 12 years ago, Talcott, 43, has been paying almost $2,000 a month toward her federal loans, only taking a brief forbearance seven years ago when she was put on bed rest while pregnant with her twin boys. And she wants to keep paying on the debt she incurred to pay for the education that led to her dream job at an animal clinic in Placentia.

But when the coronavirus hit, Talcott lost side work with a nonprofit animal group. Then she started hearing of colleagues who were laid off or saw their salaries reduced as clinics cut back. She feared her full-time job was in jeopardy and that she might lose her small home in Fullerton. So the federal government’s promise that borrowers could defer student loan payments for six months without accumulating interest felt like a lifeline.

When the bill was passed, Talcott started logging into her account with her loan service provider Navient, hoping to see the “balance due” drop to $0. But a few weeks passed without a change. That’s when she called Navient and got the news:

Talcott was one of the 7.2 million borrowers across the country whose federal student loan debt isn’t covered by the federal relief act.

While Talcott had taken out the only federal student loans her veterinary school offered, she learned her loans weren’t direct from the U.S. Treasury. Instead, her loans were part of the decades-old Federal Family Education Loan (FFEL) program, where the federal government guaranteed loans that were actually owned by private banks.

Though President Barack Obama ended the FFEL program in 2010, Taclott and the other 7.2 million FFEL borrowers who still owe a collective $169 billion from pre-2010 loans were left in the same boat as some 2 million other borrowers who have private student loans and also don’t qualify for help under the CARES Act.

“The majority of people who went to school and borrowed money before 2010 more likely than not don’t qualify for anything



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