April 7, 2020

Guidance to New York State-Regulated Student Loan Servicers Regarding Support for Borrowers Impacted by the Novel Coronavirus (COVID-19)

To: The Chief Executive Officers or the Equivalents of New York State-Regulated Student Loan Servicers

On March 7, 2020, Governor Andrew M. Cuomo declared a state of emergency in the State of New York in response to the spread of the novel coronavirus COVID-19. COVID-19 presents a public health crisis and economic challenge to the State unprecedented in modern history. The virus itself and the emergency response measures required to protect the health and safety of all New Yorkers limit the ability of many to earn a livelihood. The economic impact to consumers is considerable and the outbreak will continue to cause significant financial hardship for individuals and families, especially workers who cannot work remotely and do not have access to paid leave.

Many New Yorkers facing this financial stress are borrowers of student loans. As the only point of contact for most borrowers, student loan servicers are responsible for providing timely and accurate information to them. Therefore, in response to this crisis, the Department is issuing guidance to urge all regulated student loan servicers to do their part to alleviate the hardship caused by COVID-19 on borrowers by taking the reasonable and prudent actions described below.

In addition to swiftly implementing the relief available under the federal CARES Act for all borrowers whose student loans are federally owned, regulated student loan servicers should respond to the COVID-19 emergency by, at a minimum:

• Providing at least 90 days of forbearance or similar repayment accommodation for all borrowers whose student loans are privately held and who have been impacted by COVID-19;
• For at least 90 days, reporting any missed payment that is subject to a forbearance or other repayment accommodation as “current” to credit reporting agencies;
• For at least 90 days, refraining from sending defaulted loan accounts to third-party debt collectors and refraining from filing any new or proceeding with any existing collections actions against borrowers;
• For at least 90 days, waiving late payment fees for all borrowers who have obtained a forbearance or similar repayment accommodation;
• Proactively contacting borrowers to inform them of relief that is available if the borrower has been impacted by COVID-19, such as by alerting borrowers via email or any other manner in which a borrower has agreed to receive communications, that borrowers may contact the student loan servicer to discuss potential options and/or visit the servicer’s website for information on the relief available in response to COVID-19;
• Prominently posting, on the student loan servicer’s website, clear and complete information, written in easily-understandable language, about any available repayment options related to COVID-19;
• Ensuring customer representatives are aware of and capable of informing and discussing with borrowers impacted by COVID-19 all currently-available repayment options related to COVID-19, as well as any other alternative repayment plans (including income-driven repayment), hardship programs, and relief opportunities provided by the federal government;
• If a borrower contacts a student loan servicer to express financial hardship related to COVID-19, informing and discussing with the borrower any available repayment options related to COVID-19, as well as any other alternative repayment plans (including income-driven repayment), loan forgiveness, cancellation, and discharge benefits;
• Contacting borrowers who recently missed or who in the coming weeks miss a payment to determine their status and the best options for them, and implementing any automatic relief for these borrowers where available or required by the U.S. Department of Education or private lenders;
• Reducing wherever possible any administrative procedures or document verification associated with enrolling a borrower in an income-driven repayment plan, deferment, forbearance, rehabilitation, consolidation, or equivalent relief offered by private loan holders;
• Relaxing wherever possible any recertification requirements associated with income-driven repayment plans or any hardship status already in place and granting automatic extensions on such statuses to ensure that any borrower who does not recertify by a given deadline or who lacks certain paperwork is not removed from the plan or hardship status;
• Ensuring staffing plans are sufficient to meet borrowers’ needs and requests for assistance, and if staffing capacity is impaired by COVID-19, developing additional means of meeting borrowers’ needs as permissible, such as allowing borrowers to request a deferment or forbearance, change payment plans, or certify income via a telephone touch-tone menu, email, or online;
• Posting, processing, and crediting student loan payments in a timely manner, and ensuring borrowers are held harmless for any payment that is not timely posted, processed, or credited as a result of the student loan servicer’s inability to do so;
• Ensuring borrowers are held harmless for any disruption in required paper processing, such as inbound and outbound mail, and hard copy relief or repayment plan applications, and that borrowers without internet or telephone access are adequately served;
• Monitoring changes in the number and frequency of inbound borrower calls, including the call abandon rate, and application submission rates and review periods, and adjusting staffing plans or other policies and procedures accordingly to ensure borrowers’ needs are reasonably met; and
• Providing any customer service representatives and other staff working remotely with safe and secure access to borrowers’ information.

Where regulated student loan servicers are limited in their ability to take these actions due to investor restrictions or contractual obligations, servicers should proactively work with loan holders or the U.S. Department of Education whenever possible to relax those restrictions or obligations. The Department will exercise its examination and reporting authority, pursuant to 3 NYCRR 409.10-11, as necessary to ensure that regulated student loan servicers meet essential servicing standards and demonstrate the institutional fitness required to further the public interest.

The Department also welcomes any actions by regulated student loan servicers to support these goals and believes reasonable and prudent actions to assist borrowers under these unusual and extreme circumstances, such as those outlined in this guidance, are consistent with safe and sound industry practices as well as in the public interest and will not be subject to examiner criticism.

You may contact the Department with questions about this guidance by emailing [email protected].

Sincerely,

Katherine Lemire
Executive Deputy Superintendent
Consumer Protection & Financial Enforcement Division