Publication Date: September 19, 2001
Author: ADDERS | Office of the Deputy Assistant Secretary
Summary: US EDUCATION DEPARTMENT GRANTS LOAN RELIEF TO TERRORIST ATTACK VICTIMS
DEPARTMENT OF EDUCATION
Contact: Stephanie Babyak (202) 401-2311
|September 19, 2001|| |
Jane Glickman (202) 401-1307
U.S. EDUCATION DEPARTMENT GRANTS LOAN RELIEF TO TERRORIST ATTACK VICTIMS
Also announces assistance to NY colleges and universities in meeting reporting requirements
To help victims of the recent terrorist attacks, the U.S. Department of Education announced today that it has directed lenders who have made or hold federal student loans to provide financial relief from monthly loan payments to those borrowers affected by the terrorist attacks.
"As a government, we have pledged to help meet the needs of New Yorkers and other victims of the terrorist attack, and the steps we are announcing today will provide financial relief during these extraordinary circumstances," said U.S. Secretary of Education Rod Paige.
On September 11, 2001, President Bush designated the five boroughs of New York City (Brooklyn, The Bronx, Manhattan, Staten Island, and Queens) as being eligible for national disaster assistance.
Under the department's guidance, lenders are directed to grant "mandatory administrative forbearance" to borrowers who live or work in the New York City disaster assistance area. The procedure allows affected borrowers to postpone or reduce the amount of monthly payments from September 11, 2001, through January 31, 2002, due to the change in their financial circumstances resulting from the attacks. Mandatory administrative forbearance does not require either a request or documentation from the borrower.
Forbearance will also be granted to borrowers outside the national disaster area but who were affected by any of the terrorist attacks and hijackings. Borrowers or families need to
contact their lender, and forbearance will be granted upon request. Forbearance beyond January will require documentation and a written forbearance agreement between loan holder and borrower.
The relief is provided to borrowers who are in repayment under the Federal Family Education Loan (FFEL), the William D. Ford Federal Direct Loan (Direct Loan), and Federal Perkins Loan Programs.
Default collection activities are also on a hold until January 31, 2002, for borrowers in the New York City area. Other defaulted borrowers impacted by the disaster may be granted relief from collection activities upon request.
Lenders were also given administrative flexibility in filing death discharges without contacting the borrower's family.
In additional guidance, the department extended certain reporting deadlines for postsecondary schools in New York City. The deadlines have been extended for Federal Pell Grant reporting and disbursement records, Direct Loan records submission, and the report for the campus-based federal student aid programs.
Through a continuing series of actions, the Education Department will address other issues that relate to administrative and regulatory relief for those affected by the terrorist attacks. If borrowers or their families have questions about the department's guidance issued thus far, they should call 1-800-4 FED AID (1-800-433-3243) for information and assistance.
"It will take some time for people to return to their jobs and resume their lives. It is my sincere hope that the department's efforts will help ease the strain on those who have suffered so much and help them get back to business," Paige said.