Will Loan Payments Suspended Due To Coronavirus Count Toward Satisfactory Repayment Arrangements?

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This AskRegs Knowledgebase Q&A was updated on February 2, 2021 to clarify that the guidance below applies until loan payments resume after September 30, 2021 or the end date of any future extension.

No. The payments towards the satisfactory repayment arrangement are temporarily suspended and will resume when loan repayment resumes.

Direct Loans: See the April 3, 2020 Electronic Announcement, which reads:

"Satisfactory Repayment Arrangements (§ 685.102)
The Department will not treat any payment the borrower fails to make as a missed payment in the stream of six consecutive, on-time voluntary full monthly payments required to re-establish his or her eligibility for assistance under Title IV of the HEA. If the Department does not extend the effective period for the temporary relief provided by this guidance, the required sequence of qualifying payments resumes at the point at which it was discontinued.

The Department will not treat any payment the borrower fails to make as a missed payment in the stream of three consecutive, on-time voluntary full monthly payments required to establish eligibility to consolidate a defaulted loan. If the Department does not extend the effective period for the temporary relief provided by this guidance, the required sequence of qualifying payments resumes at the point at which it was discontinued."

Federal Perkins Loans: The same general rule applies to satisfactory repayment arrangements for Federal Perkins Loans. The December 11, 2020 Federal Register states it this way:

"Under sections 428F(b) and 464(h)(2) of the HEA and under the definition of ‘‘satisfactory repayment arrangement’’, a defaulted Perkins Loan borrower may make six consecutive, on-time, voluntary, full, monthly payments to reestablish eligibility for title IV Federal student financial assistance. To assist Perkins Loan borrowers who are affected by the COVID–19 pandemic, the Secretary is waiving ... the statutory and regulatory provisions that require the borrower to make consecutive payments to reestablish eligibility. Loan holders are encouraged not to treat any payment missed during the time that a borrower is an affected individual in this category as an interruption in the six consecutive, on-time, voluntary, full, monthly payments required for reestablishing title IV eligibility. If there is an arrangement or agreement in place between the borrower and loan holder and the borrower makes a payment during this period, the loan holder must treat the payment as an eligible payment in the required series of payments even if the borrower did not make additional payments during this period. At the conclusion of this waiver period, the required sequence of qualifying payments may resume at the point they were discontinued because of the borrower’s status as an affected individual. The Secretary will apply the waivers described in this paragraph to loans held by the Department."

Notes:

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