The U.S. Department of Education has directed lenders to ease the repayment obligations of student-loan borrowers affected by last week's 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," Education Secretary Roderick R. Paige said.
The Department of Education also announced Wednesday it will provide $500,000 to Virginia's Department of Public Instruction to help students and teachers directly affected by the terrorist attack on the Pentagon in Arlington.
According to the announcement regarding loan repayments, the department has mandated that lenders grant "administrative forbearance" to borrowers living or working in New York City through Jan. 31. As a result, lenders are allowed to postpone or reduce the amount of monthly loan payments without requiring a request or documentation from the borrower.
Forbearance also will be granted to borrowers outside the New York national disaster area but who are personally affected by the terrorist attacks. These borrowers must contact their lenders before being temporarily relieved of their repayment obligations.
Although debt payments can be suspended temporarily, many borrowers may still resume normal repayment because interest will continue to accrue on the loans during the period of forbearance.
The loan relief could affect University students with connections to terrorist attacks and hijackings who now are receiving financial aid.
Although the University Office of Financial Aid does not collect money on the loans currently affected by the mandated forbearance, the office is involved in relieving the burdens of affected students in other ways, Financial Aid Director Yvonne Hubbard said.
"Basically we would work with Student Affairs to keep an eye on students with circumstances that would require a change in need-based aid," Hubbard said. Also, the office "would certainly encourage students with concerns to go to student financial services for counseling," she added.
The terrorist attacks' effect on the economy could affect financial aid as well.
"We've had a lower percentage of students on financial aid this year than we've had in a long time," Hubbard said. But with the economy cooling down as an indirect result of the attacks, "we think it will go back up"
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