April 2, 2020 12:50 PM EDT

Millions of people with student loans breathed sighs of relief when the stimulus bill known as the CARES Act was signed into law. It suspended both monthly payments and interest accrual on most student loans held by the federal government through September 30, 2020.

But for millions of people whose student loans are from private lenders such as Wells Fargo, Sallie Mae, or SoFi, the package, which is intended to alleviate financial pressures caused by the coronavirus pandemic, brings no relief. It does not require private lenders to pause payments or stop charging interest on loans, even for borrowers who have lost their jobs or income because of the economic collapse.

While some private lenders are allowing some borrowers to enter into forbearance, essentially pausing payments for 30, 60 or 90 days, almost none contacted by TIME are waiving interest during this time. This means in most cases, borrowers will end up owing more than they did before the economic collapse, and some people’s monthly payments may also go up. In some cases, borrowers’ balances could go up by thousands of dollars; if someone had law school debt of $145,000—the average for law school graduates—and a private loan with an interest rate of 11%, for instance, they would owe $4,125 more than before their forbearance because of the interest accrual.

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“I’ve already taken a pay cut, but they withdrew my payment yesterday and aren’t willing to work with me,” says Justin Lucas, 29, who has a private student loan from Wells Fargo with an 11.24% interest rate. (The interest rate on federal student loans for the 2019-2020 school year is 4.53%, by comparison.) Lucas, the first person in his family to go to college, couldn’t get federal student loans his freshman year because his family was not able to provide the required paperwork; his school, Texas State University, directed him to a Wells Fargo branch on campus, which offered a high-interest private loan.

He says that when he called Wells Fargo after learning that he, along with everyone at the construction company where he works, is getting a 25% pay cut, he was told he could pause his payments for one month, but he would still be charged interest and his interest rate would go up. A Wells Fargo spokesman confirmed that some borrowers’ interest rates could increase during forbearance because they would lose their eligibility for a discount available to borrowers whose monthly payments are automatically deducted from their bank accounts. Once borrowers resume payments, the spokesman said their interest would revert back to pre-forbearance rates.

The private student loan market is worth about $130 billion—a fraction of the federal one, which is worth about $1.5 trillion—but it is growing as the cost of education goes up. There are more private student loans in America than there are payday loans, and more than one million students take out private student loans each year.

Lucas was told it was his only option. “It’s pretty easy when you’re dumb and young to take risks,” he says. “As the only one in my family who went to college, I was learning as I went.”

Other people are pushed into private loans because the annual limit for federal loans, at $12,500 for an undergraduate, doesn’t cover all of their expenses, or because they are attending a for-profit school that pushes its own private loan product. While the amount of money granted in federal student loans fell more than 25% between 2010 and 2018, the amount granted in new private student loans grew by almost 78% over the same time period, according to the Student Borrower Protection Center, which advocates on behalf of borrowers.

Consumer groups say that the paltry options available to people with private loans during this crisis, and the lack of protection offered them, illustrate the problem of entrusting more student loans to commercial banks, as some conservative are advocating. While the CARES Act also suspended the involuntary collection of defaulted federal loans, private lenders are not prohibited from collecting on defaulted loans. One private lender, Iowa Student Loan, has filed 18 lawsuits trying to collect from borrowers since President Trump declared a national emergency on March 13, according to the Student Borrower Protection Center, which searched Iowa court records for the collection actions. In New York, lenders filed more than 20 new collection cases after the national emergency was declared, according to the Borrower Protection Center.

President Donald Trump signs the Coronavirus Aid, Relief, and Economic Security (CARES) Act, in the Oval Office of the White House in Washington, D.C., on Friday, March 27, 2020.
Erin Schaff—The New York Times/Bloomberg/Getty Images

“I have real concerns that we are just leaving the millions of Americans who were forced to take on private student loans to try and get a better life for themselves just totally in the lurch,” says Seth Frotman, who was the student loan ombudsman for the Consumer Financial Protection Bureau until 2018 and is now the executive director of the Student Borrower Protection Center. Because of the burden of his loans, Lucas, for instance, still lives with family, can’t qualify for a credit card even though he makes a decent income, and says the only way he’ll ever pay off his loans is if he wins the lottery. “Don’t get private student loans. That would be my advice to anybody,” he says.

On March 27, the day the $2.2 trillion stimulus package was signed into law, the Student Borrower Protection Center and Americans for Financial Reform sent a letter to the 12 biggest private student lenders urging them to let borrowers cease payments without fees or penalties and to expand options for loan modifications. “If immediate action is not taken, the effects of the coronavirus pandemic could substantially imperil the financial lives of the millions of borrowers who relied on private student loans,” said the letters, signed by Frotman and Alexis Goldstein, senior policy analyst with Americans for Financial Reform, which supports stricter regulation of Wall Street.

TIME reached out to 11 of the 12 lenders asking about their policies during this time (One, Mohela, had no contact information except for its hotline for students.) Only one, Discover, is offering relief similar to that available to federal borrowers. Through its Skip-A-Pay program, Discover is letting borrowers who contact the company pause payments for two months, and during that time, be charged zero percent interest.

“We think it’s the right thing to do for our customers,” says Kate Manfred, senior vice president for Discover Student Loans.

Others, including College Avenue Student Loans, SoFi, Wells Fargo, PNC, Navient, and Truist said they were offering various forbearance programs that suspend payments, but interest will accrue during the suspensions. In some cases, that interest will be added to the loan’s unpaid balance, and borrowers will have to pay interest on the larger balance. LendKey said that since it services loans for hundreds of banks and credit unions, the policies vary from institution to institution, so it could not comment.

It’s more difficult for private lenders to pause interest because they have contractual obligations to make payments to the investors who hold the loans, says Scott Buchanan, the executive director of the Student Loan Servicing Alliance, a membership organization of federal and private servicers. Breaking those contractual obligations could have implications on financial markets, Buchanan says. “In a moment that we have an economic crisis,” he says, “we have to make sure we are not exacerbating the difficulties in the markets while also giving borrowers real relief today.”

Financial institutions are in a difficult position right now, since so many households and small businesses that took out loans may be unable to repay them because of the economic crisis resulting from COVID-19, says Andrew Winton, a professor in the finance department of the University of Minnesota’s Carlson School of Management. The total amount of debt held by U.S. households is at an all-time high, and if millions of people stop making payments, banks will be in trouble. “There’s a lot of concern about banks’ finances,” he says. Banks may want to pause interest on student loans right now, he says, because it would be a good public relations move. “They’re probably all sitting there saying, it would look good for us, but can we really afford to do it?” he says.

But Frotman says this economic crisis is an opportunity to rethink a system that allows private loans with few protections for borrowers.

“The private student loan market is really kind of the Wild West of consumer finance,” he says. “There’s no real requirement that companies work with borrowers who struggle.”

By comparison, the protections for people who take out federal loans are robust, thanks in part to a 2010 bill passed in the wake of the last recession that made the federal government the primary student lender, ending a policy in which commercial banks received federal subsidies to lend to students. Borrowers have access to income-driven repayment, which allows those with low incomes to adjust their monthly payments. Borrowers who become permanently disabled, or who enter public service careers such as teaching or government work, can be eligible for student loan forgiveness under the federal lending program.

None of these options are available to people with private loans.

And while all federal loan payments were suspended automatically under the CARES Act, holders of private loans have scrambled to get in touch with lenders to see if any relief is available, only to find offices closed because of COVID-19. One borrower, who didn’t want his name used because he didn’t clear the interview with his employer, said that when he called his lender, American Education Services, on Monday, he was told the offices were closed; he emailed them and reached out on Twitter, but got no response. (American Education Services did not return a call for comment.)

For some private borrowers with low interest rates, forbearance programs will help them through this crisis. Accruing interest for a few months isn’t a huge deal for them. But for others, especially those like Lucas who already have a high interest rate and no savings to make principal payments, the lack of a comprehensive relief plan could lead to thousands of dollars more in debt.

Courtesy Mackenzie Hammond
Mackenzie Hammond of Hattiesburg Mississippi at her graduation from the University of Southern Mississippi in 2017.

Many say that if they had known they were giving up protections when they were taking out private loans, they wouldn’t have done it. “If I had the opportunity to go back in time and do only federal loans, I’d do it,” says Mackenzie Hammond, a 25-year-old living in Hattiesburg, Mississippi. When Hammond was getting her bachelor’s degree from the University of Southern Mississippi, Wells Fargo approached Hammond’s mother, who had a mortgage with the bank, and offered a discount on her mortgage if they used Wells Fargo for a student loan. Hammond, who already had some federal loans, took Wells Fargo up on the offer.

But Hammond, who has been working as a speech pathologist since she graduated in 2017, has had her hours cut 30%. While her federal loan payments were paused, she was told by Wells Fargo that she could not defer payment without interest accruing. (A Wells Fargo spokesman told TIME that the company is offering 90-day payment deferrals but interest will accrue during that time.) Now, Hammond and her husband, who is also working reduced hours, are facing car payments and student loan payments—her private loan payments alone are $250 a month.

She rues the day she took out a private loan. “I feel like I’ve gotten trapped in this loan,” she says.

Another group of borrowers had federal loans until they refinanced with private lenders who were offering extremely low interest rates.

When a friend last year recommended that it would be financially savvy to do this, Lauren Maupin, a nurse practitioner living in Lexington, Kentucky, went online and refinanced with SoFI, a personal finance company, significantly lowering her monthly payments. But now, she’s lost her income because the dermatology office where she works closed in response to COVID-19. If Maupin had stayed with a federal loan, she could have paused payments without accruing interest.

“I don’t have an income now, and I don’t know when I will have an income again,” says Maupin, who says she did not realize when she refinanced that she was turning her Department of Education loans over to a private company.

A SoFi spokesperson said that the company is working to assist borrowers and that it recently updated its website to make sure that people who are trying to refinance understand the protections that they are forfeiting. In a section with resources for borrowers affected by COVID-19, SoFi warns: “While forbearance will allow you to skip payments in the short term, it will extend the life of the loan and cause your loan to accrue more interest over the life of the loan.”

The company does not have a lot of wiggle room to just pause all interest, a spokesperson said. “Private companies like SoFi simply cannot do things like waive interest on our loans, as doing so would threaten our viability and breach our contractual obligations to investors who own the loans that we service,” the company said in a statement.

An early version of the CARES Act would have given relief to borrowers with private student loans. That version would have paid private lenders the money that the borrowers were not paying. But after the last financial crisis, the idea of having the government make payments to financial institutions was controversial. Some House Democrats also wanted the CARES Act to include some cancellation of student debt, but this was not included in the final bill.

The divergent protections are important to remember going forward, as interest rates fall and financial institutions try to lure borrowers away from federal loans with lower interest rates on private loans. Most people are optimists and think that if their finances are stable, they’ll always be stable, says Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center.

But this crisis shows the flaws in that reasoning. “This really does highlight,” Yu says, “why these protections are so important.”

Contact us at editors@time.com.

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