Congress could be set to extend student loan relief until 2021
Biparty group of senators released text for second stimulus bill, and it contains good news for some student loan borrowers.
Lawmakers have engaged in fierce negotiations to try to craft a bipartisan compromise stimulus package that could be passed by Congress before the end of the year. While some elements of a new stimulus package are widely popular – such as extending unemployment relief and giving more money to small businesses – other proposals have drawn more partisan opposition. This hampered the ability of congressional negotiators to find sufficient common ground for a broad back-up plan.
The latest proposal would fork the stimulus plan. A part would contain the most popular elements. The other part would contain the more controversial elements – namely, state and local government funding (which Democrats want) and a COVID-19 liability shield (which Republicans want).
The larger and more popular part of the stimulus package includes an extension of existing student loan relief until April 1, 2021. A previous summary of the proposed stimulus package had suggested that the extension would be until April 30. .
Since March, millions of federal student loan borrowers have had their payments and interest suspended under the CARES Act. Emergency pandemic stimulus legislation also halted all collection efforts on delinquent federal loans, such as wage garnishments and interceptions of federal tax refunds. Student loan relief was originally scheduled to end in September, but the Trump administration has granted two extensions – the first to December 31 and the second to January 31 to give Congress more time to extend the relief .
Notably, current student loan relief is limited to federal student loans held by the government only. Over $ 300 billion in commercially held FFEL loans, federal Perkins loans issued by colleges and universities, and private student loans were excluded from the original CARES law. The new stimulus package does not extend that relief to cover additional student loans, which Congressional Democrats had wanted.
Nonetheless, the stimulus package would provide much needed relief to millions of student loan borrowers. In a recent survey by Student Debt Crisis and Savi, 77% of student loan borrowers covered by the moratorium indicated that they did not feel financially secure enough to resume their student loan payments, and more than half of Borrowers surveyed rate their current financial well-being as poor or very poor since the start of the pandemic earlier this year. The investigation found that healthcare workers were particularly concerned. President-elect Biden could extend the moratorium on student loans by executive order in the spring, although it is too early to know if he would.
Passage of the current stimulus proposal is by no means guaranteed, but congressional leaders have expressed optimism. “I can speak for the Republican side. We want to pass a law to get us to agree where we can and help those who need it,” Senate Majority Leader McConnell said yesterday (R- KY). Senatorial Minority Leader Chuck Schumer (D-NY) echoed this sentiment on behalf of Senate Democrats.
Any stimulus bill passed by Congress would have to be signed by President Trump. The White House pushed its own version of a new stimulus package that excludes an extension of student loan relief.
Under the current provisions governing the moratorium on student loans, months of suspended payments would count towards loan forgiveness programs (such as loan forgiveness for the civil service), as well as for rehabilitation programs. loan for borrowers who are trying to fix overdue federal loans. This would continue to be the case if Congress passed the additional extension until April 2021. In addition, many student loan managers have voluntarily pushed back the annual recertification deadlines for income-based repayment plans until 2021. , which means that many borrowers may not have to take action on their loans for several more months. Borrowers should contact their loan officers for more information.