Don’t expect a $2,000 a month stimulus check or student loan forgiveness any time soon.
Here’s what you need to know.
HEROES Act: $2,000 A Month Stimulus Check and Student Loan Forgiveness
The House passed the HEROES Act – the ambitious $3 trillion stimulus proposal to help provide financial support to the American public – on Friday. The HEROES Act, if passed by the Senate and signed by the president, would provide a multitude of financial benefits, ranging from a one-time stimulus check to extended unemployment benefits to student loan forgiveness. However, don’t expect many of these provisions to become law anytime soon. Here’s are 5 things to expect instead so you can adjust your expectations.
1. The HEROES Act barely passed the House
The House of Representatives barely passed the HEROES Act, 208-199, a margin of only 9 votes. Despite Democrats controlling the House of Representatives, and the vote falling mostly along party lines, 14 Democrats voted against the HEROES Act. That shows that Democrats – the party that sponsored the proposed legislation – did not unanimously unite around the HEROES Act.
2. Don’t expect a $2,000 A Month Stimulus Check
There has been much excitement about the possibility of a $2,000 a month stimulus check. The idea gained inspiration from universal basic income, which is a form of social security that provides guaranteed money to recipients. For example, former presidential candidate Andrew Yang proposed $1,000 a month for every U.S. citizen 18 and older — forever. However, despite all the excitement, the HEROES Act does not contain a proposal for a $2,000 a month stimulus check. Rather, the HEROES Act proposes:
- A second stimulus check for $1,200 for each individual
- $2,400 for married couples
- $1,200 for each dependent (with a maximum of three dependents), which is higher than the CARES Act, which provided up to a $500 payment for dependents
- The second stimulus check would be a one-time stimulus check, not a recurring monthly stimulus check.
- The income limitations are the same as the CARES Act: you can receive the full $1,200 payment if your adjusted gross income is less than $75,000 for single filers and $150,000 for married couples filing jointly.
If there is another stimulus check, it would likely be a one-time stimulus check similar to the CARES Act.
3. Student loan forgiveness was reduced significantly in the HEROES Act
Student loan forgiveness may be top of mind for many student loan borrowers. However, don’t get your hopes up in the near-term. The HEROES Act initially proposed $10,000 of student loan forgiveness for your federal student loans and $10,000 of private student loan forgiveness. This provision was already less than earlier House Democrats proposal that called for $30,000 of student loan forgiveness. Now, the student loan forgiveness plan is even less than a Senate student loan forgiveness plan to forgive at least $10,000 of federal student loans for all borrowers. Why? House Democrats amended the HEROES Act and weakened the final provision for student loan forgiveness. Rather than every borrower receiving student loan forgiveness, the legislation was narrowed to only those borrowers who are facing significant financial struggles. As a result, if the HEROES Act becomes law, millions of student loan borrowers likely would not qualify for, or receive, student loan forgiveness. Even with the final proposal for student loan forgiveness, the provision is less likely to pass the Senate.
4. There are other legislative and financial priorities
That may be hard to grasp, as a $2,000 a month stimulus check or student loan forgiveness may be your top priorities. However, these are only proposals from one political party. To become law, the HEROES Act also has to pass the Senate and be signed by the president. Republicans have called the legislation “dead on arrival,” which means it has no chance, in its current form, of becoming law. Given concerns about federal spending, there are other legislative priorities that Republicans may want to include in a future stimulus bill, including tax cuts, help for small businesses, fixes to the Payment Protection Program, extension of unemployment benefits, and support for state and local governments, among other priorities.
5. Student loans are already paused, which decreases the immediate need for student loan forgiveness
Through the CARES Act, Congress already paused all payments for federal student loans through September 30, 2020. Congress also set interest rates at 0%, so interest will accrue on your federal student loans during this period. While Congress did not pause payments for private student loans, many (but not all) states have made agreements with private student loan lenders and servicers effectively to pause payments as well for residents in those states. Some members of Congress have said that Congress should, in addition pausing payments, cancel student loan debt. However, a six-month forbearance on all federal student loans helps provide financial relief to millions of Americans, even if your student loan balance is not reduced. Given this financial benefit (which you may or may not believe is ideal), Congress is less likely to focus on student loan forgiveness now.
It’s an election year, so anything can happen. It’s unlikely, but possible, that a $2,000 a month stimulus check or student loan forgiveness find their way back into a new stimulus bill. Stay turned as Congress debates the next stimulus bill. However, don’t expect anything soon—the Senate likely won’t pass any stimulus bill before June.
Student Loan Repayment Options
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