This week, Senate Republicans outlined their priorities for the next stimulus bill. As expected, it included stimulus checks and money for education. What won’t be in the bill is more student loan relief or debt forgiveness.
While Senate Republicans haven’t released their bill language, they are expected to propose the same type of stimulus checks as in the CARES Act. However, Republicans want to end the student loan payment suspension granted in the same legislation.
There has been a debate among lawmakers and advocates about how to approach student loans going forward, but the debate has mostly been centered on how much relief to provide. Several proposals have been put forth to extend the student loan hiatus: some through December, others for another year.
Others went further. Senator Elizabeth Warren and former Vice President Joe Biden have been pushing for $10,000 in student debt forgiveness. Progressives in the House want $30,000 forgiven for each borrower.
Republicans have a different idea. Senator Lamar Alexander told reporters that the Republican bill will include his “new” income-driven repayment plan he released earlier this week, rather than extend the student loan repayment suspension.
Alexander’s plan is borrowers without an income would not be required to make any student loan payments. But this isn’t a new idea. His plan has different terms, but existing repayment plans already provide this protection for borrowers. And Alexander has proposed a version of this plan before.
Advocates have pushed back on the proposal, saying that it doesn’t provide enough relief. In fact, his proposal actually saves tax dollars. “Senator Alexander’s proposal does little to nothing to alleviate the real strains people were already facing before the pandemic—particularly borrowers of color,’’ said Kyle Southern, Policy and Advocacy Director for Higher Education and Workforce at the advocacy organization, Young Invincibles.
“Rather than pursue this proposal, members of Congress should, at the very least, extend and expand the CARES Act automatic forbearance period while the country continues to navigate dual public health and economic crises,’’ Southern said. At the same time, Warren continues to call for student debt cancellation, in part for economic stimulus.
Alexander and others believe that suspending payments for all borrowers provides relief to borrowers who aren’t struggling. His plan would target those who are unemployed.
Even though suspending payments for all borrowers is overly inclusive, it can help stimulate the economy. If the borrowers who didn’t lose their job have extra cash freed up, they are able to spend more and help pump more money into the economy.
Millions of Americans are already unemployed and more might be soon as coronavirus cases continue to rise across the country. Alexander’s plan would take time to implement and would also put another burden on struggling Americans who would have to report to their loan servicers they are struggling.