Yesterday, House Speaker Nancy Pelosi and her leadership team unveiled the latest stimulus proposal in response to the ongoing COVID-19 Pandemic. The Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act) is a sprawling $3 trillion proposal to inject cash and other forms of relief into the economy. Senate Republicans immediately blasted the bill as “dead on arrival.”
Buried in the bill are various provisions that, if enacted, would benefit student loan borrowers. Here’s a breakdown.
Student Loan Forgiveness
The HEROES Act would provide for $10,000 in across-the-board student loan forgiveness for federal student loan borrowers. This matches an earlier proposal by Senate Democrats and would result in an estimated 16 million Americans becoming student debt-free. However, it is far short of the $30,000 in student loan forgiveness suggested by progressive House Democrats.
Expansion of CARES Act Protections
The CARES Act — the first major stimulus bill passed in response to the pandemic — suspends all payments, interest, and collections on government-held federal student loans through September 30, 2020. The HEROES Act would extend these protections for an additional 12 months to September 2021, giving borrowers a full year and a half to recover financially before payments would become due again. The protections would also be extended to commercially-held FFEL-program federal student loans and Perkins loans, which were excluded from the CARES Act.
Fixes to Public Service Loan Forgiveness
The HEROES Act would also address problems with the Public Service Loan Forgiveness (PSLF) program, which allows qualifying public servants to get their federal student loans forgiven after 10 years of repayment. Currently, only Direct federal student loans are eligible for forgiveness under the PSLF program. Borrowers who have commercially-held FFEL-program federal student loans and Perkins loans do not qualify unless they consolidate those loans via the federal Direct consolidation program. By consolidating, however, they would erase any progress towards the 10 year repayment period and would effectively be starting over. The HEROES Act would allow payments made prior to consolidation to count towards PSLF.
Direct Payments and Unemployment Benefits
The HEROES Act provides for additional direct cash payments to households, including $1,200 per individual earning up to $75,000 per year. Families with dependent children could receive up to $6,000. Enhanced unemployment benefits of an additional $600 per week would also be extended to January 2021. This could help borrowers cover payments on other obligations, such as private student loans not covered by the CARES Act and HEROES Act.
Will This Bill Pass?
Even if the HEROES Act passes the House, it would still have to pass the Senate and be signed into law by the president to become law. Senate Republicans have criticized the bill as “aspirational” and not something that can pass the Senate. However, the bill will be a potential starting point for House-Senate negotiations. The Senate will not return to session until sometime in June, so it will be at least several weeks (if not longer) before a new stimulus bill would become law.