- House Democrats are scaling back their efforts to provide student-debt relief, Politico first reported on Thursday.
- An amendment to their latest coronavirus bill would limit relief to people who were in dire financial straits before March 13, the day President Donald Trump declared a national emergency.
- The initial provision to forgive up to $10,000 in student loans was projected to cost $250 billion to $300 billion, a larger price tag than Democrats had expected.
- Visit Business Insider’s homepage for more stories.
House Democrats on Thursday introduced an amendment to their $3 trillion coronavirus relief spending package that significantly scaled back a student-debt provision because of its higher-than-expected cost.
Politico first reported on the amendment, which would limit the number of people who qualify for student-debt relief.
The latest spending-package proposal, called the Heroes Act, initially would have forgiven up to $10,000 for all borrowers of federal and private student loans. But with the revision, debt forgiveness would be restricted only to people who were “economically distressed” on March 12, the day before President Donald Trump declared a national emergency because of the coronavirus pandemic.
Borrowers would be categorized as in dire financial straits if their monthly payment would amount to zero on an income-based repayment plan, or if they were in default or delinquent on their payments.
The Congressional Budget Office estimated the initial provision would have cost $250 billion to $300 billion, a much heftier price tag than Democratic lawmakers had expected, Politico reported.
Read more: Warren Buffett calls the prospect of negative interest rates the ‘most interesting question I’ve seen in economics.’ We had 5 financial experts weigh in on how they could impact the investing world as we know it.
Democrats like Sen. Elizabeth Warren had championed the full $10,000 loan-forgiveness measure when the House proposal was unveiled on Tuesday. She wrote on Twitter that the plan would “provide relief to millions of student borrowers crushed with debt.”
—Elizabeth Warren (@SenWarren) May 13, 2020
Progressives are likely to be critical of the new amendment.
Other elements of the spending package have elicited some backlash. Democrats are trying to temporarily suspend a cap on the amount of state and local taxes that can be deducted from federal income taxes — that would benefit mostly high-income taxpayers in highly taxed states and cost about $137 billion to implement, according to the Joint Committee on Taxation, a nonpartisan arm of Congress.
The Cares Act, enacted in March, suspended interest, payments, and collection on student loans through September 30, according to The Washington Post. The Democratic bill would extend those breaks until September 2021.
Republicans have staunchly opposed the House legislation and described it as an unrealistic liberal wish list that would pile more money on the federal debt. Senate Majority Leader Mitch McConnell on Thursday also lambasted another provision that would send $1,200 stimulus checks to immigrants shut out of the initial wave of direct payments.
But calls have mounted for lawmakers to enact further relief measures to rescue a cratering economy and limit the financial pain for Americans during the coronavirus pandemic.
McConnell said in a Fox News interview on Thursday that there was a “high likelihood” of another large spending package to confront the pandemic.
More than 36 million people have filed jobless claims in the past two months and the unemployment rate has surged to levels unseen since the Great Depression, underscoring the severity of the crisis.