May 13, 2020

House Dems Propose Student Loan Forgiveness In Coronavirus Response

House Dems Propose Student Loan Forgiveness In Coronavirus Response


Democrats in the U.S. House of Representatives have proposed limited student loan forgiveness and an expanded payment pause and interest waiver as part of the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act).

Payment Pause and Interest Waiver

The HEROES Act will expand the payment pause and interest waiver from the CARES Act to cover all federal loans, not just those held by the U.S. Department of Education. The payment pause and interest waiver will be extended to September 30, 2021, a year beyond the current expiration date.

Private student loans will also be eligible for loan payment relief. Instead of a payment pause and interest waiver, the federal government will make the monthly loan payments on behalf of the borrower, up to a total of $10,000 in student loan payments.

Student Loan Forgiveness

The HEROES Act will forgive up to $10,000 in federal student loans within 30 days of enactment. If the borrower’s federal student loans exceed this limit, the loans with the highest interest rates will be forgiven first, unless the borrower instructs otherwise.

The legislation will also forgive up to $10,000 in private student loans within three months after September 30, 2021. The amount of loan forgiveness will be reduced by the total amount of private student loan payments made by the federal government. The borrower can choose to apply the forgiveness amount to any specific loan, or all of their loans. If a borrower does not choose to apply the forgiveness differently, the loan forgiveness will be applied first to the loans with the highest interest rates.

The student loan forgiveness is tax-free.

Other Provisions Affecting Student Loan Borrowers

The HEROES Act includes several other provisions that benefit student loan borrowers:

  • Consolidation will not reset the clock on public service loan forgiveness or loan forgiveness at the end of an income-driven repayment plan
  • Paused payments will continue to count toward public service loan forgiveness even if the borrower loses their public service job
  • The annual recertification requirement for income-driven repayment plans is waived through September 30, 2021
  • Many borrowers who have been seeking financial relief under the defense to repayment will finally get their relief

Other Provisions Affecting College Students

The HEROES Act clarifies that the emergency financial aid grants are available to all students and prohibits the U.S. Department of Education from limiting who can get the grants. Grant recipients will not be required to file a FAFSA. International students and undocumented students will be eligible. Receipt of an emergency financial aid grant will not affect the student’s eligibility for need-based financial aid.

Parents will be able to claim a recovery rebate of $500 for each dependent who is a college student. Most college students were unable to qualify for a stimulus check under the CARES Act legislation.



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