Democratic lawmakers in Congress have been pushing for student loan forgiveness to be included in stimulus bills related to the economic fallout from the COVID-19 pandemic. So far, they have been unsuccessful. But as talks continue regarding a new stimulus bill, they are not giving up.
Under the CARES Act, payments, interest, and collections on government-held federal student loans have been suspended through September 30, 2020. But no student loan debt has been cancelled, and some lawmakers and advocates are concerned that borrowers will have an even tougher time repaying their student loans when they inevitably enter repayment again.
On May 8, 2020, over 30 members of Congress signed a public letter to House Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy asking that they include broad student loan forgiveness in the next stimulus bill.
“Public health experts and economists alike have estimated that our nation will feel the economic impact of this pandemic for up to 18 months,” the lawmakers say in the letter. “Short-term relief from student loan debt payments simply does not reflect that reality…. Any future relief packages must include student loan debt cancellation and long-term relief for all struggling borrowers shouldering record levels of student loan debt.”
The lawmakers also pointed out the racial and age disparities of the student debt crisis, noting that, “Black and Latinx communities are forced to borrow at higher rates to afford a higher education and face some of the most significant challenges paying down this debt. More than three million people over the age of 60 continue to struggle to pay back their student loans, and more than 40,000 unfairly see their Social Security benefits, tax refunds and other critical government benefits garnished after falling behind.” Black and Latinx communities have been disproportionately impacted by the pandemic.
The Democratic lawmakers are proposing three main ways of providing relief to student loan borrowers:
- Universal, broad forgiveness and cancellation of $30,000 in federal student loans for every borrower.
- Long-term expanded payment relief, whereby the government will continue to suspend payments on all federal student loans (including FFEL-program loans not held by the government) for as long as the COVID-19 emergency continues — even beyond the current September 30 deadline.
- New relief for private student loan borrowers, including “cancellation, a suspension of payments and involuntary collections as well as the opportunity to refinance any outstanding balance at lower interest rates.”
While student loan forgiveness is potentially more viable than it has ever been before, hurdles still remain. And so far, these proposal have not gained enough support to pass both the House and the Senate. Discussions are ongoing, and a new stimulus bill could be released as early as next week.