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Did Congress drop student loans from the new stimulus package?
Here’s what you need to know.
Congress is close to finalizing a new stimulus package with second stimulus checks of $600 for each individual and child as well as $300 a week of unemployment insurance. For millions of Americans, that’s the good news. (That said, most Americans have been wondering why they didn’t get a second stimulus check). However, one thing was notably absent from a joint press release today from Speaker of the House Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY): student loans. Pelosi and Schumer issued a press release with key highlights from the new stimulus package, which Congress has not finalized. Pelosi and Schumer did not reference any extension of student loan relief. If student loans are excluded from the final stimulus bill, then here’s what this could mean for your student loans.
Student loan relief expires January 31, 2021
In an unexpected move earlier this month, President Donald Trump paused federal student loan payments for one more month until January 31, 2021. This means that the existing student loan relief from the Cares Act stimulus package will not expire on December 31, 2020 as previously expected. Previously, Trump extended student loan relief from September 30 through December 31. Therefore, student loan borrowers can continue to expect the following for their federal student loans until January 31, 2021:
- No payments: federal student loan payments are paused.
- No interest: no new interest will accrue on your federal student loan balance.
- No debt collection: Student loan debt collection of defaulted student loan debt is halted.
Private student loans, FFELP Loans and Perkins Loans do not qualify for the payment pause or other student loan relief. Through January 31, 2021, student loan borrowers can still pay their federal student loans if they choose. Two weeks ago, a new stimulus package proposal would have extended student loan relief through April 30, 2021. Other Democrats have proposed pausing federal student loan payments until at least September 30, 2021 or when the Covid-19 pandemic has ended. However, that later date has gained less traction on a bipartisan basis in Congress. If student loans are not paused any further, make sure to do these 7 things.
Stimulus package doesn’t include student loan forgiveness
As expected, the new stimulus package doesn’t include any student loan forgiveness. With Republicans in control of the U.S. Senate, any plans to cancel student loans were not expected to be included. Democrats will have to wait until either the next congressional term or after President-elect Joe Biden becomes president. Democrats in Congress have proposed several plans to cancel student loans, including the most recent effort to cancel up to $50,000 of student loans through an executive order from the president. For supporters of wide-scale student loan forgiveness, that would be the best hope to cancel student loans given the power balance in Congress and the White House.
New stimulus package: largest expansion of Pell Grants ever
According to the joint press release, the new stimulus package will include “the largest expansion of Pell Grant recipients in over a decade.” Pelosi and Schumer say that the Pell Grants will impact 500,000 new recipients and “ensure more than 1.5 million students will now receive the maximum benefit.” Separately, the stimulus package could provide $82 billion for colleges and schools.
It’s possible that Congress will keep student loan relief in the final text of the stimulus bill. The exclusion from Pelosi’s and Schumer’s press release may be an oversight, for example. Therefore, if it is included in the new stimulus, federal student loan payments could be extended through April 2021. If it’s not included, then you should expect student loan relief from the Cares Act to expire on January 31, 2021, unless it is extended by Congress through legislation or by the president through executive order.
Pay Off Student Loans
Will you get more student loan relief? Congress could extend student loan relief beyond January 31, 2021, or wait until the next congressional and presidential terms. In the meantime, make sure you have a game plan for student loan repayment. Here are 3 ways to pay off student loans, all of which have no fees: