Congress is considering another round of stimulus and coronavirus relief this month. Negotiations are said to pick up after the holiday break. They’ll likely discuss more money for states, unemployment benefits, a possible stimulus check, student loans, and more.
In March, the CARES Act suspended payments and interest on student loans. That suspension expires on September 30th and, while that’s not as soon as the enhanced unemployment benefits, this next stimulus bill will likely be the last one for the year. So if those benefits are to continue, it has to happen in this bill.
Congress has a few options they can consider now. Here are three ways the next stimulus might deal with student loans:
Let the suspension expire.
Congress could let the payments suspension expire as they are set to under the CARES Act. That means student loan payments would resume in October and with interest. Borrowers who are struggling due to unemployment or lost income should contact their loan servicer to get relief through programs like income-driven repayment.
Extend the suspension.
Some in Congress have proposed extending the student loan payment suspension for another year. Many are concerned with the uncertainty of what the economy will look like in the coming year, especially as some states are seeing large spikes in the number of cases of Covid-19. Extending the suspension would provide continued relief for those who will need it and free up cash for others to put into the economy. The HEROES Act, which was passed by the House of Representatives, would extend the student loan payment and interest suspension for another year, through September 30, 2021.
Provide loan forgiveness.
From the onset of the coronavirus pandemic, several advocates and lawmakers have pushed different plans to provide student loan forgiveness. Congress could approach debt forgiveness in many ways. Before the CARES Act passed, many were pushing a blanket $10,000 student debt cancellation proposal. Others proposed larger amounts. The HEROES Act is the only piece of legislation that passed with some debt cancellation. It would cancel up to $10,000 for distressed student loan borrowers.