August 9, 2020

Trump Extends Student Loan Relief Provisions Through The End Of The Year

Trump Extends Student Loan Relief Provisions Through The End Of The Year


On August 6, 2020, the Senate adjourned without passing a stimulus package. Senate Majority Leader Mitch McConnell (R-KY) wasn’t involved in the talks, leaving Senate Minority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA) to work directly with Treasury Secretary Steve Mnuchin and White House Chief of Staff Mark Meadows. As of Friday night, the sides reported that they had not reached an agreement.

On Saturday, apparently frustrated with Congress’ inaction, President Trump issued several Executive Orders and Memoranda affecting payroll taxes, unemployment benefits, eviction procedures, and student loans.

(Real quick: An executive order is an official, legally binding mandate passed down from the President, and must be printed in the Federal Register. An executive memorandum is basically the same thing except that a memorandum does not have to be published in the Federal Register.)

Since the orders were issued separately, that’s how I’m tackling them. You can read my take on payroll taxes here. Next up, student loans.

With respect to student loans, the Order says: In light of the national emergency declared on March 13, 2020, the Secretary of Education shall take action pursuant to applicable law to effectuate appropriate waivers of and modifications to the requirements and conditions of economic hardship deferments described in section 455(f)(2)(D) of the Higher Education Act of 1965, as amended, 20 U.S.C. 1087e(f)(2)(D), and provide such deferments to borrowers as necessary to continue the temporary cessation of payments and the waiver of all interest on student loans held by the Department of Education until December 31, 2020.

You can read the entire Order here.

Here’s some context. On March 27, 2020, Congress passed the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act.” The final version was bigger than the original Senate proposal but smaller than the subsequent House proposal. Included in the CARES Act’s provisions were the suspension of payments for student loans under the Federal Family Education Loan and Direct Loan programs – without interest – through September 30, 2020. Additionally, collection efforts for those loans were supposed to stop during that time, including garnishments and tax refund offsets.

The President’s Order now directs the Secretary of Education to extend the student loan relief through the end of the year. Some confusion remains about how far that relief will go, including whether the collections pieces will be extended, affecting tax refund offsets: we’ll have to wait for official guidance from the Department of Education for more information. However, as before, the Order applies to federally-held student loans and does not extend to federal student loan borrowers whose debt is held by private lenders or their colleges (representing about 9 million borrowers).

The suspension is voluntary, with the Order making clear that, “All persons who wish to continue making student loan payments shall be allowed to do so, notwithstanding the deferments provided pursuant to subsection (a) of this section.”

The President promised to extend the relief further, in remarks he made from the Trump National Golf Club in Bedminster, New Jersey, on August 8: Earlier this year, we slashed student loans’ interest rates to zero percent and suspended student loan payments, and Congress extended that policy through September 30th. Today, I’m extending this policy through the end of the year, and we’ll extend it further than that — most likely, right after December 1st. So we look like we’re going to be extending that. They’re paying zero interest. And again, not their fault that their colleges are closed down and not their fault that they’re unable to get what they bargained for.



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