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Congress May Be Poised To Extend Student Loan Relief Further Into 2021

A bipartisan group of senators has released the text of a proposed second stimulus bill, and it contains some good news for certain student loan borrowers.

Lawmakers have been engaged in furious negotiations to try to hammer out a bipartisan compromise stimulus package that can pass Congress before the end of the year. While certain elements of a new stimulus package are broadly popular — such as extending unemployment relief and providing additional funding to small businesses — other proposals have generated more partisan opposition. This has hindered the ability of congressional negotiators to find sufficient common ground for a broad relief package.

The latest proposal would bifurcate the stimulus package. One part would contain the more popular elements. The other part would contain the more controversial elements — namely, funding for state and local governments (which Democrats want), and a COVID-19 liability shield (which Republicans want).

Included in the larger, more popular portion of the stimulus package is an extension of existing student loan relief to April 1, 2020. A previous summary of the proposed stimulus package had suggested the extension would be to April 30.

Since March, millions of federal student loan borrowers have had their payments and interest suspended under the CARES Act. The emergency pandemic stimulus legislation also stopped all collections efforts on defaulted federal loans, such was wage garnishments and interceptions of federal tax refunds. The student loan relief was originally scheduled to end in September, but the Trump administration granted two extensions — the first to December 31, and the second to January 31, to provide Congress with additional time to extend the relief further.

Notably, the current student loan relief is limited to government-held federal student loans only. Over $300 billion in commercially-held FFEL loans, federal Perkins loans issued by colleges and universities, and private student loans were excluded from the original CARES Act. The new stimulus package does not expand this relief to cover additional student loans, which congressional Democrats had wanted.

Nevertheless, the stimulus package would provide much-needed relief to millions of student loan borrowers. In a recent survey by Student Debt Crisis and Savi, 77% of student loan borrowers covered by the moratorium indicated that they do not feel financially secure enough to resume their student loan payments, and more than half of surveyed borrowers rate their current financial wellness as poor or very poor since the pandemic began in earlier this year. The survey found that healthcare workers were particularly concerned. Presdent-Elect Biden could further extend the student loan moratorium via executive order in the spring, although it is too soon to know whether he would do so.

Passage of the current stimulus proposal is by no means guaranteed, but Congressional leaders have expressed optimism. “I can speak for the Republican side. We want to make a law to agree where we can and help people who need,” Senate Majority Leader McConnell (R-KY) said yesterday. Senate Minority Leader Chuck Schumer (D-NY) echoed that sentiment on behalf of Senate Democrats.

Any stimulus legislation passed by Congress would have to be signed by President Trump. The White House has been pushing its own version of a new stimulus package that excludes an extension of student loan relief.

Under the current provisions governing the student loan moratorium, the months of suspended payments would count towards loan forgiveness programs (such as Public Service Loan Forgiveness), as well as loan rehabilitation programs for borrowers making efforts to cure defaulted federal loans. That would continue to be the case if Congress passes the additional extension to April 2021. In addition, many student loan servicers have voluntarily pushed annual recertification deadlines for income-driven repayment plans well into 2021, meaning many borrowers may not have to take action on their loans for several more months. Borrowers should contact their loan servicers for additional information.

Further Reading

White House Stimulus Check Proposal Excludes Help For Student Loan Borrowers

DeVos Extends Student Loan Relief Into 2021: What You Need To Know

These Student Loans Are Not Covered By DeVos’s Extension Of Relief

Could Biden Cancel Some Student Debt Through Executive Action?

What The Election Results Mean For Student Loan Borrowers

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