U.S. Senate Majority Leader Mitch McConnell (R-KY) (Photo by Win McNamee/Getty Images)
Your student loan payments will be paused for six months, according to the $2 trillion coronavirus stimulus bill.
Here’s what you need to know.
Student Loan Repayment
If passed by the U.S. Senate, the new legislation – known as the CARES Act – would grant several benefits to help student loan borrowers manage their money due to the coronavirus emergency. The current benefits, according to the bill, would include:
- Ability to pause payment on your federal student loans until September 30, 2020.
- No interest on your federal student loan payments through September 30, 2020.
- Ability to count these 6 months of no federal student loan payments for purposes of any student loan forgiveness program, including public service loan forgiveness.
- Ability for your employer to pay up to $5,250 of your student loans tax-free.
The legislation builds upon executive action from President Donald Trump, who announced that he is waiving interest on federal student loans. Trump also announced that you have an option to stop paying your federal student loans for 60 days. You can get student loan forbearance by contacting your student loan servicer. Or, you can continue to make federal student loan payments if you choose. These student loan repayment efforts are in addition to Trump’s paid sick leave plan.
Trump also stopped collection of student loan debt from 9 million student loan borrowers who have defaulted on their federal student loans. New York Governor Andrew Cuomo announced similar plans, when he temporarily suspended collection of student loan debt and also suspended mortgage payments for those facing financial difficulty. U.S. Secretary of Education Betsy DeVos also directed the Treasury Department to stop garnishment of wages, Social Security and tax refunds from 830,000 federal student loan borrowers, which is expected to save borrowers $1.8 billion, according to the Education Department.
Student Loan Forgiveness
Despite a push from Democratic lawmakers, the draft legislation does not include student loan forgiveness. Senate Democrats proposed a student loan forgiveness plan that would forgive at least $10,000 of federal student loans for all borrowers. Former Vice President Joe Biden supports $10,000 of student loan forgiveness, although this new plan differs from Sen. Elizabeth Warren’s original student loan forgiveness plan to cancel student loan debt. Sen. Bernie Sanders (I-VT) has proposed forgiving all $1.6 trillion of student loan debt, including both federal and private student loans. Biden has his own $750 billion student loan plan, which is centered on income-driven repayment.