Freeze all student loan payments and interest for 12 months

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As the debate over the next big stimulus package heats up, Democrats in the House of Representatives today are about to get one proposal that would suspend all payments, all interest, and all involuntary recoveries on private student loans for 12 months until 09/30/2021.

Private student loans have been exempted from the facilitation provisions for student loans under the CARES Act. Some private student loan Lenders offered emergency assistance to borrowers, but this was not required by law and was usually offered on a case-by-case basis on a short-term basis. For many borrowers, the student loan emergency programs will end this month.

The Democrats’ latest proposal reflects a similar 12 month suspension of payments, interest and recoveries for federal agencies Student Loans proposed by the House Democrats HEROES Act, which the House of Representatives passed in a largely bipartisan vote in May. The HEROES Act would also extend the 12-month student loan suspension period to include commercially issued federal loans from the FFEL program as well as federal Perkins loans. Taken together, today’s proposal and the HEROES Act would effectively freeze all student loan payments and interest for over 40 million borrowers for 12 months.

Meanwhile, a Republican Congressman has introduced legislation Extension of the suspension of federal law by the CARES law Student Loans Payments, interest and collections by three months until December 31, 2020. While this is a much shorter extension, it could be an indication that there is a bipartisan desire to extend the existing student loan relief for at least a certain period of time.

Suspending payments and interest on student loans would provide significant short-term relief to borrowers struggling with the aftermath of the coronavirus pandemic and economic recession. However, some consumer advocacy groups have argued that these temporary suspensions are well below what borrowers actually need. “Student debt relief is a much more effective solution than short-term suspension,” argued several of these organizations in a recent letter to the leaders of the House and Senate.

While the latest proposals to ease student loan easing are being debated in the House of Representatives, it is the Senate that is ultimately working on a new stimulus package. A Senate bill could be released within the next week or two.

further reading

Next impulse: will there be easing of student loans?

Over 100 civil rights groups are telling Congress: Remove student debts in the next stimulus bill

Rep. Ayanna Pressley: Cancel student loan now

GOP concerns about costs could limit student loan relief in the next pulse

Biden reaffirms plan to cancel student debt and reduce racial inequality

NAACP and 60 other groups are calling on Congress to cancel student debts

There are now five student loan waiver plans – how do they compare?

Widespread student loan forgiveness is now more likely than ever – here’s why

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