GOP’s coronavirus relief proposal leaves student loan borrowers in the dust

Senate Republicans released their $ 1,000 billion coronavirus relief bill on Monday, and it largely leaves out additional relief for student loan borrowers.

The proposal, which Senate Majority Leader Mitch McConnell (R-Ky.) Called the Health, Economic Assistance, Liability Protection and Schools Act (HEALS), would provide stimulus payments additional one-time savings to individuals, would expand the paycheck protection program. (PPP) and extend weekly unemployment benefits funded by the federal government.

The GOP’s proposal would not extend the current federal student loan forbearance period under the CARES Act, which Congress passed in March. Under this law, some federal student loan borrowers do not have to make student loan repayments until September 30, 2020, and interest does not accrue on their loans during that time. It also suspended collection activities for borrowers whose loans are in arrears.

The GOP’s proposal does not extend the federal relief currently available for student loans. Here’s what you need to know.

Consumer advocates respond to GOP’s coronavirus relief proposal

The exclusion of additional protections for student loan borrowers in the HEALS Act comes after consumer advocates rallied around Congress to provide more help to borrowers who need it most.

The National Consumer Law Center (NCLC), a nonprofit that works for consumer justice, for example, has called for the relief under the CARES Act to be extended to the Federal Family Education Loan (FFEL) and the Health Education Assistance Loan (HEAL). and borrowers of Perkins loans; allow the discharge of student loans in the event of bankruptcy; or write off student loan debt altogether.

The NCLC issued a statement in response to the GOP’s proposal excluding relief for student loan borrowers.

“This new proposal continues to exclude millions of borrowers from federal student loans and is less generous than current income-oriented repayment plans, and will be more costly for long-term borrowers,” said Persis Yu, director NCLC student loan borrowers. Assistance project, in the press release. “This is no relief and it is failing the 43 million student loan borrowers who rely on Congress for action.”

Is there no hope for student loan relief?

Just because the GOP proposal doesn’t include a provision to extend the current federal student loan forbearance period doesn’t mean we might not see something written in the law.

Keep in mind that the GOP proposal is only a starting point for negotiations between the House and the Senate.

The House, which passed its own proposal in May – the $ 3 trillion HEROES law – has already expressed how the GOP’s proposal falls flat.

“It is unacceptable that AFTER MONTHS Senate Republicans have presented us with a half-hearted and half-hearted legislative proposal,” Senate Minority Leader Chuck Schumer (D-NY) said tweeted on Monday.

The HEROES Act would offer $ 10,000 in federal and private student loan forgiveness to borrowers who are experiencing financial hardship due to COVID-19. While the HEROES Act in its current form is not expected to receive a Senate vote, Democrats could rally to include additional relief for student loan borrowers as Congress moves towards passage of the next stimulus bill. .

Steps Student Loans Borrowers Can Take Right Now

Since it is not clear whether Congress plans to include more student loan relief, borrowers should prepare a plan now assuming there will be no more payment relief after September 30. .

If October arrives and federal student loan borrowers cannot afford their loans at all, they can request a deferment or forbearance through their student loan officer. Here is how they work:

  • Student loan deferral allows borrowers to stop repaying student loans. Interest will not accrue on Federal Subsidized Student Loans and Deferred Perkins Loans, but interest will continue to accrue if you have other types of Federal Loans or Private Loans. This means that failure to make payments could inflate your balance over time. Some federal student loans are eligible for deferral of unemployment for up to three years while individuals seek and are unable to find full-time employment.
  • Student loan abstention allows borrowers to temporarily stop making payments, or make smaller payments, on their federal student loans. In all cases, interest will continue to accumulate while the loans are forborne. So even if your payment is reduced, it may not be enough to cover the interest and your overall balance may increase. There are two main types of forbearance: general – to which you may be entitled if you experience financial difficulties, medical bills and job changes – and mandatory, which covers people whose monthly payments are equal to or greater than 20% of their gross monthly income. . Refer to the Federal Student Aid website on forbearance options to determine which one might be best for you.

Private student loan services are not subject to the student loan relief provisions of the CARES Act, and it is unclear whether they will be included in the next stimulus package, if it included loan assistance. students. That doesn’t mean, however, that private student loan borrowers run out of options.

In May, many private student loan managers, including Sallie Mae, Navient and Nelnet, offered repayment assistance programs to struggling borrowers during the COVID-19 crisis. It’s worth picking up the phone and calling your private student loan department to discuss your options if you can’t make a loan repayment.

Previous RBI's draft rules for mortgage lenders leave easy path for compliance
Next Elite Westside Private School Receives PPP Loan

No Comment

Leave a reply

Your email address will not be published.