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Friday, October 23, 2020

Is Student Loan Forgiveness Included In The Next Stimulus Bill?

Does the next stimulus bill include student loan forgiveness?

Here’s what you need to know.

New Stimulus Bill

Only weeks after the passage of the CARES Act, the House of Representatives passed a $484 billion stimulus bill today. The new stimulus package, focuses primarily on funds for small businesses and Coronavirus testing. Unlike the CARES Act – the $2 trillion stimulus package to help provide financial support to Americans in the wake of the COVID-19 pandemic, this new stimulus aid will not result in new stimulus checks. Here’s the breakdown of the $484 billion, also known as the PPP Healthcare Enhancement Act:

  • Payment Protection Program (PPP): $310 billion
  • Emergency money for health system: $75 billion
  • Economic Injury Disaster Loan program: $50 billion
  • Testing and contact tracing capabilities: $25 billion
  • PPP administrative costs: $12 billion
  • Emergency Economic Injury Grant program:$10 billion
  • Small Business Administration salaries and expenses: $2 billion

Total: $484 billion

Absent from this list: student loan forgiveness. Unfortunately, student loan forgiveness is not included in this stimulus bill.

Why no student loan forgiveness?

Student loan forgiveness didn’t make the cut for this stimulus bill, which focused entirely on helping small businesses and providing funding for testing and contract testing. Why wasn’t student loan forgiveness included? House and Senate Democrats have made a big push all year to enact 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 called for student loan forgiveness all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities for borrowers who earn less than $125,000 per year. Biden has his own $750 billion student loan plan, which is centered on income-driven repayment.
  • House Democrats called for $30,000 of student loan forgiveness. These student loan forgiveness efforts asked for amount much smaller than those proposed by
  • Sen. Elizabeth Warren’s original student loan forgiveness plan to cancel student loan debt.
  • Sen. Bernie Sanders (I-VT) also proposed forgiving all $1.6 trillion of student loan debt, including both federal and private student loans.

Even though student loan forgiveness wasn’t included in the latest stimulus bill doesn’t mean Congress did not help student loan borrowers. Student loan debt relief has been a central component of the CARES Act. Following President Donald Trump’s executive actions for 60 days, the CARES Act provided the following student loan benefits from March 13, 2020 through September 30, 2020:

Future Stimulus: Student Loan Forgiveness?

The president and members of Congress have signaled interest in future stimulus. There have been several legislative proposals, including a $2,000 a month stimulus check as well as free rent and mortgage payments. So far, student loan forgiveness has not topped the priority list for the next stimulus package. There has been chatter about a potential infrastructure package, fiscal support for state and local governments, additional pay for frontline workers, payroll tax cuts, food aid and more.

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