March 19, 2020
Sens. Schumer, Murray, Brown, And Warren’s New Proposal Would Provide Immediate, Much-Needed Relief To Federal Student Loan Borrowers Through Minimum $10K In Student Loan Payments
Schumer, Murray, Brown, And Warren Unveil Bold, New Plan To Cancel Student Loan Payments For Duration Of Coronavirus Emergency And Provide Minimum $10K Payoff For All Federal Student Loan Borrowers
Sens. Schumer, Murray, Brown, And Warren’s New Proposal Would Provide Immediate, Much-Needed Relief To Federal Student Loan Borrowers Through Minimum $10K In Student Loan Payments
New Proposal Would
Authorize Congress To Make Monthly Payments On Behalf Of Borrowers For Duration
Of National Emergency And Be Followed By 3-Month Grace Period At Program
Termination
Schumer, Murray,
Brown, And Warren: Borrowers Need Immediate Relief From Financial Strain Of
Student Loan Debt Amid Coronavirus Outbreak, Federal Gov’t Must Cancel
Payments, Provide Minimum $10K Payoff
Washington, D.C.— Senate Democratic Leader Chuck
Schumer (D-NY), Senate Committee on Health, Education, Labor, and Pensions
Ranking Member Patty Murray (D-WA), Senate Committee on Banking, Housing, and
Urban Development Ranking Member Sherrod Brown (D-OH), and Senator Elizabeth
Warren (D-MA) today unveiled an emergency student loan payment and relief plan,
which would provide much-needed relief to federal student loan borrowers
through immediate cancellation of monthly student loan payments for the
duration of the national emergency caused by the spread of the coronavirus, and
a pay down of a minimum $10K for all federal student loan borrowers. The
Senators’ proposal requires that Congress authorize the U.S. Department of
Education to make monthly student loan payments on behalf of borrowers,
equivalent to the amount due for all federal student loan borrowers (including
Direct Loans and Federal Family Education Loans (FFEL)) for the duration of the
national emergency declarations. The Senators’ proposal guarantees a
minimum $10K loan payoff for all federal student loan borrowers.
“The coronavirus
outbreak brought with it crushing economic uncertainty, and students and
borrowers need targeted, quick relief from payment burdens,” said
Leader Schumer. “Our new proposal would immediately cancel monthly
payments, and give students and borrowers a minimum $10K student loan payoff.
We must act now to help alleviate the growing financial strain on students and
families across the country.”
“These are
incredibly uncertain and challenging times. Families and student loan borrowers
desperately need our help right now and we’re only just at the beginning of the
devastating economic impact of this crisis,” said Senator Murray. “Our
legislation would provide immediate relief for borrowers who are struggling to
make payments.”
“During this
pandemic, students and families should not have to worry that they will go into
default on their student loans—they should be worried about keeping themselves
and their loved ones safe. Student loan debt in this country is already
crushing for many and without relief it will prevent people from fully participating
in our economy,” said Senator Brown. “We need to protect
Americans who may face financial hardship during this uncertain time. I urge my
colleagues in Congress to help us pass this right away.”
“Last time our
economy crashed, this country made a devastating mistake: we turned our backs
on students and families to bail out the giant banks,” said Senator
Warren. “Student loan borrowers—especially students of color—never
fully recovered from that economic punch to the gut. This time around, by
cancelling student debt payments for millions, we will
fix the mistake that still holds back a generation
of people and dragged down our economy, and create a real,
grassroots stimulus to help see us through this crisis.”
Students and
federal loan borrowers were particularly hard-hit by the last economic crisis
and remain under significant financial strain, an issue compounded by the
coronavirus outbreak. The Senators’ new proposal would provide
immediate relief to students and borrowers through targeted, sustained
financial assistance for, at minimum, $10,000 in payments. Borrowers will
receive credit toward forgiveness and loan rehabilitation for payments made by
the Department on their behalf, and all payments made by the Department would
be tax-free for borrowers. The proposal also suspends all involuntary debt
collections and wage garnishment for borrowers who have defaulted while the
Department is making payments on borrowers' behalf. Importantly, at the
termination of this program, the Department will institute a 90 day “grace
period” during which missed payments will not result in fees or penalties,
including negative credit reporting.
Sens. Schumer,
Murray, Brown, and Warren’s proposal is included as part of Senate
Democrats’ bold Phase 3 proposal for at least $750 billion to
wage war against COVID-19 and the economic crisis facing every American. Senate
Democrats’ phase three proposal puts workers and families first while ensuring
that necessary resources are delivered to address every corner of the public
health crisis, including funds to address burgeoning capacity issues at
hospitals, child care and education, and more.
A summary of Sens.
Schumer, Murray, Brown, and Warren’s emergency student loan payment and relief
plan can be found here and below:
Making payments on
behalf of federal student loan borrowers. The last economic crisis hit student loan borrowers
particularly hard, many of whom never fully recovered financially. To provide
immediate relief to federal student loan borrowers, we propose that Congress
authorize the U.S. Department of Education (“Department”) to make month student
loan payments on behalf of borrowers.
Summary of
Proposal: The Department
will make payments equivalent to the amount due for all federal student loan
borrowers (including Direct Loans and Federal Family Education Loans (FFEL))
duration of the national emergency, or public health emergency, declarations. Garnishment of wages, tax
refunds, and Social Security benefits will also stop, and all interest
capitalization (including from interest accrued prior to the President’s March
13th announcement) will cease. The proposal will also codify the
President’s waiver of interest on federal student loans held by the Department,
and extend this waiver to FFEL loans.
This suspension of
payments will be a new policy distinct from “deferment” and “forbearance,”
which are opt-in procedures that do not count toward student loan forgiveness
under income-driven repayment (IDR) or Public Service Loan Forgiveness (PSLF).
During the period of suspending payments, borrowers will receive credit toward
forgiveness and loan rehabilitation for payments made by the Department on
their behalf. All payments made by the Department will be tax-free for
borrowers.
The Secretary will
be directed to send monthly notices to all borrowers to allow them to opt-out
of the suspension and payment contribution and to notify them that the program
is temporary and will end at some point when the national emergency has ceased.
At the termination of this program, the Department will institute a 3-month
“grace period” during which missed payments will not result in fees or
penalties, including negative credit reporting. Furthermore, no more than 90
days after the conclusion of the national emergency, the Department shall apply
additional payments to the balance due to ensure that each federal student loan
borrower received a minimum of $10,000 in student loan relief over the course
of the national emergency.
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