Shopper rights teams slammed Senate Republicans on Monday for offering no significant aid for scholar loan debtors of their just-unveiled stimulus invoice.
The CARES Act — the earlier stimulus invoice handed by Congress in April — suspended all funds, curiosity, and collections on government-held federal scholar loans. However these protections are scheduled to run out on September 30, 2020, placing thousands and thousands of struggling scholar loan debtors in danger if they can’t afford their funds because the pandemic and financial recession continues.
Shopper rights teams and scholar borrower advocates have been calling for the CARES Act’s scholar loan provisions to be prolonged, and for that aid to be expanded to incorporate different sorts of scholar loans, together with personal loans and commercially-held FFEL-program loans. However the Senate stimulus invoice launched as we speak — referred to as the HEALS Act — doesn’t embody an extension of the CARES Act’s scholar loan provisions. The invoice additionally doesn’t embody any scholar loan forgiveness.
“This week, student loan borrowers will start receiving notices that CARES Act relief protections expire on September 30, 2020. Congress must take steps now to ensure that vulnerable student loan borrowers are not thrown into financial turmoil by being forced to make payments on their federal student loan debts during and in the aftermath of the pandemic,” mentioned the Nationwide Shopper Legislation Heart in a press release. The group referred to as on Congress to “extend the payment suspension and make sure any relief is provided to at least all Federal Family Education Loans, Health Education Assistance Loans, and Perkins loans; and ensure that borrowers can recover… by restoring vital safety-net protections & providing widespread student debt cancellation.”
The Institute for Faculty Entry and Success (TICAS) additionally criticized the HEALS Act. “For college students and student loan borrowers, the HEALS Act proposed by Senator McConnell today is too little, too late. In the face of a surging pandemic, it cuts off much-needed relief for millions of student loan borrowers and fails to invest enough in public colleges to prevent dire consequences for students,” the group mentioned in a press release.
The Senate GOP invoice features a proposal by Tennessee Senator Lamar Alexander to simplify the federal scholar loan compensation system. The proposal would come with an income-driven compensation possibility that will enable scholar loan debtors incomes no earnings to haven’t any month-to-month fee obligation.
Nonetheless, this proposal is just about an identical to the Revised Pay As You Earn (REPAYE) compensation plans, which already exempts debtors incomes lower than 150% of the poverty restrict from any fee obligation, and caps different debtors’ scholar loan funds at 10% of their discretionary earnings.
“While the Senate Republicans’ proposal to simplify student loan repayment should be considered within the context of broader reforms to college affordability, it does nothing to help colleges, students, and borrowers now,” mentioned TICAS. “Millions of borrowers are struggling with large debts in the middle of a historic pandemic and recession. It is simply not feasible to establish a new repayment plan and require them all to enroll within two months.”
Home Democrats handed the HEROES Act in May, which might prolong the CARES Act’s scholar loan fee and curiosity suspension for an extra 12 months, and would additionally present $10,000 in federal and personal scholar loan forgiveness to debtors experiencing financial misery. Senate GOP leaders rejected the HEROES Act with out taking a proper vote on it. It’s unclear if Senate Republicans and Home Democrats will have the ability to negotiate a compromise stimulus invoice that will be signed by President Trump.
“Without relief, Americans with student debt will struggle to survive the continuing pandemic,” the group Younger Invincibles mentioned in a Tweet.
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