Earlier this week, Senate Majority Leader Mitch McConnell published his stimulation suggestion in a speech to the Senate floor since lots of the terms and conditions of this CARES Act were going to perish. What fast become evident was that the lack of pupil loan relief.
Much like the improved unemployment benefits of this CARES Act, the Senate Republican proposal doesn’t expand the suspension of obligations on federally-held pupil loans. Rather, Republicans are backing a strategy from Senator Lamar Alexander — what he predicts, “No Income. No Payment.” Alexander is suggesting a loan repayment simplification which could produce one standard repayment program along with another income-driven repayment program.
While Alexander may pitch his strategy as fresh, it isn’t. It’s a strategy he has suggested before in a bid to simplify pupil loan repayment. Simplifying repayment is a worthy cause, however, Senator Alexander’s proposal doesn’t offer any fresh relief. Apps like this existed prior to the pandemic. Borrowers may enroll in income-driven repayment which could remove their repayment when they had no earnings, or merely too low of income.
In actuality, it probably wouldn’t offer any relief whatsoever when the payment expires. Implementing a new repayment plan such as that would take some time and probably wouldn’t be prepared in time for student borrowers to register before payments restart.
In a time when Congress is spending money to give relief or stimulation, Alexander’s plan really ends up saving cash. It also conserves a similar quantity of cash to cover one more payment suspension like this CARES Act.
Many are opposed to the suggestion. In a letter to Senate leadership, 56 organizations composed the “legislation would actually penalize many borrowers and remove important protections, while ignoring the urgent needs for both student loan debt cancellation and, at the very least, extension and expansion of the automatic forbearance period put in place by the CARES Act.”
The associations called on Congress to expand the pupil loan suspension for one more year rather than embracing Alexander’s proposal. The House passed a bill in May, known as the HEROES Act, that would do just that. That legislation would also provide some targeted loan forgiveness to those borrowers struggling before the pandemic.
The letter also called for broad student loan forgiveness that many, including Senators Elizabeth Warren and Kamala Harris, have requested.
The current student loan payment suspension ends on September 30, 2020. The Department of Education has already started communicating to borrowers the fact that the suspension may end soon. At the same time, coronavirus cases continue to rise and the economy continues to falter. Just today, the Commerce Department reported the worst economic contraction modern American history.
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