Plan would provide minimum $10,000 payoff for all federal student loan borrowers
WASHINGTON—U.S. Senator Dick Durbin (D-IL), along with Senators Chuck Schumer (D-NY), Patty Murray (D-WA), Sherrod Brown (D-OH), and Elizabeth Warren (D-MA) 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 $10,000 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 declaration. The Senators’ proposal guarantees a minimum $10,000 loan payoff for all federal student loan borrowers.
“Too many student borrowers are drowning in student loan debt. Even before the coronavirus pandemic, experts warned that student loan debt was already having a negative impact on our economy, and will now only get worse. As Congress continues to address the economic impact of the coronavirus crisis, it’ll be imperative that we provide real relief to these borrowers who are in serious need of our help,” Durbin said.
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.
The 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 the emergency student loan payment and relief plan can be found here and below: