03.19.20

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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