Senate Majority Leader Mitch McConnell, R-Ky.
Photo by Stefani Reynolds/Getty Images
Republicans have introduced their proposal for the next coronavirus relief package, a $1 trillion plan called the HEALS Act.
Notably absent from their agenda: relief for people with student debt.
The plan calls for streamlining the number of repayment options, but wouldn’t extend the payment pause for borrowers or offer them any debt forgiveness.
“Student loan borrowers get nothing in the HEALS Act,” said higher education expert Mark Kantrowitz.
More from Invest in You:
Quarantine spending was more than just hoarding canned goods
Prices go up every year. That doesn’t mean you have to pay more
If you need cash, try these less-obvious sources
The CARES Act passed by Congress and signed into law by President Donald Trump in March paused payments on federal student loans until the end of September. Yet Democrats, and even some Republicans, have said the reprieve needs to be extended because borrowers won’t be able to resume their payments by then.
The Congressional Budget Office expects jobless rates to stay elevated through 2021, and unemployment is still more than 11%, with some areas especially hard hit. In Massachusetts, more than 17% of residents are out of work. More than 1 in 5 people in New York City are unemployed.
“If borrowers are forced to resume repaying their student loans on Oct. 1, delinquencies and defaults will skyrocket,” Kantrowitz said.
Americans were already struggling with their student loans before the country fell into a recession.
Outstanding student loan debt in the U.S. has spilled to more than $1.6 trillion. Prior to the pandemic, some 1 in 7 borrowers were in delinquency, and up to two-thirds of borrowers were only paying the interest on their debt each month, meaning their balances weren’t actually going down.
“Americans need significant, comprehensive relief or the next wave of the student debt crisis will be even more devastating,” said Seth Frotman, the executive director of the Student Borrower Protection Center.
House Democrats, in their $3 trillion HEROES Act passed in May, called for extending the payment pause for student loan borrowers for another year, until Sept. 30, 2021. The bill would also forgive $10,000 in debt for economically distressed borrowers. The measure hasn’t been taken up by the Senate.
The final stimulus package will likely fall “somewhere in between the HEALS Act and the HEROES Act,” Kantrowitz said.