Rep. Ayanna Pressley, D-Mass., left, and Rep. Alexandria Ocasio-Cortez, D-N.Y. on Capitol Hill, ... [+]
House Democrats have unveiled a proposal to cancel student loan debt for millions of student loan borrowers amid the escalating Coronavirus crisis.
The bill, called the Student Debt Emergency Relief Act, would do the following:
- The bill would cancel $30,000 in federal student loans for borrowers.
- The student loan forgiveness would be tax-free. In other words, the debt cancellation would not be taxed as income.
- For student loan borrowers who continue to have student loan payments due even after the $30,000 in cancellation, the government would assume their monthly payments so borrowers can remain on track for loan forgiveness programs or loan payoff.
- All involuntary collections efforts by the U.S. Department of Education — including wage garnishments, tax refund seizures, and offsets of Social Security — would be suspended.
Rep. Ayanna Pressley (D-MA), one of the lead sponsors, said: “During this unprecedented crisis, no one should have to choose between paying their student loan payment, putting food on the table or keeping themselves and their families safe and healthy. We must prioritize debt cancellation for the 45 million student loan borrowers who are struggling to pay off their debt during this difficult time.”
The proposal mirrors a similar plan put forth by Senate Democrats last week, although the House bill goes further and calls for a greater amount of student loan forgiveness.
Currently, student loan borrowers impacted by the Coronavirus crisis have limited options, which include an interest rate freeze and a temporary forbearance. But many borrowers are not even eligible for those options at this time.
Democrats and Republicans in Congress are currently in negotiations for the final terms of a massive stimulus bill to address the Coronavirus crisis and the associated economic collapse. It is unclear what, if any, relief will be provided to student loan borrowers as part of that package.
UPDATE: The Senate-passed stimulus package does not include any student loan forgiveness.
