GOP To Include $1,200 Checks, But No New Student Loan Relief, In Stimulus Bill

Republican Senate and Trump administration officials, who are finalizing the details of a new stimulus package, confirmed the following key details over the weekend:

• The bill would include a new round of $1,200 stimulus checks to be sent to taxpayers.
• The bill will not include an extension of the $600/week enhanced unemployment benefits.
• The bill will likely not include an extension of the CARES Act’s student loan provisions, which suspends all payments, all interest, and all collections on government-held federal student loans. The bill will also not include any student loan forgiveness.

White House economic adviser Larry Kudlow told CNN on Sunday that the GOP stimulus bill would also include reemployment incentives, retention bonuses, and tax credits for small businesses.

The Senate GOP bill will include a proposal by Tennessee Senator Lamar Alexander to simplify the federal student loan repayment system. Senator Alexander’s plan would include an income-driven repayment option that would allow student loan borrowers earning no income to have no monthly payment obligation, while other borrowers would have to pay 10% of their discretionary income towards their student loans.

However, this proposal is virtually identical to the Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE) repayment plans, which already exempt borrowers earning less than 150% of the poverty limit from any payment obligation, and cap other borrowers’ student loan payments at 10% of their discretionary income. The GOP stimulus bill would, therefore, effectively provide no student loan new relief, and would force millions of borrowers to re-enter repayment this fall.

“Senator Alexander's proposal misses the mark on how we need to support student loan borrowers,” Kyle Southern of Young Invincibles recently told Inside Higher Ed. “While we're seeing record unemployment numbers, we also know many people technically still have employment but have had their hours dramatically reduced. It's not fair to expect them to pick up loan payments, even at a lower rate, just because Congress has decided on a new scheme for how payments should be made.”

House Democrats passed the HEROES Act in May, which would extend the CARES Act’s student loan payment and interest suspension for an additional 12 months, and would also provide $10,000 in federal and private student loan forgiveness to borrowers experiencing economic distress. Senate GOP leaders rejected the HEROES Act without taking a formal vote on it.

As it stands, the CARES Act’s student loan provisions are scheduled to expire on September 30, 2020, unless Congress or the White House take action to extend the relief. Senate GOP leaders are expected to unveil their stimulus bill on Monday.

Further Reading

Democrats: Freeze All Student Loan Payments, Interest For 12 Months

Over 100 Civil Rights Groups Tell Congress: Cancel Student Debt In Next Stimulus Bill

Rep. Ayanna Pressley: Cancel Student Loan Debt Now

GOP Concerns Over Costs Could Limit Student Loan Relief In Next Stimulus

Biden Reaffirms Plan To Cancel Student Debt, Reduce Racial Inequality

NAACP And 60 Other Groups Call On Congress To Cancel Student Debt

There Are Now Five Plans To Forgive Student Loans — How Do They Compare?

Widespread Student Loan Forgiveness Is More Likely Now Than Ever Before – Here’s Why