Senate Democrats today unveiled a student loan relief plan in response to the coronavirus, calling for immediate cancellation of monthly payments for the duration of the national emergency and the payment of at least $10,000 for all federal student loan borrowers.
The emergency plan was announced by Senators Chuck Schumer (D-NY), Patty Murray (D-WA), Sherrod Brown (D-OH), and Elizabeth Warren (D-MA) today.
The proposal asks Congress to authorize the Department of Education to make the monthly payments for all federal loans, tax-free for borrowers.
The proposal also calls for the suspension of interest capitalization, a minimum $10,000 debt relief payoff for all federal loan borrowers, and the suspension of all involuntary debt collections or wage garnishment for borrowers who have defaulted.
“The coronavirus outbreak brought with it crushing economic uncertainty, and students and borrowers need targeted, quick relief from payment burdens,” Senate Democratic Leader Schumer said in a press release. “We must act now to help alleviate the growing financial strain on students and families across the country.”
There are more than 43 million Americans with $1.5 trillion in student loan debt. Federal student loans form $1.3 trillion of that pile.
The Democrats’ proposal follows along the same pitch former presidential candidate Warren made on the campaign trail.
“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,” she stated. “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.”
‘THIS IS HUGE!!!!’
Consumer advocates — who were previously not thrilled with the Trump administration’s interest waiver on federal student loans — lauded the plan introduced on Thursday.
“The bold measures proposed by Senators Schumer, Murray, Brown, and Warren are necessary to shield borrowers from the government’s draconian collection powers and to ensure that Americans devastated by the financial crisis are able to dig out from this crisis in the months ahead,” Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project said in a statement. “Congress should take immediate action and cancel all student loan payments now.”
Even those on the other side of the spectrum agreed that a pause is warranted given the crisis at hand.
"The Coronavirus crisis is an economic disaster for Americans with student loan debt who are already on financial thin ice,” Student Debt Crisis Executive Director Natalia Abrams said in a statement. “Millions of people will need all of their income and savings to weather the financial harm that is to come; families cannot afford to send money to the government for their student loans. ... We are calling on Congress and Betsy DeVos’ Department of Education to do what is morally right by canceling student loan debt in response to this health crisis.”
Aarthi is a writer for Yahoo Finance. She can be reached at email@example.com. Follow her on Twitter @aarthiswami.