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Breaking down the key takeaways student borrowers should know about the latest stimulus bill

Yahoo Finance's Aarthi Swaminathan joined Yahoo Finance Live to break down everything student borrowers need to know about the latest stimulus bill.

Video Transcript

[MUSIC PLAYING]

ADAM SHAPIRO: Welcome back to Yahoo Finance Live. As we head towards the closing bell-- we've got about 30 minutes-- the S&P 500 is essentially flat. The Dow is up 424 points. NASDAQ is down. It's off about 2%. We're keeping an eye on all of this, but we're also keeping an eye on the $1.9 trillion stimulus bill, which the Senate passed, the House will act on next. And what happens to the millions of people, the student loan debt, who have been falling behind? Aarthi Swaminathan joins us now with what sounded like a good idea, but the follow through wasn't so great. Can you tell us more on what's happening there?

AARTHI SWAMINATHAN: Yeah, it's really interesting because what the Senate passed, I would think, you know, it's a big game changer if we get forgiveness. So what happened was aside from allocating $40 billion for colleges, they also did allow for student loan borrowers, they being Senators Warren and Senators Bob Menendez. They introduced a provision that said if you had your loans forgiven, you would not see a tax bill. Because until today, if you had gone through the income based repayment plan 20, 25 years, made payments, you would end up with a tax bill of thousands of dollars.

And so, they basically fixed this loophole, but the problem is, you know, obviously, Senator Warren has an expectation that broad scale forgiveness is going to come. Do not know how that's going to play out because the president has said he doesn't want broad scale cancellation. But for millions of people on income based repayment plan, this would be amazing because then they wouldn't have to pay that extra money.