Lawmakers may have reached a “bipartisan breakthrough” on a $900 billion stimulus relief package, but what does the new bill mean for student loan borrowers? The current freeze on federal student loan payments is currently set to expire on Jan. 31, leaving many borrowers wondering if more help is on the way. With a vote set to happen on Capitol Hill Monday to approve the next bill, here is what student loan borrowers can expect.
While the CARES Act, passed and signed by President Donald Trump in late March, enacted the existing student loan relief, one thing is becoming clear: this help will seemingly expire. A joint statement issued by House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer Sunday indicated that provisions targeting student loans are included in the newest relief package. The statement applauded the numerous provisions “Democrats have secured” aid the negotiations, including an end to surprise billing, support for small businesses, rental assistance, enhanced unemployment insurance benefits, nutrition assistance, and another round of stimulus checks. Notably absent from the list, however, was a provision extending the current student loan relief.
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As Forbes points out, this does not, however, mean that such a provision is not included in the bill, which is expected to pass through both chambers of Congress. If no provision targeting student loans is included, though, this would mean that the current freeze would expire on Jan. 31. This means that borrowers have just over a month left of a pause on federal student loan payments as well as a pause on the accrual of interest. Student loan debt collection of defaulted student loan debt is also halted. All of these pauses would expire on Jan. 31, after which normal payments, interest accrual, and debt collection would resume.
If student loan relief is not included in the final text of the stimulus bill, all hope is not lost. Democrats have long pushed for an extension of the current pauses through September 2021 as well as student loan forgiveness, and Trump himself paused federal student loan payments for one more month via an executive order. It is possible he could sign a second executive order, or President-elect Joe Biden could do so in order to extend student loan relief. It is also possible that separate legislation could be brought forth on Capitol Hill targeting student loan relief. Biden has already proposed making several key changes to federal student loans and has called on Congress to cancel student loans.
