Students who have taken loans are worried while the pandemic shuttered the economy. As per the stats, there is more than $1.6 trillion struck as student debt. The CARES Act, signed by the president came in response to economic hardship because of the pandemic CORONAVIRUS. An important point to note here is, CARES act’s student loan relief benefits will expire after September 30, 2020, until further notice. This could mean that over 40 million student loan borrowers will be forced to repay again by the month of October. However, there are reasons to believe that the CARES act’s student loan relief provisions may face extension. As of now, the CARES act suspends payments and interests on government-held federal student loans. federal student loan borrowers need not have to make payments for a period of six months. Additionally, federal student loan interest rates are 0% during the CORONAVIRUS outbreak. Hence, The student loan borrowers nevertheless, have benefited. Multiple Student loan relief programs during COVID-19 are published both by the ED and many private lenders also have release programs in the form of extending forbearance period to support its customers.
Table of contents
- Status of the Economy due to COVID 19
- Student loan relief procedures due to CORONAVIRUS OUTBREAK
- New legislation to come in November
- HEROES act leading to the extension of student loan relief
- Student loan relief by HEROES act
- Economic relief provided by the HEROES Act
Status of the Economy due to COVID 19
COVID-19 is a national emergency at the moment, to provide relief to student loan borrowers while the federal student loan borrowers are automatically being placed in forbearance, which allows you to temporarily stop making your monthly loan payment providing the grace period. This suspension of payments will last until Sept. 30, 2020, but you can still make payments if you are left with cash. Though some members of the Education Department said borrowers should contact their student loan servicers directly for forbearance, that is no longer the case. Under the CARES Act, the expanded six-month payment relief is automatic, and it runs from March 13 through September 30, 2020, until further notice. As COVID-19 cases and deaths are increasing, the ED has decided to release Student loan relief extension - COVID-19 to help the borrowers during this period.
The Borrowers should log on to their student loan servicer’s website to access their account. Then, we should see that there is no payment due.
By now, the major student loan servicers should have put all qualifying student loans into forbearance. If you think your loans qualify for the six-month forbearance but you’re not yet receiving it, contact your servicer directly and immediately. At this point of time, you need to contact your school. Many institutions are making arrangements (such as take-home assignments or online classes for students during the lockdown) so students can complete the term. The CARES act ensures students will be able to keep the federal student aid they have already received.
Student loan relief procedures due to CORONAVIRUS OUTBREAK
If you were working before coronavirus-related disruptions occurred, but you’re now unable to work your scheduled hours because of coronavirus-related chaos, your school may pay you for any scheduled hours. For example, working online or remotely, depending on the job and not going to the workplace as of CORONAVIRUS outbreak. Again at this point in time, you need to contact your school for more information. Student Loan Relief with CARES Act was signed in March to support American workers, businesses, and save jobs for Americans.
If you had not started your Federal Work-Study job before coronavirus-related disruptions, you may not be paid Federal Work-Study wages for hours you cannot work. Check with your financial aid workplace to see if other sources of funding are available.
Despite some statements from administration officials of the schools and colleges, Coronavirus cases continue to increase in many states throughout the country, indicating that the pandemic is far from over ever. This week, several states and localities including California, Arizona, and parts of Florida and other places have announced new measures to try to contain skyrocketing cases. Hospitalizations are also increasing in several states. The pandemic has not ended, and there is no evidence that the country will be COVID-19 free by the month of October.
New legislation to come in November
The presidential election, therefore, is scheduled for November 3, 2020. But it’s not just the President who is up for re-election. All 435 members of the House of Representatives will be participating for re-election, as are 35 senators. If the CARES Act’s student loan provisions or benefits as loan forgiveness are allowed to expire, over 40 million student loan borrowers will get billed on their student loans for the first time in six months, merely days before the election is held. As a result, there may be a broad political thirst in both Congress and the White House to extend the suspension of payments, interest, and collections on federal student loans until after the election, so voters don’t take out their anger and frustration at the polls.
HEROES act leading to the extension of student loan relief
In May, the House of Representatives passed the HEROES Act, a massive second stimulus bill in addition to the CARES act which was signed by the president in the month of March, which extends the CARES Act’s student loan relief provisions by a full year to September 2021. While the GOP Senate leadership did not agree and had rejected the HEROES Act, members recently suggested that they could pass their own new stimulus package sometime in July.
At this, the Treasury Secretary Steve Mnuchin in recent days suggested to congress that the administration would consider additional stimulus as well as critical relief.
While the broad student loan relief in the form or in the terms of student loan forgiveness and debt cancellation does not currently enjoy the support, extending temporary student loan relief programs through the end of this year or even into 2021 may be far more beneficial, and it could get enough broad support to pass Congress, given the relatively low cost of these measures. Note not to fall victim to Student Loan Relief Scams-COVID 19 during the pandemic.
Student loan relief by HEROES act
House progressives had originally assigned $30,000 in across the board student loan forgiveness. They released latest version of the bill reduced the forgiveness, but still provided meaningful student loan student relief, which includes the following :
Federal student loans provide forgiveness up to $10,000.
Private student loans provide forgiveness up to $10,000.
As an extension to the CARES Act, suspension of interests, payments, collections on government-held federal student loans through September 2021. An expansion to those protections to include commercially held FEEL program federal student loans as well as Perkins loans.
To fix a Public Service Loan Forgiveness that would allow payments made on previously consolidated federal student loans to potentially count towards 120 qualifying monthly payments required by the program.
Economic relief provided by the HEROES Act.
In addition, the HEROES act also includes many other economic relief provisions, including the following:
Additional direct cash payments to households, including $1,200 per individual earning up to $75,000 per year. Families with dependent children could receive up to $6,000.
An extension of improved or better unemployment benefits (which is an additional $600 per week) to January 2021.
Hazard pay for essential workers.
Housing assistance to help renters and homeowners with rent and mortgage payments.
Debt collection relief.
Direct financial relief to state, local, and tribal governments.
Billions of dollars dedicated to Coronavirus testing and contact tracing initiatives.
In order for a bill to become law, it must pass both the House and the Senate, and then be signed by the President.
Senate leadership has described the HEROES Act as “dead on arrival,” before the final version was even passed. The Senate seems not likely to return to Washington June, so no quick action can be taken. The President has also indicated that he opposes the House bill. However, the Democratic House leadership views the passage of this bill as an important negotiating step in crafting a final stimulus bill that can win over sufficient votes in both chambers of Congress to become law.Student loan relief summarizes all the act published by the ED during the pandemic.