President of the US House Rep. Nancy Pelosi (D-CA) and Senate Minority Leader Senator Chuck Schumer … [+]
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Has Congress given up on student loans from the new stimulus package?
Here’s what you need to know.
Student loans
Congress is nearing completion of a new stimulus package with a second stimulus check of $ 600 for each person and child, as well as $ 300 per week in unemployment insurance. For millions of Americans, this is good news. (That being said, most Americans wondered why they didn’t get a second stimulus check). However, one thing was missing in a press release made today by House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY): student loans. Pelosi and Schumer issued a press release with key elements of the new stimulus package, which Congress did not finalize. Pelosi and Schumer did not refer to any extension of the student loan exemption. If student loans are excluded from the final incentive bill, then here’s what this could mean for your student loans.
The exemption for student loans expires on January 31, 2021
In an unexpected move earlier this month, President Donald Trump suspended federal student loan payments for another month until January 31, 2021. This means that the existing student loan exemption from the Cares Act incentive package will not expire on December 31. 2020 as previously expected. Earlier, Trump extended the student loan exemption from September 30 to December 31. Therefore, student loan lenders can continue to expect the following for their federal student loans until January 31, 2021:
- No payments: federal student loan payments are discontinued.
- No interest: no new interest will accrue on your federal student loan balance.
- No debt collection: The collection of student loan debts and non-repayable student loan debts is stopped.
Private student loans, FFELP loans and Perkins loans do not qualify for payment breaks or other student loan exemptions. Until January 31, 2021, student loan lenders can continue to pay their federal student loans if they wish. Two weeks ago, a new stimulus package proposal would have extended the student loan exemption until April 30, 2021. Other Democrats have proposed suspending federal student loan payments until at least September 30, 2021 or when the Covid-19 pandemic ended. . However, that later date gained less traction based on bipartisanship in Congress. If student loans are no longer interrupted, make sure you do these 7 things.
The incentive package does not include the forgiveness of the student loan
As expected, the new incentive package does not include any forgiveness of student loans. With Republicans controlling the U.S. Senate, he did not expect plans to cancel student loans to be included. Democrats will have to wait until the next legislature or after President-elect Joe Biden becomes president. Congress Democrats have proposed several plans to cancel student loans, including the latest effort to cancel up to $ 50,000 in student loans through an executive order by the president. For proponents of widespread forgiveness of student loans, this would be the best hope for canceling student loans, given the balance of power in Congress and the White House.
The new stimulus package: the largest expansion of Pell Grants ever
According to the joint press release, the new incentive package will include “the largest expansion of Pell Grant beneficiaries in the last ten years”. Pelosi and Schumer say the Pell Grants will impact 500,000 new recipients and “ensure that more than 1.5 million students will now receive the maximum benefit.” Separately, the incentive package could provide $ 82 billion for colleges and schools.
Next steps
Congress may keep the student loan exemption in the final text of the stimulus bill. The exclusion from Pelosi and Schumer’s press release could be, for example, a surveillance. Therefore, if included in the new incentive, federal student loan payments could be extended until April 2021. If not included, then you should expect the student loan exemption from the Care Act to expire on January 31, 2021, with unless extended by Congress by legislation or by the president by executive order.
Grant student loans
Will you get a higher student loan exemption? Congress could extend the student loan exemption beyond January 31, 2021 or wait until the next congressional and presidential terms. In the meantime, make sure you have a game plan for student loan repayment. Here are 3 ways to pay off student loans, all without fees: