Representatives Ayanna Pressley and Ilhan Omar have proposed legislation to cancel at least $30,000 in outstanding federal student loan debt per borrower due to the coronavirus emergency .
The legislation also would require the U.S. Department of Education to immediately start making loan payments on the behalf of borrowers. The Student Debt Emergency Relief Act would also prevent any wage garnishments during this public health crisis.
“During this unprecedented crisis, no one should have to choose between paying their student loan payment, putting food on the table or keeping themselves and their families safe and healthy,” Pressley said in a statement.
Last week, Democratic Senators proposed student loan debt relief as well. That proposed plan pays a minimum of $10,000 for all federal student loan borrowers. Like the Pressley-Omar proposal, payments would also be made by the U.S. Department of Education and not required by borrowers.
Both plans are tax-free to borrowers. Both plans also allow borrowers to keep making payments if they prefer.
What is being offered for student loan borrowers right now
Currently, President Trump has announced that he will pause student loan payments for 60 days for federal student loans. If you are a federal borrower interested in taking advantage of this forbearance, you need to contact your loan servicer directly to apply. This is not automatic.
If you are working towards student loan forgiveness, either for Public Service Loan Forgiveness or Income-Driven Repayment plans, the paused payments will not count as a qualified payment.
Unlike the above proposals, this plan does not make payments for you – it is pausing payments. President Trump has also announced that he is waiving student loan interest right now on federal student loans.
While all of these announcement and potential plans are for federal borrowers, there are options to pause student loan payments or reduce your monthly payment for those impacted by coronavirus, even for private student loan borrowers.
With interest rates at an all-time low, now could be a good time to consider refinancing private student loans to save money. Consider the pros and cons of refinancing student loans before proceeding. If you refinance federal student loans, you’ll lose certain borrower benefits including the option for income-driven repayment plans, generous deferment options for period of unemployment and economic hardship and an option to have student loans forgiven. For high-interest private loans, refinancing could lower your interest rate, which can help you save money.