A bipartisan group in the Senate has unveiled a new stimulus bill designed to revive efforts to reach a compromise on broad economic relief before the end of the year.
Several critical programs related to the last stimulus package are set to expire within the next few weeks. 12 million Americans will lose unemployment benefits, and rental assistance programs may run out of funds, as well.
In addition, critical student loan protections expire after December 31. For much of 2020, millions of student loan borrowers have not had to repay their federal student loans because of emergency pandemic relief under the CARES Act, which suspended payments, interest, and collections on all government-held federal student loans. President Trump subsequently extended that relief through the end of the year to December 31 (it originally was scheduled to expire in September).
Democrats have been pushing to further extend enhanced unemployment benefits, rental assistance, and student loan relief well into 2021 as part of larger stimulus negotiations. House Democrats passed legislation that would push the student loan moratorium’s expiration well into 2021. But the Democratic-controlled House and Republican-led Senate have been at an impasse for months.
The $908 billion package aims to bridge the gap between Senate Republicans’ $500 billion proposal, and the $2 trillion proposal by House Democrats. Key provisions include the following:
- $300 per week in enhanced federal unemployment benefits. This is lower than the $600 per week pushed by congressional Democrats, but still represents critical relief for workers.
- $300 billion in funding for small businesses by supplementing the troubled but popular Paycheck Protection Program.
- $25 billion in housing assistance.
- $40 billion to assist transit agencies struggling with low ridership.
- $4 billion for student loans.
Not included in the proposal are direct cash payments to Americans.
The latest effort at a compromise could provide some hope for struggling student loan borrowers, renters, and workers facing furloughs and job loss, but the specific details regarding student debt relief have yet to be disclosed. An extension of existing student loan relief would be critical for student loan borrowers, even if it is only temporary to bridge the gap between the expiration of relief after December 31 and Biden’s inauguration later in January.
Under the CARES Act, student loan servicers are required to send multiple notifications to student loan borrowers in the coming weeks that their student loans are entering repayment this January. Borrowers have been advised to start budgeting for payments, applying or re-certifying for income-driven repayment plans, and considering whether to request hardship deferments or forbearances. Servicers will start generating student loan bills within the first week or two of January, with anticipated billing due dates later that month, or in early February. A stimulus package that extends student loan relief beyond the December 31 deadline would avoid (at least temporarily) what advocates fear would be a disastrous combination of millions of borrowers unable to afford their student loan payments, and servicers unable to manage the high volume of distressed borrowers seeking additional relief through existing programs.
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