President Trump put a brake on further stimulus negotiations in a series of tweets on Tuesday.
“Nancy Pelosi is asking for $2.4 trillion dollars to save mismanaged, high crime, Democratic states, money unrelated in any way to COVID-19,” the president said. “We have made a very generous offer of $1.6 trillion and, as usual, she is not negotiating in good faith. I reject their request and look to the future of our country. I have instructed my representatives to stop negotiating until after the election, when, immediately after I win, we will pass a major stimulus bill targeting hard-working Americans and small businesses.”
The president’s statement means that by 2020 there may be no further incentive to provide financial support to the unemployed, small businesses and especially student loan borrowers.
House Democrats had passed $3.4 trillion HEROES Act in May, largely on a party line. They then backed a stripped-down version of the bill with a total cost of nearly $2.2 trillion in an effort to compromise with Republicans. That bill included another round of $1,200 incentive checks, federal increased unemployment benefits of $600 a week and additional funding for the Paycheck Protection Program to help small businesses.
Both versions of the HEROES Act would also have extended the payment of student loans and the interest suspension of the CARES Act until September 30, 2021, extending those protections to include commercially issued FFEL program federal student loans and Perkins loans. The house has sequel to push for this expansion and extension of student loan relief, and include it in an updated stimulus proposal released last week. The original HEROES Act also included $10,000 in general student loan waiver for economically distressed borrowers.
Republican Senate leaders have so far rejected many of the House Democrats’ proposals, but negotiations were underway.
Earlier in August, President Trump signed a executive memorandum to temporarily extend student loan waivers for millions of Americans through December 31, 2020. But consumer advocates have argued that this is not enough.
“The president’s action on student debt is not meeting what Americans need to stay afloat during this unprecedented health and economic crisis,” the Student Borrower Protection Center said in an earlier statement. statement. “First, all borrowers deserve relief. This includes the 9 million borrowers with loans not covered by the president’s proposal. Second, as we’ve said before, interrupting payments will only end the road for borrowers dealing with job loss and financial turmoil — including millions in need before the pandemic. The tens of millions of Americans drowning under the weight of student debt desperately need meaningful relief, not political games.”
Student loan advocates have called for widespread student loan forgiveness in the next stimulus package. “Until Congress, the President, or the U.S. Department of Education take action to cancel student loan debt, deferrals and suspension of interest will only address the hardships borrowers face as they reopen their student loans after the COVID crisis. refund”, the National Center for Consumer Law.
Meanwhile, Senator Elizabeth Warren (D-MA) and Senate Leader Chuck Schumer (D-NY) last month tabled a Senate resolution calling on the next president to use executive power to enact sweeping student loan forgiveness.
“America faces historic and overlapping crises during the coronavirus pandemic,” the senators wrote in a statement. joint statement. “More than 40 million Americans are crushed by more than $1.5 trillion in federal student loans. That’s generally hundreds of dollars a month that borrowers spend paying off loans, in addition to rent or mortgage payments and other living expenses. With more than 9 million borrowers in default, student loans much higher delinquency rates than any other type of household debt. This huge student debt burden prevents people from starting a small business or buying a house, and forces students to drop out of school before graduating.”
The senators called on the next president to use the executive powers granted by the Higher Education Act to cancel student loan debt. “Congress has already given the president and his secretary of education through the Higher Education Act the ability to amend, jeopardize, waive or release student loans,” the senators wrote. “This authority provides a safety valve for federal student loan programs, allowing the secretary to use her discretion to wipe out loans even if they do not meet the eligibility criteria for more specific cancellation programs such as disability redundancy”
Former Vice President Joe Biden, who was initially hesitant to approve broad student loan relief, has taken more dramatic steps to ease the burden of student loans in the wake of the pandemic and recent protests against racial justice. Under his plan, Biden would waive all undergraduate federal student loans for borrowers with annual incomes of less than $125,000 who attended public colleges and universities, as well as historically black colleges and universities (HBCUs) and private minority service institutions (MSIs). Biden also supports the $10,000 in general student loan forgiveness for all borrowers proposed by House Democrats in the HEROES Act. He also has expressed support for Senator Warren’s proposal to amend the bankruptcy law to make it easier to pay off student loan debt in bankruptcy.