As the economic fallout from the coronavirus pandemic leaves many people struggling to make ends meet, relief could be coming for many, including those with student loans, very soon thanks to the largest stimulus package in US history.
Student loan borrowers would be allowed to put off paying their federal student loan payments all without penalty until September 30 under the Senate coronavirus stimulus bill passed late Wednesday.
Until September 30, no student loan issuer would be able to charge students or current student loan borrowers. This is due to the Senate coronavirus stimulus bill passed late Wednesday. This new bill is a provision to the one the Education Department has already put in place. The bill that was already in effect was regarding deferring payments without interest for the next 60 days.
Issues with the Education Department bill include borrowers having to contact their lenders in order to receive a deferred payment plan. This includes all automatic payments. Borrowers wanting to defer their current loans of charges without interest must contact their lenders to do so.
The new Senate bill would automatically suspend payments without interest charges for the next six months. This includes any collection of automatic debit card payments and wage and tax refund garnishment.
The new Senate bill also offers additional benefits for borrowers that seek loan forgiveness. Borrowers needing to do so can through the Public Service Loan Forgiveness program. All borrowers should see debt wiped away for the next 10 years without being penalized for not making payments.
This applies to borrowers with federal loans and does not apply to private loans or some federally guaranteed loans that were likely disbursed before 2008.
The new bill does still allow borrowers to still make payments during the next six months if they are willing and able.
The bill unanimously passed the Senate and is now headed to the House for a vote Friday morning.