Realizing the economic impact that the coronavirus crisis is already causing and what it might bring down the line, Senate Democrats say student loan borrowers need quick relief in the form of loan forgiveness and debt cancellation. They are proposing slashing a minimum of $10,000 in debt for all federal student loans, according to The Washington Post.
“The coronavirus outbreak brought with it crushing economic uncertainty, and students and borrowers need targeted, quick relief from payment burdens,” Senate Minority Leader Charles E. Schumer (D-N.Y.), said as he introduced his plan on Thursday, alongside Senator Patty Murray (D-Wash.), Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio).
The senators want to shift the loan payments to the Education Department in the months ahead while the United States grapples with the pandemic, and start a three-month grace period where borrowers get a reprieve on making payments without any penalty.
Big for America’s students right now. @PattyMurray, @SenSherrodBrown, @SenWarren, and I are announcing our bold new plan to #CancelStudentDebt for the duration of the coronavirus emergency and provide a minimum $10k payoff for federal student loan borrowers.
— Chuck Schumer (@SenSchumer) March 19, 2020
Under the plan, the government would not be able to seize tax refunds or garnish borrowers’ wages or reduce their Social Security benefits to repay past debt. In addition to this, President Trump’s order last week waiving interest on federal education loans would still be applied.
Warren was the first to suggest forgiving student loans as a way to stimulate the economy. Since last week, her aides say she has been meeting with Senate colleagues to work on getting the plan included in the Senate Democrats’ $750 billion stimulus package, according to The Washington Post.
“Last time our economy crashed, this country made a devastating mistake: we turned our backs on students and families to bail out the giant banks,” Warren said yesterday, according to The Post. “Student loan borrowers — especially students of color — never fully recovered from that economic punch to the gut. This time around, by canceling student debt payments for millions, we will fix the mistake that still holds back a generation of people and dragged down our economy.”