40 million student loan borrowers facing financial hardship when CARES relief expires
Borrowers may find repayment even more difficult when student loan relief expires
As the nation grapples with sky-high unemployment rates and an economy buckling under the weight of rising coronavirus cases, the federal government’s emergency relief for student loan borrowers is set to expire at the end of September.
According to Politico, the impending end of these benefits not only adversely impacts over 40 million borrowers but also creates a political dilemma in an election year already fraught with complications.
“People have now priced into their family finances not having to make a student loan payment during this crisis,” said Mike Pierce, who worked on student loan policy at the Consumer Financial Protection Bureau during the Obama administration. “Restarting these payments six weeks before the election seems like a fast way to alienate tens of millions of voters with student loans.”
Lawmakers on both sides of the aisle have acknowledged the importance of student loan relief to their constituents after it was included in the CARES Act in March. But it remains unclear as to if Democrats and Republicans will reach a bipartisan plan of action when the reprieve for borrowers ultimately comes to an end.
Currently, Democrats are not only pushing for an extension of student loan benefits, they’re also pushing for an expansion which would lead to a more ambitious approach in which each borrower gets $10,000 of their debt canceled altogether.
This proposed policy has become a rallying cry amongst more progressive sects of the political party but is not favored by a Republican majority. A plan with more bipartisan support extends student loan deferment for another year with no interest accruing.
Given that Congress is now working on extending other benefits in the CARES Act, such as expanded unemployment payments and protections from housing evictions, lawmakers must also work to avoid a student loan crisis in October.
“We should be talking not about whether to extend — but how long to extend,” the benefits, Whitney Barkley-Denney, a senior policy counsel at the Center for Responsible Lending, a non-profit that works to end predatory lending and inform consumers about financial products, told Politico.
“We seem to be dealing in this fictional universe where COVID is getting better and not worse, and unemployment is getting better and not worse,” she said. “The idea that we’re ready to return to payments as usual is baffling to me.”
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