Democratic Sen. Elizabeth Warren of Massachusetts is reviving a piece of her presidential campaign platform amid the coronavirus pandemic, proposing to cancel student loan payments for the duration of the emergency.
The plan is backed by Senate Minority Leader Chuck Schumer of New York, Washington state’s Sen. Patty Murray and Sen. Sherrod Brown of Ohio, all fellow Democrats. It comes as lawmakers are considering what to include in a $1 trillion-plus stimulus plan.
The proposal would require the government to make the monthly payments for everyone with federal student loans, wiping away some of their debt.
It guarantees a minimum of $10,000 in debt relief per borrower. If that amount isn’t met by the end of the national emergency, the proposal requires the government to make additional payments on behalf of the borrower. There is no cap to the relief, and a Warren spokeswoman did not immediately respond when asked how much the proposal would cost.
The plan would also halt interest accrual, as well as collections on debts – including wage or tax refund garnishment – for borrowers in default. It calls for implementing a three-month grace period once the national emergency ends, during which fees would be waived for late payments.
Last week, President Donald Trump said he would waive the interest on federal student loans because of the pandemic, but the move is unlikely to immediately lower borrowers’ monthly payments and would instead end interest accumulation for the time being – resulting in savings over the long run.
As of Thursday, borrowers and loan servicers were still waiting for the Department of Education to release details on how the waiver would work and how long it would last. The Democratic proposal would also codify the loan waiver into law
Consumer advocates, like Ashley Harrington at the Center for Responsible Lending, argued that Trump’s waiver would offer little help to those who may have lost their jobs or seen their hours cut because of the coronavirus – but applauded the Democratic plan.
“This proposal is paramount if we want to quickly provide much-needed relief for borrowers who are greatly impacted by this public health epidemic,” Harrington said.
During Warren’s presidential campaign, she proposed a sweeping student loan cancellation plan that would forgive up to $50,000 in those debts for households earning less than $250,000 a year. Sen. Bernie Sanders of Vermont, who remains in the Democratic presidential primary race, has proposed wiping out all outstanding student debt.