Senator Patty Muarray's office issued the following:
Senator Murray’s new
proposal would provide immediate, much-needed relief to federal student
loan borrowers in Washington state and across the country through
minimum $10k in student loan payments
New proposal would
authorize Congress to make monthly payments on behalf of borrowers for
duration of national emergency and be followed by 3-month grace period
at program termination
Senator Murray: “This legislation would provide immediate relief for borrowers who are struggling to make payments”
(Washington, D.C.) – Today,
Senator Patty Murray (D-WA), the top Democrat on the Senate education
committee, joined Senate Democratic Leader Chuck Schumer (D-NY), Senator
Sherrod Brown (D-OH), and Senator Elizabeth Warren (D-MA), to unveil an
emergency student loan payment and relief plan, which would provide
much-needed relief to federal student loan borrowers through immediate
cancellation of monthly student loan payments for the duration of the
national emergency caused by the spread of the coronavirus, and a pay
down of a minimum $10K for all federal student loan borrowers. The
Senators’ proposal requires that Congress authorize the U.S. Department
of Education to make monthly student loan payments on behalf of
borrowers, equivalent to the amount due for all federal student loan
borrowers (including Direct Loans and Federal Family Education Loans
(FFEL)) for the duration of the national emergency declarations. The
Senators’ proposal guarantees a minimum $10K loan payoff for all federal
student loan borrowers.
“These are incredibly uncertain and
challenging times. Families and student loan borrowers desperately need
our help right now and we’re only just at the beginning of the
devastating economic impact of this crisis,” said Senator Murray. “This legislation would provide immediate relief for borrowers who are struggling to make payments.”
Students and federal loan borrowers in
Washington state and across the country were particularly hard-hit by
the last economic crisis and remain under significant financial strain,
an issue compounded by the coronavirus outbreak. The Senators’ new
proposal would provide immediate relief to students and borrowers
through targeted, sustained financial assistance for, at minimum,
$10,000 in payments. Borrowers will receive credit toward forgiveness
and loan rehabilitation for payments made by the Department on their
behalf, and all payments made by the Department would be tax-free for
borrowers. The proposal also suspends all involuntary debt collections
and wage garnishment for borrowers who have defaulted while the
Department is making payments on borrowers' behalf. Importantly, at the
termination of this program, the Department will institute a 90 day
“grace period” during which missed payments will not result in fees or
penalties, including negative credit reporting.
The Senators’ proposal is included as part of Senate Democrats’ bold Phase 3 proposal for at least $750 billion to
wage war against COVID-19 and the economic crisis facing every
American. Senate Democrats’ phase three proposal puts workers and
families first while ensuring that necessary resources are delivered to
address every corner of the public health crisis, including funds to
address burgeoning capacity issues at hospitals, child care and
education, and more.
A summary of the Senators’ student loan payment and relief plan can be found here and below:
Making payments on behalf of federal student loan borrowers. The
last economic crisis hit student loan borrowers particularly hard, many
of whom never fully recovered financially. To provide immediate relief
to federal student loan borrowers, we propose that Congress authorize
the U.S. Department of Education (“Department”) to make month student
loan payments on behalf of borrowers.
Summary of Proposal: The
Department will make payments equivalent to the amount due for all
federal student loan borrowers (including Direct Loans and Federal
Family Education Loans (FFEL)) duration of the national emergency, or
public health emergency, declarations. Garnishment of
wages, tax refunds, and Social Security benefits will also stop, and all
interest capitalization (including from interest accrued prior to the
President’s March 13th announcement) will cease. The proposal will also
codify the President’s waiver of interest on federal student loans held
by the Department, and extend this waiver to FFEL loans.
This suspension of payments will be a new
policy distinct from “deferment” and “forbearance,” which are opt-in
procedures that do not count toward student loan forgiveness under
income-driven repayment (IDR) or Public Service Loan Forgiveness (PSLF).
During the period of suspending payments, borrowers will receive credit
toward forgiveness and loan rehabilitation for payments made by the
Department on their behalf. All payments made by the Department will be
tax-free for borrowers.
The Secretary will be directed to send
monthly notices to all borrowers to allow them to opt-out of the
suspension and payment contribution and to notify them that the program
is temporary and will end at some point when the national emergency has
ceased. At the termination of this program, the Department will
institute a 3-month “grace period” during which missed payments will not
result in fees or penalties, including negative credit reporting.
Furthermore, no more than 90 days after the conclusion of the national
emergency, the Department shall apply additional payments to the balance
due to ensure that each federal student loan borrower received a
minimum of $10,000 in student loan relief over the course of the
national emergency.
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