Stimulus negotiations seem to have fallen apart for now. Unemployed Americans, those facing eviction notices, and more, are left without the protections and relief from the CARES Act. Soon to be added to that list are student borrowers, whose coronavirus relief expires next month.
The CARES Act suspended payments and interest on federally-held student loans, but only through September 30, 2020. Now that negotiations have stalled, many student loan borrowers are worried about the suspension ending soon.
This week, President Trump tweeted that he directed staff to draft an executive order that would address eviction protections, extend unemployment benefits, and address student loan repayment.
Trump reiterated that intention on Friday to reporters at his golf club. However, his plan to suspend payments raises question for many student borrowers.
For one, it is unclear how long the President’s extension would last. The House passed the HEROES Act in May and that would have extended the suspension for another year. Others have proposed through the end of this calendar year.
Borrowers seeking loan forgiveness under income-driven repayment plans or the Public Service Loan Forgiveness (PSLF) program should also check to see if Trump’s student loan payment suspension would count towards those programs. The CARES Act suspension counted towards forgiveness, but it was written explicitly into the law.
The legal authority Trump plans to use to suspend the student loan payments is also unknown. Before the CARES Act passed, the president considered suspending payments and eventually issued an order to suspend interest. Some believe his order will use the “compromise and modification” authority of the Higher Education Act — the same authority Elizabeth Warren cited in her plan to unilaterally cancel student loan debt.