The White House memo says extending student loans is “appropriate … until the economy stabilizes, schools reopen and the crisis caused by the COVID-19 pandemic. cause has subsided. “
Executive action that offers student relief is less extensive than some Democrats and Republicans in Congress have sought. The policy will continue to eliminate approximately 9 million federal student loan borrowers whose debt is held by private lenders or their universities.
Congressional Democrats have proposed extending aid to student loans to cover more borrowers and expanding protections for at least another year.
The Senate GOP stimulus plan announced last month will allow the CARES Act student loan to expire. But more and more are called for from Republicans to provide the extension of those benefits.
As negotiations over the next coronavirus bailout round remained stalled on Capitol Hill, on Saturday Trump said he was taking immediate action to provide relief to borrowers because of officials. the government had “something”; with the Democrats “hindering” the agreement’s implementation.
Trump’s order instructs Education Secretary Betsy DeVos to take the necessary steps to continue suspending payments and waiving all interest on student loans held by the Department of Education until December 31st.
In March, Trump unilaterally suspended interest rates on federally held student loans and the Education Department said borrowers could stop paying if they contact their lender. Firstly. The CARES Act then made that policy law this spring and went one step further, automatically suspending monthly payments.
The president’s executive action will likely become complicated for the Education Department and the companies hired to implement the policy in the coming weeks.
For example, the CARES Act requires the department to send a notice to borrowers about the expiration of benefits by September 30. The department is prepared to start sending those warnings early next week, and it is not clear whether authoritative authority to stop them or not.
The chaos of student bailout provided through Congress and executive action could also create challenges in implementing payment and interest rate freezing.
For example, the CARES Act requires the Department of Education to treat suspended monthly payments as timely payments for federal write-off, including under the Public Service Loan Forgiveness program. It is not clear whether the Department of Education will continue that benefit.