Senators call for forgiveness for student loans in stimulus package

A group of Democratic senators are calling for a solution to the Public Service Loan Forgiveness Program (PSLF) to be included in the next Senate stimulus package. In a letter to Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer, 18 Democratic Senators call on the Senate to include provisions of the What you can do for your country Take action in the bill.

Led by Senators Kirsten Gillibrand, Tim Kaine, Elizabeth Warren and Kamala Harris, Senators said this solution was essential because “the COVID-19 pandemic has rendered the work of our nurses, health care providers, teachers, first aiders, stakeholders and countless other public sector workers more important than ever. They said essential workers need support and they’ve gotten student loan forgiveness.

The PSLF program is complex. It grants a student loan discount to those who work for the government or certain non-profit organizations after 10 years of full-time work. During this time, borrowers must have the right type of federal student loan, make all payments on time, and be on the right repayment plan. Due to the strict standards and other complexities, the program has been heavily criticized for having a rejection rate of 99%.

the What you can do for your country Take action was introduced in 2019 and makes several changes to the PSLF program and makes it easier to get forgiveness. All federal loans and federal repayment plans would qualify under the legislation. It also takes steps to make sure the process is streamlined and program information is clearer.

The bill would also allow borrowers to receive partial forgiveness after five years, rather than waiting ten years. Some criticize the 10-year all-or-nothing requirement of the current PSLF program because it does not reward shorter, but significant periods of public service. The summary of the bill states that “it allows borrowers to contribute to a shorter, but still meaningful public service period, and ensure that they can still benefit from a return.”

the What you can do for your country Take action is supported by several organizations, including the American Federation of Teachers (AFT), the National Education Association (NEA) and Young Invincibles. Former Vice President Joe Biden also included it in his presidential campaign policies.

But Republicans are unlikely to include these provisions in the stimulus bill. Many Republicans criticize the program, especially for its cost. President Trump has called for its elimination in every one of his budget requests.

Adopting these provisions would only make it easier for more borrowers to obtain a rebate, which would likely make it more expensive. (Some argue that more people would accept a five-year partial pardon rather than a ten-year full pardon, making it cheaper.)

Senate Republicans have opposed the cancellation of student loans in general, and in particular in stimulus bills. They ignored calls for debt cancellation in the CARES Act and eliminated all student loan relief in the proposal they released yesterday.

Related readings:

What the coronavirus stimulus means for your student loans

Pelosi Offers $ 1,200 Stimulus Checks, $ 10,000 Student Loan Discount, and College Money

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