Republicans Prepare New Stimulus Bill With No Student Loan Relief, Reduced Unemployment Benefits

This article has been updated.

Congress is in recess after failing to reach a compromise on a new stimulus package. But Republicans are trying to cobble together a narrow stimulus proposal for when lawmakers return to Washington in September.

The draft proposal includes reduced unemployment benefits of $300 per week (a reduction from the $600 per week in the CARES Act), and no direct stimulus payments to Americans. The proposal also includes no student loan relief.

Earlier in August, President Trump signed an executive memorandum that purports to temporarily extend student loan relief for millions of Americans to December 31, 2020. A suspension of student loan payments, interest, and collections provided by the CARES Act was set to expire on September 30.

But key questions about the President’s memorandum remain, including whether borrowers in default on their student loans are covered by the suspension, whether the extension is automatic or universal, and whether borrowers on track for loan forgiveness programs such as Public Service Loan Forgiveness can continue to make progress during the extended suspension period. The U.S. Department of Education has not issued updated guidance for borrowers.

Consumer advocacy groups have criticized the President’s executive memorandum as insufficient. “The President’s action on student debt falls short of what Americans need to stay afloat through this unprecedented health and economic crisis,” said the Student Borrower Protection Center in a statement.

House Democrats passed the HEROES Act in May, which would extend the CARES Act’s student loan payment and interest suspension for an additional 12 months. The HEROES Act would also expand the CARES Act’s protections to include commercially-issued FFEL-program federal student loans, as well as federal Perkins loans, and would provide $10,000 in federal and private student loan forgiveness to borrowers experiencing economic distress. The HEROES Act would also continue enhanced unemployment benefits of $600 per week, and would provide additional relief to states, cities, and hospitals. House Democrats recently passed a separate bill that would also suspend private student loan payments for 12 months.

Republicans have so far rejected those proposals. House Democrats agreed to compromise on a new stimulus bill earlier in August, reducing the price tag of the HEROES Act from over $3 trillion to approximately $2 trillion, hoping Republicans could meet them halfway (Republicans had previously offered a new stimulus package costing around $1 trillion). But lawmakers could not reach an agreement.

Even if the latest narrow stimulus proposal could garner enough votes to pass the Republican-controlled Senate, the bill would have to pass the Democratic-controlled House. Democratic congressional leaders have, so far, opposed a narrow stimulus bill.

Correction: An earlier version of this article referenced unemployment benefits on a per-month basis, rather than a per-week basis.

Further Reading

Analysis: Trump’s Vague Student Loan Order Leaves Many Questions Unanswered

Student Loan Stimulus: Multi-State Coalition Tells DeVos To Take Action As Compromise Hopes Dim

Second Student Loan Stimulus: Five Possible Scenarios

Here’s what to do if Congress doesn’t extend student loan relief.

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