Will There Be Student Debt Cancellation In The Next Stimulus?

Thanks to the CARES Act—and an extension from President Trump—federal student loan payments are currently suspended through December 31^st. But that date is approaching quickly, and student borrowers are hoping for some extended relief and are looking to Congress to pass another stimulus package.

However, at the moment, many are wondering if there will even be another stimulus package. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been negotiating off and on for months, but no deal has been reached. Some say a deal is still possible before the election, but what would be included remains a mystery if one were to pass.

Several different proposals have been made to provide student loan relief to borrowers and many options are likely being considered. At the start of the pandemic, Senate Democrats proposed providing a minimum of $10,000 in student debt cancellation for an economic relief and stimulus package. The CARES Act passed and didn’t include the cancellation, but it did suspend payments for about six months.

House Democrats initially backed the $10,000 proposal in their follow-up stimulus proposal before scaling it back to an extension of the pause in payments for another year, through September 30, 2021. However, their scaled back plan would have still provided loan forgiveness to borrowers who were struggling financially before the pandemic.

The House passed that bill in May but not much has happened since. Several people have called on lawmakers to cancel student loans or provide some form of relief in the next stimulus, and some have put forth their own proposals. One Republican member of Congress proposed extending the suspension through the end of the year, something Trump eventually did through executive action.

Still, many are hoping for more relief. One former Trump Education Department official proposed suspending payments through the end of 2021. Senator Elizabeth Warren has continued her call for $10,000 in student debt cancellation, and even got Democratic presidential nominee Joe Biden on board with the plan. Senator Warren and Senate Minority Leader Chuck Schumer have also called on the next president—who they assume with be Joe Biden—to cancel $50,000 in student debt for each borrower.

Now, it has become a waiting game for borrowers and the Americans waiting for a stimulus deal. With loan payments coming due in just over two months, many student borrowers are hoping for at least an extension of the student loan payment suspension. If Congress fails to reach a deal before the election, many fear that nothing with pass in the lame duck period and payments will resume in January.