Reed & Murkowski Lead Bipartisan Push to Help More Student Loan Borrowers
Student Loan Fairness Act would extend student loan relief to FFEL & Perkins loan borrowers not covered by the CARES Act
WASHINGTON, DC – In an effort to expand student loan relief to more Americans, U.S. Senators Jack Reed (D-RI), Lisa Murkowski (R-AK), Doug Jones (D-AL), and Thom Tillis (R-NC) are teaming up to introduce the bipartisan Student Loan Fairness Act. This legislation would expand the reach of student borrower protections included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law No. 116-136). The bipartisan proposal would allow millions of Americans who were not covered by the CARES Act to make no or smaller monthly student loan payments during the pandemic.
The CARES Act automatically allowed student loan borrowers to suspend all payments on federal loans through September 30, with no interest accruing. To incentivize payments to continue, borrowers who make payments during this time are rewarded with the funds applying directly to their principal rather than interest. And non-payment during this period cannot be used to negatively impact credit scores or qualifications for loan forgiveness. However, these CARES Act benefits are limited to borrowers of student loans that are held by the federal government. This leaves out the borrowers whose Federal Family Education Loans (FFEL) are still held by commercial and state agency lenders, and those with Perkins Loans that are administered by institutions of higher education. As a result, nearly 6 million borrowers were left out under the FFEL Program and another 1.9 million under the Perkins Loan Program. This disparate treatment by loan type is as confusing as it is unfair.
“Student loan debt is a growing financial burden on millions of Americans and Congress needs to take smart, targeted action to uplift individuals, communities, and our economy. The bipartisan Student Loan Fairness Act will help millions of Americans who were left out of the CARES Act but are every bit as deserving of student loan relief. It will ease the burden of student loan repayment as we continue to combat COVID-19,” said Senator Reed. “This legislation is one component of what should be a comprehensive package of student loan debt relief. As the crisis continues, I hope we will extend the repayment relief until health and economic conditions improve sufficiently for borrowers to be able to begin repayment. Going forward, we must reduce the need for student loan borrowing and take steps to ensure that college is affordable.”
“Americans should not be left out of CARES Act student aid relief on a technicality,” said Senator Murkowski. “Student borrowers utilizing Federal Family Education Loans and Perkins Loans should be eligible for the same relief whether the federal government has taken ownership of their loans or not. I’m proud to have helped craft the Student Loan Fairness Act, which will extend the zero interest rate benefits, payment suspension, loan forgiveness eligibility, and credit score protection—critical components of CARES Act relief—to all Federal student loan borrowers. Congress has taken significant strides towards providing direct relief during the pandemic, but it’s imperative that federal student loan borrowers have access to the same relief as everyone else.”
Approximately 45 million Americans are currently saddled with over $1.65 trillion in outstanding student loan debt, according to the nonprofit Student Borrower Protection Center (SBPC). The SBPC website also reports that 1-in-4 borrowers are currently behind on their student loans.
The Student Loan Fairness Act (S. 4237) will extend the CARES Act student loan relief to recipients of Perkins loans and commercially-held FFEL loans by covering the cost of interest and suspending monthly payments for the period of March 13 through September 30, 2020, and suspending all involuntary collection, such as administrative wage garnishment or offsets from tax refunds, for this period.
The bipartisan bill will build on the important steps Congress took to provide relief in the CARES Act by ensuring that all federal student loan borrowers have access to this relief.