Officially known as the Health Care and Education Reconciliation Act, this act helps students repay their student loan debt by basing the amount that they have to pay on their income, as well as where they live and the size of their family, allowing those of lower class upbringing to have the opportunity of affordable college education. The monthly payment for the PAYE plan cannot be more than 10% of the borrower's income. Also, traditionally loans would go through a third party middle man, increasing the charge to the person. However, under the act, the middle man was removed, greatly cutting costs. If you have not fully paid off the loan by 20 years, every single dollar is waived. Additionally, if you are a minority, the program would support you with additional funding and grant you easier access to colleges.
Roger Hull, former president of Beloit College and Union College, discussed that student loan forgiveness and free college is not the right answer to manage the nation's $1.6 trillion of student loan debt. However, he supports a different type of student loan forgiveness as he proposes that student loan forgiveness should be tied to service. This loan-for-service program might forgive student loans for frontline healthcare workers and other heroes who work full-time or part-time to service. Although this plan contrasts with Sen. Bernie Sanders and Sen. Elizabeth Warren's plan for widespread student loan forgiveness and tuition-free college, Hull views the national-loan-for-service program as a win-win for students and graduates who perform national service as it would entail tuition-free college, fewer private colleges would suffer financially, and less student loan debt as well as stronger communities. As a result, this plan positively impacts student loans and debt as it offers service and work in return for free college.
After thousands of students began to petition the federal government to forgive their federal student loans following the collapse of one the largest for-profit college chains, Corinthian Colleges, students argued they should not be held liable for student loans issued by companies that took advantaged of people and misguided them. As a result, the students requested student loan relief and forgiveness and thus, the Department of Education came to address the Defense to Repayment, a program that allowed borrowers to request their federal student loans to be forgiven if their school engaged in material misrepresentations which allows students to receive aid and relief.
The ongoing global pandemic, COVID-19, has presented a significant financial struggle, leaving many students unable to pay off their student debt. The CARES Act intends to provide relief for students who owe federal student loans.
Student loan payments are suspended through September 30, 2020 for Direct Loans and Federal Family Education Loans (FFEL)
During this forbearance period, no interest will be added to the loan payment
During this time, the absence of payments towards loans qualified for forbearance will not negatively affect credit history
The student's employer is able to pay up to $5,250 toward student loan debt through the end of 2020, which will not be considered part of the student's taxable income.
Suspended student loan payments will still count toward the required payments for Public Service Loan Forgiveness (PSLF)
The CARES Act directs student loan relief to those who owe federal student loans such as:
Direct Loans (including Stafford, Grad PLUS, Parent PLUS and Consolidation loans)
FFEL Loans
Perkins Loans held by the U.S. Department of Education.
In the midst of the 2020 Presidential election, Joe Biden has selected Senator Kamala Harris as his running mate. As student loans continue to be a major national issue, it has propelled significantly in the 2020 election and has rapidly gained momentum and awareness in the recent months.
As the former California's Attorney General, she sued one of the largest for-profit college chains in the nation, Corinthian Colleges, and played a key role in collapse of the company, which allegedly saddled thousands of student loan borrowers with mountains of debt and limited career prospects. Harris was a leader in the struggle to stop predatory for-profit schools from defrauding students.
Harris has been a strong proponent of Defense to Repayment, a program established to provide relief to student loan borrowers defrauded by their schools. She has continued to voice support for the program and voted in favor of reversing new rules put in place by Education Secretary Betsy DeVos that imposed new barriers for borrowers seeking relief.
Harris has supported initiatives for free college. For instance, she backed the College For All Act in 2017 (a bill sponsored by Sen. Bernie Sanders), and she co-sponsored the Debt-Free College Act of 2018, which would have created a federal-state partnership to incentivize states to reduce or eliminate tuition at public colleges and universities. Additionally, Harris is a co-sponsor of the What You Can Do For Your Country Act, a bill that would significantly improve the Public Service Loan Forgiveness (PSLF) program. Moreover, she has also called for the Senate to pass the HEROES Act, the $3.4 trillion stimulus bill passed by House Democrats in April that would provide $10,000 in federal and private student loan forgiveness to economically distressed borrowers, and would extend the existing freeze on student loan payments and interest for a full 12 months.
Harris has also developed her own student loan forgiveness plan as she proposed cancelling up to $20,000 in student loans for borrowers who established successful new businesses in underserved communities. However, the plan was criticized by some as being narrowly focused and unwieldy. She also voiced support for $10,000 in across-the-board student loan forgiveness for borrowers as a form of economic stimulus response to the COVID-19 pandemic.