President Trump and his administration confirmed Friday that he planned to issue an executive order to remedy the expiration of economic aid under the CARES Act, including unemployment insurance and student loan relief for millions of Americans. He provided few details on details or timing, but said student loan payments and interest would continue to be deferred.
There are many unanswered questions about extended student loan relief, such as whether the collection of overdue amounts student loans would continue to be suspended, if relief would be extended to other types of student loans, or if the months of suspended payments would continue to qualify borrowers for student loan exemption programs such as the Bank Loan Waiver. public service. The president also did not provide meaningful details on extended unemployment benefits.
The president’s statement comes as Congress has failed to come to a compromise on extending student loan relief and other expiring economic aid programs. Congress had suspended all payments, interest and collections on federal student loans held by the government for six months under the CARES Act, which was enacted in April. This student loan relief expires at the end of September.
House Democrats passed a law extending this relief for one 12 additional months, but Senate Republicans opposed the measure. Instead, Senate GOP leaders just unveiled a new stimulus plan which does not include any further extensions to existing student loan relief, but would create a new repayment plan that reflects the income-based repayment options that are already available to borrowers.
With Congress unable to reach a compromise so far, the Trump administration could act unilaterally and issue a new executive order extending the suspension of student loan payments and the interest freeze. The Trump administration previously exercised that authority in March to temporarily suspend payments and interest on student loans at the start of the pandemic. With the provisions of the CARES Act expiring on September 30, millions of student loan borrowers will be billed just days before the November election. It’s a potentially powerful incentive for lawmakers – and the President – to act.
The Trump administration already has a plan for such an extension. The HEROES Act, which the House passed in May, extends existing student loan protections for an additional 12 months and would expand those protections to include FFEL program loans and Perkins loans. In addition, a Republican congressman introduced a law extend the student loan relief until December 31, 2020. While this three-month extension is much shorter than the 12 months suggested by House Democrats, it would allow the administration to pass the election and bring any further relief to the next Congress.