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Here’s how the HEROES Act COVID-19 stimulus impacts student loan borrowers

  1. An extension of the administrative forbearance pausing payment collection and interest accrual on all federal student loans until September 2021. The CARES Act suspended all payments, interest and collection on federal student loans until September 30, 2020. The HEROES Act would extend this benefit until September 2021, giving borrowers an additional 12 months before payments are due again. The Act would also extend relief to include commercially-held FFEL and Perkins loans, previously excluded under the CARES Act. Including FFEL and Perkins loans would benefit approximately 20% of student loan borrowers.

  2. An extension of benefits to private student loan holders. Many CARES Act benefits would be extended to private loan holders until September 2021. The HEROES Act provides forbearance on private student loans until September 2021, and also forbids the capitalization of interest on private loans; pauses adverse credit reporting; and suspends involuntary collections.

  3. $10,000 in federal and private student loan forgiveness for borrowers who are “economically distressed.” The original proposal included a much broader $10,000 in forgiveness for all student loan borrowers. The revised language limits the $10K in loan forgiveness only to those borrowers who were “economically distressed” on March 12, the day before President Trump declared a coronavirus national emergency. Borrowers are considered "economically distressed" if their monthly payment under an income-based repayment plan was $0. Borrowers who are delinquent or in default— or in financial hardship deferment or forbearance— also qualify. The language was revised because the provision was considered too costly.

  4. An important revision to Public Service Loan Forgiveness (PSLF) qualifications. Currently, only direct federal-loans are eligible for PSLF, forcing borrowers with commercially-held FFEL or Perkins loans to consolidate into direct federal-loans. Consolidation, however, would erase any progress toward the 10 year repayment period, forcing borrowers to start over. The HEROES Act would make payments made prior to consolidation count toward the PSLF requirements. This has huge, beneficial implications for many forgiveness-seeking borrowers.

  5. Not related to student loan debt but important for struggling borrowers: a second round of $1,200 stimulus checks, or up to $6,000 per household. The HEROES Act authorizes cash payments of: $1,200 per individual earning up to $75,000 per year; up to $6,000 for families with dependents; and unemployment benefits of an additional $600 per week until January 2021. These payments could help borrowers get ahead on their debt. The HEROES Act now moves onto the Senate where some Senate Republicans are calling it “dead on arrival.” "What you've seen in the House Nancy is not something designed to deal with reality, but designed to deal with aspirations. This is not a time for aspirational legislation, this is a time for practical response to the coronavirus pandemic," said Senate Majority Leader Mitch McConnell We’ll continue monitoring progress on the Hill and share breaking updates as the next steps on additional stimulus relief is left to the Senate.


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