Erasing $10,000 in Student Loan Debt Sought by Senate Democrats

Senate Democrats are calling for at least $10,000 in debt cancellation for all borrowers of federally held student loans as part of coronavirus relief legislation.

The federal government would assume student debt payments for the duration of the national coronavirus emergency, including federal Direct Loans and Federal Family Education Loans held by the federal government, under the proposal unveiled Thursday.

Sarah Silbiger/Bloomberg

Senate Minority Leader Chuck Schumer (D-N.Y.)

The Democrats also are pressing for a halt to garnishment of wages, tax refunds, and Social Security benefits to collect student debt payments, and they are supporting a pause on interest capitalization. They also proposed codifying into law President Donald Trump‘s order to waive interest on federally held student debt announced last week.

The plan was introduced by Senate Minority Leader Chuck Schumer (N.Y.), Health, Education, Labor, and Pensions Committee ranking member Patty Murray (Wash.), and Sens. Elizabeth Warren (Mass.), and Sherrod Brown (Ohio).

Crushing Economic Uncertainty

“The coronavirus outbreak brought with it crushing economic uncertainty, and students and borrowers need targeted, quick relief from payment burdens,” Schumer said in a statement.

“Our new proposal would immediately cancel monthly payments, and give students and borrowers a minimum $10K student loan payoff. We must act now to help alleviate the growing financial strain on students and families across the country.”

The Democrats’ plan would count loan payments made by the federal government toward loan forgiveness plans as well as loan rehabilitation. And the debt relief would be tax free.

To contact the reporter on this story: Andrew Kreighbaum at akreighbaum@bgov.com

To contact the editors responsible for this story: Paul Hendrie at phendrie@bgov.com; Loren Duggan at lduggan@bgov.com