Trump extends student loan relief provisions until end of year
On August 6, 2020, the Senate adjourned without adopting a stimulus plan. Senate Majority Leader Mitch McConnell (R-KY) was not involved in the talks, leaving Senate Minority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D -CA) work directly with Treasury Secretary Steve Mnuchin and White House Chief of Staff Mark Meadows. On Friday evening, the parties said they had not reached an agreement.
On Saturday, seemingly frustrated by Congress’ inaction, President Trump issued several executive orders and memoranda regarding payroll taxes, unemployment benefits, eviction proceedings and student loans.
(Really quick: an executive decree is an official, legally binding mandate issued by the president and must be printed in the federal register. An executive memorandum is basically the same thing, except that a memorandum does not have to be published in the federal register. Register.)
Since the orders were issued separately, this is how I approach them. You can read my opinion on social charges here. Next, student loans.
Regarding student loans, the Order says: In light of the national emergency declared on March 13, 2020, the Secretary of Education will take action in accordance with applicable law to make appropriate exemptions and modifications to the requirements and conditions for postponement of economic hardship described in Article 455 (f) (2) (D) of the Higher Education Act of 1965, as amended, 20 USC 1087e (f) (2) (D), and grant borrowers the deferrals necessary to pursue termination temporary payments and waiver of all interest on student loans held by the Department of Education until December 31, 2020.
You can read the entire command here.
Here is a little background. March 27, 2020, Congress passed the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act”. The final version was larger than the original Senate proposal but smaller than the subsequent proposal of the House. The provisions of the CARES Act included the suspension of student loan payments under federal family education loan programs and direct loans – interest-free – until September 30, 2020. In addition, collection efforts to these loans were supposed to stop during this period, including garnishments and tax refund offsets.
The presidential decree now directs the secretary of education to extend the student loan relief until the end of the year. Some confusion persists as to the scope of this relief, especially if the collector’s items will be extended, affecting tax refund offsets: we will have to wait for official directives from the Ministry of Education for more information. However, as before, the Executive Order applies to student loans held by the federal government and does not extend to federal student loan borrowers whose debt is held by private lenders or their colleges (representing approximately 9 million borrowers). ).
The suspension is voluntary, with the order specifying that “all persons who wish to continue making student loan payments will be permitted to do so, notwithstanding any postponements provided for under paragraph (a) of this section”.
The president promised to extend the relief further, in the remarks he made from Trump National Golf Club in Bedminster, New Jersey, August 8: Earlier this year, we cut student loan interest rates to zero percent and suspended student loan payments, and Congress extended that policy until September 30. Today I am extending this policy until the end of the year, and we will extend it further than that – most likely, just after December 1. So it looks like we’re going to expand that. They pay no interest. And again, it is not their fault that their colleges are closed and not their fault that they are unable to get what they bargained for.