5 Reasons Student Loan Relief May Have Been Left Out Of The Stimulus

If you’re looking for more student loan relief, you won’t find it in the new stimulus package.

Here’s what you need to know.

Student Loans

The new stimulus package includes $600 stimulus checks and $300 weekly unemployment insurance. One thing you won’t find, however, is more relief for your student loans. Why? Student Loans got dropped from the new stimulus package. The new stimulus package won’t have relief for student loan borrowers in the form of paused payments, no interest accrual, no student loan debt collection or any student loan forgiveness.

Now, student loan borrowers have been hit with three surprises this month. First, President Donald Trump extended student loan relief through January 31, 2021, a one month extension, through an executive order. Second, members of Congress as part of a bipartisan stimulus package proposed extending that same student loan relief through April 30, 2021. Third, despite the proposed three-month extension from January to April, Congress decided not to extend student loan relief for more than 40 million student loan borrowers. Here are 5 reasons why Congress may have left out student loan relief in the new stimulus package:

1. Student loan relief already has been extended twice

Student loan payments have been paused for most of 2020. After Congress passed the Cares Act — the $2.2 trillion stimulus package that included federal student loan relief — in March, President Donald Trump extended student loan relief through December 31, 2020 and then through January 31, 2021. Congress may believe that after six months under the Cares Act and two extensions through executive action, it’s time for the federal government to start collecting student loan interest again.


2. Congress has other economic priorities besides student loans

Congress may have a policy wish list that includes student loans, but when it comes to finalizing a stimulus package, members have to prioritize. This is especially true in today’s Congress when Republicans control the U.S. Senate. Fiscal conservatives have opposed further stimulus packages for fear of increasing the federal debt burden. Given these dynamics, Congress had to limit spending in this stimulus package to about $1 trillion, which is about half the size of the Cares Act. As such, Congress chose to prioritize second stimulus checks and unemployment insurance ahead of student loans.

3. Covid-19 vaccine may signal beginning of economic recovery

The approval of Covid-19 vaccines may have influenced Congress as well. Remember, Congress passed this original student loan relief in response to the Covid-19 pandemic the associated economic fallout. While vaccine distribution will occur between now and throughout 2021, Congress may view this as a positive step toward not only a public health benefit, but also the beginning of an economic recovery. Not everyone believes this, however, as economic recovery may take months, or longer, with some small businesses never returning. Therefore, others argue that more student loan relief now could serve as a financial bridge from now to an economic rebound.

4. Congress may extend student loan relief through legislation

It’s possible that Congress may extend student loan relief through standalone legislation. For example, Congress could extend student loan relief in a future bill that is unrelated to the stimulus package. However, that won’t happen in the current congressional term. It’s possible that Congress could extend student loan relief through legislation next year. The outcome of the two runoff elections for the U.S. Senate in Georgia will dictate whether Republicans maintain control of the U.S. Senate. If that happens, it’s less likely that Congress would extend student loan relief beyond January 31, 2021, when it expires.

5. Biden may extend student loan relief through executive action

If Congress does not pass legislation to extend student loan relief, then President-Elect Joe Biden could do so through executive action. Biden has indicated his support to extend student loan relief and his interest in using executive orders to drive public policy. However, Biden has also called on Congress to pass legislation on student loans. For example, Biden wants Congress to cancel student loans immediately. Sen. Elizabeth Warren (D-MA) wants Biden to cancel up to $50,000 of student loans through an executive order. To date, Biden has not supported cancelling student loans through an executive order. If Congress doesn’t pass legislation to extend student loan relief, there’s no guarantee that Biden would issue an executive order instead.

Pay Off Student Loans

Will you get more student loan relief? It’s possible, but there is no guarantee that either Congress or the president-elect will extend student loan relief—particularly since student loan relief was dropped from the stimulus package. Therefore, expect student loan relief to expire on January 31, 2021. That means you must have a game plan for student loan repayment—now. Here are 3 ways to pay off student loans, all of which have no fees:

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