Rahm Emanuel, former mayor of Chicago and the White House Chief of Staff to President Barack Obama, has famously stated, “You never let a serious crisis go to waste.” He has described a “serious crisis” as an “an opportunity to do things you think you could not do before.” It seems that Speak of the House Nancy Pelosi and her Democrat majority in the House have heeded Emanuel’s advice by passing the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act on Friday. If passed by the Senate, the HEROES Act can significantly appease the burden of student loans until September 2021 as well as provide financial relief in the form of another round of stimulus checks.
The Senate and the Executive branch have been vocal about their opposition to the HEROES Act. According to Senate Majority Leader Mitch McConnell, he believes the Act is “not designed to deal with reality, but designed to deal with aspirations.” Similarly, a statement of administration policy issued by the executive office of the president stated that if the HEROES Act was presented to the president, “his advisors would recommend that he veto the bill.”
However, in the event that the HEROES Act does pass in the Senate, it would offer $10,000 in student loan forgiveness to federal, Perkins, and commercially-held FFEl-program loan holders. Only those who are considered “economically distressed borrowers” would qualify for the $10,000 forgiveness, mandating that borrowers currently:
- Pay $0 a month on student loans OR
- Be in default, serious delinquency, forbearance or deferment.
The HEROES act also addresses previously faulty PSLF timeline limitations, and would allow payments made towards the Public Service Loan Forgiveness (PSLF) program to qualify even if borrowers choose to consolidate their commercially-held FFEL-program federal student loans and Perkins loans, which, unless consolidated via the federal Direct consolidation program, do not qualify for forgiveness. Without the HEROES Act, any payments made prior to consolidation does not count in the 10 years of repayment.
The HEROES Act would also extend the CARES Act loan payment suspensions by another 12 months. This means that students would now have until September of 2021 to begin paying back their loans. This allows those experiencing financial hardship more time to get back on their feet before having to worry about paying off student loans.
The current situation with COVID-19 has significantly impacted the livelihoods of millions of Americans, and is projected to continue impacting college students as they enter the job market. Colleges and universities around the country have all responded differently, but providing relief by pausing student loan repayment until 2021 and receiving another round of stimulus checks can significantly impact students’ future prospects in the years to come. Whether or not the HEROES Act will pass in the Senate, or if any other economic aid package will be addressed by the Senate, will come after the Memorial Day recess on May 25. Until then, the economic fate of college students around the country will be put on hold.