Republicans propose new incentive bill without relief for student loans, reduced unemployment benefits

This article has been updated.

Congress is in recession after reaching a compromise on a new incentive package. But Republicans are trying to cobble together a narrow incentive proposal for when lawmakers return to Washington in September.

The draft proposal includes reduced unemployment benefits of $ 300 per week (a reduction from the $ 600 per week in the CARES Act), and no direct incentive payments to Americans. The proposal also does not include relief for student loans.

Earlier in August, President Trump signed an executive memorandum proposing to extend temporary relief on student loans for millions of Americans until December 31, 2020. A suspension of student loan payments, interest and collections provided by the CARES Act was instituted on September 30.

But important questions about the president’s memorandum remain, including whether lenders default on their student loans due to the suspension, whether the extension is automatic or universal, and whether lenders are on track for loan forgiveness programs such as forgiveness of public service can continue to make progress in the extended period for retention. The US Department of Education has not issued an updated guidance for lenders.

Consumer advocacy groups have criticized the president for not doing enough. “The president’s action on student debt falls short of what Americans need to stay afloat through this unusual health and economic crisis,” the Student Borrower Protection Center said in a statement.

House Democrats passed the HEROES law in May, which would extend the payment of student loans and interest suspension of the CARES law for an additional 12 months. The HEROES Act would also extend the protections of the CARES Act with commercially issued FFEL program federal student loans, such as federal Perkins loans, and would provide $ 10,000 in forgiveness of federal and private student loans to lenders experiencing economic hardship. The HEROES Act would also continue to provide improved unemployment benefits of $ 600 per week, and would provide additional relief to states, cities and hospitals. House Democrats recently passed a separate bill that would also suspend payments of private student loans for 12 months.

Republicans have so far rejected these proposals. House Democrats agreed to compromise on a new incentive bill earlier in August, reducing the price tag of the HEROES law from more than $ 3 trillion to about $ 2 trillion, and hoping Republicans could half it (Republicans previously had a new incentive package offered that costs about $ 1 trillion). But lawmakers could not reach an agreement.

Even if the latest narrow stimulus bill could gather enough votes to pass the Republican-controlled Senate, the bill would have to pass the Democratic-controlled House. Democratic congressmen have so far opposed a narrow stimulus bill.

Correction: An earlier version of this article referred to unemployment benefits on a monthly basis, instead of per week.

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