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Second stimulus tests may be good news for many, but not necessarily if you have student loans.
This is what you need to know.
Second stimulus check
If President Donald Trump has his way, a second stimulus check can be included in the next stimulus. While this is good news for many Americans struggling financially, it may not be good news if you have student loans and are waiting for student loan forgiveness. Why? Here’s the thing: if you include the second stimulus checks in the next stimulus, the chances of any student loan forgiveness going from low to nearly zero. This is why.
Congress will decide the next stimulus package, including the possibility of a second stimulus check, likely before August 7. What will a second stimulus check be like? There have been many questions about the second stimulus checks, as well as many proposals for a second round of stimulus checks, but nothing has been finalized. The most likely scenario, if approved, is a once second stimulus check. Through the Hero Act stimulus package, House Democrats proposed a one-time stimulus check of up to $ 1,200 for each eligible individual (based on adjusted gross income) and up to $ 1,200 for each dependent (up to maximum of three dependents). Since the Heroes Act and the Care Act (the $ 2.2 billion financial stimulus package) included a one-time stimulus check of $ 1,200, it is reasonable to assume that if there is a second stimulus check, it would be in that general range of Dollars. If a second stimulus control is approved, second stimulus controls could be shipped starting in August. What do the second stimulus controls mean for your student loans?
Second stimulus check and forgiveness of student loans
Student loan borrowers have been wondering if there will be any forgiveness of student loans in the next stimulus. Why? The Care Act included several benefits for student loan borrowers, including a pause for federal student loan payments and no accrual of interest until September 30. However, the Care Law did not include any forgiveness of student loans. Second stimulus checks will make student loan forgiveness less likely primarily due to the total cost of the next stimulus. Whether you support or oppose student loan forgiveness, the cost of student loan forgiveness in the next stimulus will be a major factor for Congress. Senate Republicans, in particular, are aware of the trillions of dollars already spent on financial stimuli and are less likely to prioritize student loan forgiveness compared to other stimuli that they believe will better stimulate the economy and create jobs.
- First stimulus checks: It can cost the federal government approximately $ 300 billion.
- Second stimulus controls: With the same $ 1,200 one-time check and the same income thresholds, the second stimulus check can cost the same. However, Trump has indicated that he wants a second, larger stimulus check. Therefore, it is possible that the next stimulus may include a second stimulus check greater than $ 1,200.
- Other economic priorities: McConnell has focused on other economic priorities, such as a payroll tax cut, a return to work bonus, and other financial incentives for companies. For Senate Republicans and the President, these economic priorities are more essential than student loan forgiveness right now.
- High price: McConnell said the next stimulus would cost $ 1 trillion. A second round of stimulus controls will likely push total spending to more than $ 2 trillion.
- Student Loan Forgiveness: Democrats have said to pay off the student loan debt of $ 10,000 for each borrower. For example, if 45 million student loan borrowers received $ 10,000 of student loan forgiveness, the total cost would be $ 450 billion. (That number could be lower if only federal student loans are canceled, and even lower if only certain borrowers are granted student loan forgiveness.)
Next steps
Will there be a second stimulus check? It looks more possible. Will there be student loan forgiveness in the next stimulus? Don’t expect student loan forgiveness. For the next stimulus, Congress will have to weigh the total cost, the state of the economy, and how and where to look for support in the context of Covid-19. If second stimulus checks are prioritized alongside other economic stimuli supported by both Senate Republicans and the President, then student loan forgiveness is probably not enough.
Related Resources
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Trump wants a second “bigger” stimulus check
No, Trump did not say there would be a second stimulus check.
Don’t wait for a second stimulus test
Trump wants at least $ 2 billion for the next stimulus
Kamala Harris and Andrew Yang renew call for $ 2,000 a month stimulus check
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