The White House memorandum said an expansion of the student lending room “is appropriate … until the time the economy stabilizes, schools reopen, and the crisis is resolved by the COVID-19 pandemic.”
The executive action offers less extensive relief for student loans than some Democrats and Republicans in Congress have sought. The policy will continue with the exception of about 9 million federal student loans whose debt is held by private lenders as their colleges.
Democrats in Congress have proposed expanding student loan relief to cover more lenders and extend protections for at least a year.
The House of Representatives’ incentive plan would allow the CARES Act to grant student loans. But there have been increasing calls from Republicans to offer an expansion of these benefits.
While negotiations on the next round of coronavirus relief will remain stalled at Capitol Hill, Trump said on Saturday that he would take immediate action to provide lenders with relief because administration officials “had” the deal with Democrats. making ‘hinder.
Trump’s mandate directs Education Secretary Betsy DeVos to take the necessary steps to continue the temporary break on payments and the deviation of all interest on student loans held by the Department of Education until Dec. 31.
Trump in March unilaterally withdrew interest rates on federally held student loans, and the Department of Education said lenders could stop payments once they first contact their lenders. The CARES law then codified into law this spring and took it a step further, automatically stopping monthly payments.
The president’s executive action is likely to remain complicated for the Department of Education and the companies hired to implement the policy in the coming weeks.
The CARES Act, for example, requires the department to send notices to lenders about the September 30 issue. The department had prepared to send those warnings at the beginning of new week, and it is unclear whether the administration has the authority to stop them.
The abuse of student loan relief provided through Congress and executive action could also create challenges in carrying out the freeze on payments and interest rates.
For example, the CARES Act required the Department of Education to treat suspended monthly payments as payments on time for the purposes of forgiveness of federal loans, including under the Public Service Forgiveness Program. It is unclear whether the Department of Education will continue to benefit from this.
