People would be allowed to put off paying federal student loans for longer under a Republican plan unveiled Monday that’s intended to alleviate economic suffering during the coronavirus pandemic.
The plan would allow people without an income to defer federal loans until they start earning money. The idea is a continuation of a program Congress passed in March that allowed roughly 36 million Americans to put off paying loans through September without charging them any interest.
“If you have no income, you have no monthly payment,” Sen. Lamar Alexander of Tennessee, who chairs the Health, Education, Labor, and Pensions Committee, said Monday from the floor as he unveiled his idea.
Republicans still have to negotiate the details of the legislation with Democrats. In May, House Democrats passed a $3 trillion stimulus that would forgive $10,000 in private and federal student loans and would extend the pause on federal student loans until September 2021.
Under the plan, people won’t have to pay more than 10% of their income on student loans once they do start earning money. To assess income, the plan would allow people to first deduct rent, mortgage, and food.
Borrowers would continue to pay $0 in loans if they earn less than 150% of the federal poverty level, which is equal to $19,140 for an individual.
Senate Republicans introduced the provision Monday as part of a larger, $1 trillion stimulus bill meant to help with the health and economic costs of the coronavirus pandemic. Without a change from Congress, auto-pay for student loans will resume after September 30.
Senate Majority Leader Mitch McConnell dubbed the stimulus package the Health, Economic Assistance, Liability Protections, and Schools Act, or “HEALS Act,” and had different committee chairmen take the floor to describe their provisions.