Student Loan Forgiveness Unlikely In Next Stimulus

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If you have student loans, don’t expect student loan forgiveness in the next stimulus.

Here’s what you need to know.

Student Loans

There’s much anticipation about the next stimulus, which Congress likely will decide by August 7. If that happens, second stimulus checks could be sent as early as August. The next stimulus could include a host of new financial stimuli:

What about student loan forgiveness? If you’re hoping for student loan forgiveness now, student loan forgiveness likely won’t be included in the next stimulus. Here are several reasons why:

1. The Senate may prioritize second stimulus checks

President Donald Trump and Senate Republicans are focused on stimulating the economy and creating new jobs. There have been many questions about second stimulus checks as well many proposals for a second round of stimulus checks to help stimulate the economy. Trump has now made it clear: he wants second stimulus checks included in the next stimulus. Trump says he wants the second stimulus check larger than proposals from Democrats. To date, Senate Republicans, led by Senate Majority Leader Mitch McConnell (R-KY), have opposed second stimulus checks. If second stimulus checks are included, this will make it less likely that student loan forgiveness will be included. There are several reasons why, but principally cost plays an important role. Many Democrats have said to cancel student loan debt of $10,000 for each borrower. For example, the total cost could be $450 billion, if, for example, 45 million student loan borrowers each received $10,000 of student loan forgiveness. Even if Republicans scale back that proposal, McConnell wants the next stimulus to cost $1 trillion. Second stimulus checks, student loan forgiveness and other high priority economic stimuli — if all included — would increase total stimulus spending to $2 - $3 trillion.

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2. The Heroes Act barely passed

The Heroes Act — the ambitious $3 trillion stimulus proposal passed by House Democrats — is what House Democrats hope will become the basis for the next stimulus. However, that won’t happen. Republicans have called Heroes Act is “dead on arrival,” which means it has no chance, in its current form, of becoming law. The Heroes Act, which includes several financial benefits which can impact your financial life, is often cited as including student loan forgiveness. While that’s true, the House of Representatives barely passed the Heroes Act, 208-199, a margin of only 9 votes. Remember, Democrats control the House of Representatives. However, 14 Democrats voted against the Heroes Act. Generally, the House supports student loan forgiveness more than the Senate.

3. Student loan forgiveness may not be for everyone

If student loan forgiveness is included in the stimulus, it’s likely that it will only be available for a limited number of people. Why? House Democrats initially proposed $10,000 of student loan forgiveness for your federal student loans and $10,000 of private student loan forgiveness. This provision was already less than an earlier House Democrats proposal that called for $30,000 of student loan forgiveness. However, that’s not what the final bill said. In the final Heroes Act that passed the House, House Democrats amended the Heroes Act and weakened the final provision for student loan forgiveness. So, who would qualify for student loan forgiveness? The Heroes Act would only provide student loan forgiveness to borrowers who are facing significant financial struggles. This means that if this provision becomes law, millions of student loan borrowers likely would not receive student loan forgiveness.

4. Senate Republicans don’t support student loan forgiveness

Since Republicans control the Senate and White House, Senate Republicans and Trump will have the largest impact on what get’s included in the stimulus. While Democrats will also have input, it’s unclear whether Senate Democrats would list student loan forgiveness as their top priority for the next stimulus. For example, they likely would support second stimulus checks over student loan forgiveness. Yes, several Democratic senators who ran for president, including Sens. Kamala Harris (D-CA), Bernie Sanders (I-VT), Cory Booker (D-NJ) and Elizabeth Warren (D-MA), support student loan forgiveness. (Former Vice President Joe Biden also now supports student loan forgiveness). Yes, Democrats will have input on more than one issue. However, unless Senate Republicans are willing to include student loan forgiveness, don’t expect it in the stimulus.

Will your student loans get cancelled?

Many student loan borrowers ask: “How can I get student loan forgiveness?” or “Will your student loans get cancelled?” Anything can happen in the next stimulus bill, including that student loan forgiveness ultimately is included. However, it’s low likelihood that student loan forgiveness will make the final cut. It doesn’t mean student loan forgiveness never will happen. Rather, it means student loan forgiveness won’t be included in the next stimulus.

How to pay off student loans faster

If student loan forgiveness is not included in the next stimulus, make sure you have a game plan. What’s the best way to pay off student loans faster? Start with these four options, all of which have no fees: