A bipartisan group of senators released a $908 billion bipartisan stimulus proposal that includes $4 billion for student loans. The proposal is only an outline, without any details.
[Update: On Friday, December 4, 2020, Secretary DeVos announced a one-month extension of the payment pause and interest waiver until January 31, 2021.]
It is possible that the $4 billion for student loans will cover the cost of a short-term extension of the student loan payment pause and interest relief. The amount is not sufficient for a large amount of student loan forgiveness.
President Trump’s 3-month extension to Dec. 31, 2020 cost a total of $14.644 billion, according to the U.S. Department of Education’s annual federal student aid report for fiscal year 2020. That’s around $160 million a day.
The $4 billion in student loan funding would be enough to cover the cost of a 25-day extension.
This would extend the payment pause and interest relief until a few days after January 20, 2021, when President-elect Joe Biden will be sworn in. This will give him enough time to issue an executive order for a longer extension of the payment pause and interest waiver. It may also buy enough time for the new Congress to pass legislation for an extension.
The CARES Act requires the U.S. Department of Education to provide borrowers with at least 6 notices indicating when their normal payment obligations will resume, beginning two months before the end of the payment pause and interest relief. Some borrowers have already received these notices. However, the U.S. Department of Education has asked Federal Student Loans Services to suspend required notices until December 8, 2020.