President Trump announced Thursday that his administration is taking executive action to address the expiring student loan facilities for millions of Americans.
“After leaving the Oval Office for Ohio, I notified my employees that they were still working on an executive order related to wage tax cuts, eviction protection, unemployment extensions and student loan repayment options,” the president said tweeted. No further details were given and it was not immediately clear what the president meant by “student loan repayment options”.
The president’s statement comes because Congress has been unable to reach a compromise on extending the facility for student loans and other expiring economic aid programs. Congress suspended all payments, interest, and recoveries on government-held federal student loans for six months under the CARES bill passed in April. This student loan relief expires at the end of September.
House Democrats passed bill extending this relief for an additional 12 months, but Senate Republicans have opposed the move. Instead, Senate GOP leaders have just unveiled a new stimulus package that would not include an additional extension of the existing student loan relief but would create a new repayment plan that reflects income-oriented repayment options already available to borrowers.
With Congress unable to reach a compromise so far, the Trump administration could act unilaterally and issue a new executive order extending the existing student loan suspension and interest freeze. The Trump administration had previously used this power in March to temporarily suspend payments and interest on student loans at the start of the pandemic. With the provisions of the CARES Act expiring on September 30, millions of student loan borrowers will be billed just days before the November elections. This is a potentially powerful incentive for lawmakers – and the president – to act.
The Trump administration already has a blueprint for such an extension. The HEROES Act, which the House of Representatives passed in May, extends existing student loan protection for an additional 12 months and would extend that protection to FFEL commercial program loans and Perkins loans. Additionally, a Republican Congressman introduced a law extending student loan facilitation through December 31, 2020. While this three month extension is much shorter than the 12 months proposed by House Democrats, it would get the administration through the elections and effectively remove all further discharge for the next Congress.
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