Coronavirus

Second stimulus check: How could they affect student loans?

There are several reports that a second stimulus check could be coming as early as August but that could affect those who have student loans.

Second stimulus check: How could they affect student loans?
JALAL MORCHIDI EFE

Congress is currently on vacation but will resume negotiations of a second relief package on 20 July and a new bill can be signed in early August to send millions of Americans a second stimulus check to help them through this crisis. While this may sound like good news for many it is not for those who are hoping for a student loan forgiveness.

Congress will probably decide on the details of the next stimulus package, including the possibility of second stimulus checks, before 7 August. With the CARES Act student loans payments were paused with no interest until 30 September and it didn’t include any forgiveness.

Democrats have requested cancelling student loan debts of $10,000 for each borrower. For example, if 45 million student loan borrowers each received $10,000 of student loan forgiveness, the total cost would be $450 billion.

Some in Congress have proposed extending the student loan payment suspension for another year. Many are concerned with the uncertainty of what the economy will look like in the coming year, especially as some states are seeing large spikes in the number of cases of Covid-19.

Extending the suspension would provide continued relief for those who will need it and free up cash for others to put into the economy. The HEROES Act, which was passed by the House of Representatives, would extend the student loan payment and interest suspension for another year, until 30 September 2021.

The HEROES Act was called 'dead on arrival' by the Republican-controlled Senate and until Congress doesn't approved a second relief package everyone will know if student loan payments will be extended for a year or it will end in 30 September.