“All borrowers with federally held student loans will have their payments automatically suspended until 2021 without penalty,” DeVos said in a statement, according to CNBC. “In addition, the interest rate on all federally held student loans will be set to 0% through the end of the calendar year.”
According to the Department of Education, more than 42 million federal student borrowers collectively owe over $1.5 trillion in federal student debt.
The memorandum also extended protections for student borrowers with defaulted federal loans from having their wages garnished during this time. However, the Trump Administration is facing several class action lawsuits for continuing to take a portion of wages during the coronavirus pandemic.
Full-time workers who qualify for the Public Service Loan Forgiveness Program will have the last three months of the year count toward the 120 payments they are required to make before their debt is forgiven.
Private loan borrowers will not receive total relief under the new rule because Trump’s student borrower relief policy is less expansive than what lawmakers on both sides wanted.
The issue of student loans is yet another topic in which partisan lines have been drawn, leaving Americans in the middle.
In May, the House of Representatives passed the HEROES Act, which would have paused federal student loan payments through September 2021 and would cancel up to $10,000 in student loan payments for some federal and private loan holders.
In July, Senate Republicans introduced the HEALS Act, which does not include significant relief for borrowers. Instead, the act eliminates many loan repayment options and allows only those with no income to defer payments.
The Trump Administration said the president got the authority for his memorandum through the Higher Education Act. However, legal experts say this could create a precedence for widespread loan forgiveness in the future.
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