House Democrats unveil bill to cancel $30,000 in student debt per borrower amid coronavirus

House Representatives Ayanna Pressley (D-MA) and Ilhan Omar (D-MN) are pushing congressional negotiators to cancel student debt to help borrowers adversely affected by the coronavirus, or COVID-19.

The legislation, called the Student Debt Emergency Relief Act, proposes the cancellation of at least $30,000 in outstanding debt, tax-free, and proposes that the Education Department (ED) “immediately assume responsibility” for the monthly payments of borrowers who hold federal loans while suspending involuntary collections or garnishments of wages or federal income tax returns amid the crisis.

“During this unprecedented crisis, no one should have to choose between paying their student loan payment, putting food on the table or keeping themselves and their families safe and healthy,” Rep. Pressley said in a statement. “We must prioritize debt cancellation for the 45 million student loan borrowers who are struggling to pay off their debt during this difficult time.”

CAMBRIDGE, MA - FEBRUARY 17: Congresswoman Ayanna Pressley helps kick off canvasses for Senator Elizabeth Warren's presidential campaign in Cambridge, MA on Feb. 17, 2020. Pressley is a co-chair of Warren's campaign. (Photo by Erin Clark/The Boston Globe via Getty Images)

Democrats including Sens. Chuck Schumer (D-NY), Patty Murray (D-WA), Sherrod Brown (D-OH), and Elizabeth Warren (D-MA) previously proposed to cancel monthly payments for the duration of the national emergency and asked ED to pay at least $10,000 for all federal loan borrowers.  

RELATED:  Take a look at the first COVID-19 vaccine trials in Seattle: 

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A pharmacist gives Jennifer Haller, left, the first shot in the first-stage safety study clinical trial of a potential vaccine for COVID-19, the disease caused by the new coronavirus, Monday, March 16, 2020, at the Kaiser Permanente Washington Health Research Institute in Seattle. (AP Photo/Ted S. Warren)
Jennifer Haller poses for a photo in the living room of her home, Monday, March 16, 2020, in Seattle. Earlier in the day, Haller was the first person to receive a shot of a potential vaccine for COVID-19, the disease caused by the new coronavirus, at the start of the first-stage safety study clinical trial of the vaccine at the Kaiser Permanente Washington Health Research Institute in Seattle. (AP Photo/Ted S. Warren)
Pharmacist Michael Witte opens a package taken from a freezer that contains the potential vaccine for COVID-19, the disease caused by the new coronavirus, on the first day of a first-stage safety study clinical trial of the vaccine, Monday, March 16, 2020, at the Kaiser Permanente Washington Health Research Institute in Seattle. (AP Photo/Ted S. Warren)
Pharmacist Michael Witte, left, gives Rebecca Sirull, right, a shot in the first-stage safety study clinical trial of a potential vaccine for COVID-19, the disease caused by the new coronavirus, Monday, March 16, 2020, at the Kaiser Permanente Washington Health Research Institute in Seattle. Sirull is the third patient to receive the shot in the study. (AP Photo/Ted S. Warren)
Jennifer Haller is reflected in a mirror as she waits in an exam room before she was given a shot in the first-stage safety study clinical trial of a potential coronavirus vaccine, Monday, March 16, 2020, at the Kaiser Permanente Washington Health Research Institute in Seattle. Haller was the first person to receive the shot in the study. (AP Photo/Ted S. Warren)
Pharmacist Michael Witte, left, gives Neal Browning, right, a shot in the first-stage safety study clinical trial of a potential vaccine for COVID-19, the disease caused by the new coronavirus Monday, March 16, 2020, at the Kaiser Permanente Washington Health Research Institute in Seattle. Browning is the second patient to receive the shot in the study. (AP Photo/Ted S. Warren)
The first clinical trials to find a coronavirus vaccine have begun at a hospital in Seattle. A total of 45 men and women have volunteered to be injected. Unlike most vaccines, these COVID-19 vaccines have not been tested on mice, and will go directly to humans due to the urgent need for the drug. Lisa Guerrero spoke with Neal Browning, one of the men who is participating in the trial. He explained what he has to go through as part of this brave new experiment.
The first clinical trials to find a coronavirus vaccine have begun at a hospital in Seattle. A total of 45 men and women have volunteered to be injected. Unlike most vaccines, these COVID-19 vaccines have not been tested on mice, and will go directly to humans due to the urgent need for the drug. Lisa Guerrero spoke with Neal Browning, one of the men who is participating in the trial. He explained what he has to go through as part of this brave new experiment.
Pharmacist Michael Witte, left, gives Rebecca Sirull, right, a shot in the first-stage safety study clinical trial of a potential vaccine for the coronavirus, Monday, March 16, 2020, at the Kaiser Permanente Washington Health Research Institute in Seattle. Sirull is the third patient to receive the shot in the study. (AP Photo/Ted S. Warren)
Dr. Lisa Jackson, a senior investigator at the Kaiser Permanente Washington Health Research Institute, poses for a photo, Sunday, March 15, 2020, in Seattle. Jackson is leading the first-stage safety study clinical trial of a potential vaccine for COVID-19, the disease caused by the new coronavirus, which was given to the first volunteer in the study by injection, Monday, March 16 in Seattle. (AP Photo/Ted S. Warren)
Dr. Lisa Jackson, a senior investigator at the Kaiser Permanente Washington Health Research Institute, works in her office with an image of COVID-19 taped to her door, Sunday, March 15, 2020, in Seattle. Jackson is leading the first-stage safety study clinical trial of a potential vaccine for COVID-19, the disease caused by the new coronavirus, which was given to the first volunteer in the study by injection, Monday, March 16. (AP Photo/Ted S. Warren)
Rebecca Sirull, center, poses for a photo with her roommates, Anna Thomas, left, and Madeleine Busch, Monday, March 16, 2020, at the home they share in Seattle. Earlier in the day, Sirull was the third person to receive a shot of a potential vaccine for the COVID-19 coronavirus at the start of the first-stage safety study clinical trial of the vaccine at the Kaiser Permanente Washington Health Research Institute in Seattle. (AP Photo/Ted S. Warren)
Rebecca Sirull works on her laptop, Monday, March 16, 2020, at her home in Seattle. Earlier in the day, Sirull, an editorial coordinator for the Institute for Health Metrics and Evaluation, was the third person to receive a shot of a potential vaccine for the COVID-19 coronavirus at the start of the first-stage safety study clinical trial of the vaccine at the Kaiser Permanente Washington Health Research Institute in Seattle. (AP Photo/Ted S. Warren)
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“Democrats are trying to reduce student loans by $10,000. What the hell has that got to do with the virus?” Senator Lindsey Graham (R-SC) told Fox News on Sunday. “I’m sure everybody could use more money, but I don’t want to give money to people who have a paycheck. I want to give money to people who have lost their jobs.”

ED has officially offered two options for borrowers at present: The department has dropped interest rates on student loans automatically to 0% for at least the next 60 days, and those who are having real difficulty with their loans can request interest-free forbearance from their servicer for at least two months — and require no documentation to receive it.

Additionally, if borrowers are more than 31 days delinquent on their federal loans as of March 13, their payments are now suspended. According to ED, more than 3.2 million federal student loans are more than 31 days delinquent. 7.7 million are in default.

(Graphic: David Foster)

Student debt relief will ‘free up needed money’

Presently, there are more than 43 million Americans with $1.5 trillion in student loan debt. Federal loans comprise $1.3 trillion of that.

Consumer advocates were happy with the representatives’ proposal. 

“Rep. Pressley’s legislation would free up needed money to go to food and other essentials,” Alexis Goldstein, senior policy analyst at the Americans for Financial Reform, argued in a statement. “Instead of wages being garnished to cover student loans, borrowers would pass the savings right back into the economy by spending to meet day-to-day needs."

"We failed to address student debt in the last recession and we cannot afford to make this same mistake again,” Seth Frotman, former student loan ombudsman at the Consumer Financial Protection Bureau, added in a statement. “Student loan companies are shutting their doors and turning off their phones in response to the coronavirus pandemic, cutting off borrowers from access to critical protections ...

If borrowers have nowhere to turn to get help, lawmakers must immediately cancel student loan payments for all Americans with federal student loans.”

Aarthi is a writer for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami

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