Personal Finance

Stimulus package grants student loan borrowers a six-month reprieve

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An ambulance sits outside the US Capitol in Washington, DC, March 23, 2020, as the Senate continues negotiations on a relief package in response to the outbreak of COVID-19, known as the coronavirus.

Saul Loeb | AFP | Getty Images

The historic stimulus package Congress is expected to pass  to inject relief into an economy reeling from the coronavirus pandemic would grant the millions of Americans with federal student loans a break from their payments for at least six months. 

Based on language in the $2 trillion bill, which is still subject to change, federal student loan borrowers wouldn’t have to make a payment toward their debt until this October. Any interest that accrues during the suspension will be waived. 

The U.S. Department of Education would also put a halt to its collection practices during the health crisis, including seizing defaulted borrowers’ tax refunds and Social Security checks. That should bring relief to the roughly 9 million borrowers in default, or those who haven’t made a payment in a year or more.

There’s also a provision that says employers wouldn’t have to pay taxes on financial assistance they give to their employees for their student debt, though it only lasts until the end of the year. 

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