FOR IMMEDIATE RELEASE

March 22, 2020
CONTACT: Alexis Goldstein, alexis@ourfinancialsecurity.org

McConnell Phase 3 offers only minor tweaks
for some federal student loan borrowers in a time of crisis

Statement from Alexis Goldstein, Senior Policy Analyst, Americans for Financial Reform:

The McConnell Phase 3 coronavirus bill offers only minor tweaks for some federal student loan borrowers. Even with those tweaks, the bill fails to address the enormity of the pending economic crisis. The economic dam is about to burst and McConnell is offering student loan borrowers nothing but a deflated, leaky life vest. 

Section 3513 of the McConnell Phase 3 bill would suspend payments for six months for only some federal student loan borrowers: those with Direct loans and federally-held FFEL loans. This leaves out Perkins Loan borrowers and those with commercially-held FFEL loans. The bill also leaves out crucial policy responses that would help borrowers in this pandemic: it lacks a freeze on involuntary collections–such as tax refund and federal payment offsets–of borrowers in default. That means that some of the most cash-strapped student loan borrowers will see no relief by the McConnell phase 3 bill. This bill does not provide the short and long term economic stimulus that distressed student borrowers so desperately need. 

We continue to urge all lawmakers, and the Administration, to adopt the Senate Democrats’ plan to cancel student debt, immediately halt all involuntary collections for defaulted borrowers, and have the federal government pay down borrowers’ loans each month, which would free up needed money to go to food and other essentials instead. Twenty community, civil rights, consumer, and student advocacy organizations spoke out in support of the Senate Democrats’ plan on March 19. Anything less than the Senate Democrats’ plan completely underestimates the economic crisis student loan borrowers are facing, and the impact that failing to help them will have on the broader economy.