HEROES Act promises 5 ways to help your student loans

Problems with student loans? A new $3 trillion stimulus bill promises relief student loans.

Here’s what you need to know.

economic bill

House Democrats proposed a new $3 trillion economic bill to provide, among other things, more financial support in the wake of COVID-19. This new stimulus bill — the HEROES Act — includes several provisions that promise to fix your student loans. Here are 5 ways this new stimulus bill would fix your student loans. Let’s dive in.

Solution #1: Easing Student Loan Relief for More Borrowers

Status quo: The CARES Act — that’s the $2 trillion stimulus bill that included several temporary benefits for your student loans — only applies to state student loans that are owned by the federal government. For example federal Student loan payment has been postponedfederal Student loan interest has been set to 0%and federal Student loan collection has been suspended through September 30, 2020. Unfortunately, this means that if you have Federal Family Education Loans (FFEL) or Perkins Loans, these student loans do not qualify as they are not owned by the US Department of Education.

Proposal: The HEROES Act would Extension of student loan facilities to FFELPerkins Loans and Loans for Health and Human Services.


Solution #2: More time for student loan relief

Status quo: The CARES Act provides a six-month student loan exemption. After 30.09. Student loan repayments will resume at your regular interest rate. Debt collection for student loans will also resume, meaning the federal government can garnish your wages, tax refund, or Social Security benefits to pay off overdue federal student loans.

Proposal: The HEROES Act would extend this temporary relief by one year – until September 30, 2021 – plus an additional 30-day grace period during which no fees are charged if you make a late payment and you don’t receive negative grades on your credit would test report. If you are enrolled in an income-based repayment plan, the HEROES Act does not require you to recertify your income until after December 30, 2021.


Fix #3: 0% interest

Status quo: You will not have to make any payments on your federal loan until 9/30/2020 and there will be no interest from 3/13/2020 to 9/30/2020. That means the interest rate on your federal loan is 0%.

Proposal: The HEROES Act would extend this relief for student loans by June 30 [HEROES] Act.” For FFEL and Perkins loans, the Department of Education (and Department of Health and Human Services, if applicable) would pay interest on the unpaid principal each month, and borrowers would be “made sane” as if those student loans were part of CARES Act. The HEROES Act also ensures that no accrued interest on federal student loans before March 13th would not be activated.


Solution #4: Student Loan Forgiveness

Status quo: Two popular ways to get student loan forgiveness on your state student loans are income-based repayment plans and government loan forgiveness. Income-based repayment plans require 20 to 25 years of monthly payments. Government loan forgiveness requires 120 monthly payments as well as several other requirements to receive federal student loan forgiveness.

Proposal: The HEROES Act proposes student loan forgiveness for federal student loans and private student loans. The HEROES Act would give you $10,000 student loan forgiveness. That’s similar at the suggestion of Senate Democrats who would provide $10,000 student loans waived, but much smaller than a House Democrat proposal that called for $30,000 student loan forgiveness. Under the HEROES Act, all Department of Education borrowers would receive upfront student loan debt forgiveness. If you have less than $10,000 in government student loans, you will receive a student loan waiver up to (but no more than) your student loan balance. If you have federal student loans with different interest rates, the student loan waiver would apply to your highest interest rate first. If you have the same interest rates, student loan forgiveness would apply to your highest balance first. You would owe no income taxes on the amount of student loan waiver you receive. The HEROES Act also proposes that the U.S. Treasury pay $10,000 in private student loan forgiveness up to (but no more than) your private student loan balance.


Solution #5: Government Loan Forgiveness

Status quo: If you are consolidating FFEL loans into a direct consolidation loan, this is possible qualify for government loan forgiveness, but any payments made prior to student loan consolidation do not count toward the required 120 monthly payments. Separately, You must be employed by a government or non-profit employer at the time you receive student loan forgiveness.

Proposal: The HEROES Act proposes several changes to the government loan forgiveness program. The biggest change could Help FFEL borrowers qualify for government loan forgiveness. Until September 30, 2021, or when the economy begins to show signs of recovery (as defined by the Act, and whichever is longer), the HEROES Act would allow an FFEL Borrower to convert FFEL Loans into a Direct Consolidation Loan Consolidate and make pre-consolidation payments toward government loan forgiveness or income-based repayment plans. Regardless, the HEROES Act would a naturopath Who work full-time for a government or non-profit employer but cannot be employed directly by their employer under state law to qualify for government loan forgiveness. The HEROES Act would also remove the provision requiring employment at the time of student loan forgiveness.


Will the HEROES Act become law?

Currently, the HEROES Act is a legislative proposal, not law. It is unlikely that the HEROES Act will become law in its entirety. That doesn’t mean the HEROES Act doesn’t contain essential provisions that could benefit millions of people in need. At more than 1,800 pages, however, the $3 trillion stimulus package is an ambitious spending program. While Congress could adopt elements of the HEROES Act, the bill is unlikely to pass the Senate or be signed by the President. Stay tuned.


studnt loan repayment options

Regardless of whether the HEROES Act becomes law, you have yet to execute your student loan repayment plan. Start with these four options, all of which have no fees:


Resources: student loans

Student loan forgiveness and a $1,200 stimulus check are included in the new stimulus bill

Navient settles the dispute – what it means for your student loans

Should You Pay Off Student Loans During COVID-19?

How COVID-19 Affects Student Loan Forgiveness

Here’s everything that happened to your student loans in 2 weeks

The 15 most popular questions about student loans and coronavirus

How to pay off your student loan during the coronavirus

Student loan forgiveness benefits these members of Congress

How to get financial relief for your student loan during the coronavirus

5 ways to lower your student loan payments during the coronavirus

Student loan refinance rates are incredibly affordable

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