House Democrats cut student loan forgiveness measure to cost

  • House Democrats cut back on student debt relief, Politico made its first report on Thursday.
  • An amendment to their latest coronavirus bill would limit relief to people who were in dire financial straits before March 13, the day President Donald Trump declared a national emergency.
  • The initial provision to write off up to $ 10,000 in student loans was expected to cost $ 250 billion to $ 300 billion, a price higher than Democrats expected.
  • Visit the Business Insider homepage for more stories.

House Democrats on Thursday introduced an amendment to their $ 3 trillion coronavirus relief spending program that significantly reduced a provision for student debt due to its higher-than-expected cost.

Politics first reported on the amendment, which would limit the number of people eligible for student debt relief.

The latest spending program proposal, called the Heroes Act, would have initially canceled up to $ 10,000 for all federal and private student loan borrowers. But with the revision, debt cancellation would only be limited to people “in economic difficulty” on March 12, the day before President Donald Trump declared a national emergency due to the coronavirus pandemic.

Borrowers would be classified as being in dire financial straits if their monthly payment was zero on an income-based repayment plan, or if they were in default or in arrears.

The Congressional Budget Office estimated that the initial provision would have cost between $ 250 billion and $ 300 billion, a price much higher than expected by Democratic lawmakers, Politico reported.

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Democrats like Senator Elizabeth Warren had defended the $ 10,000 total loan forgiveness measure when the House proposal was unveiled on Tuesday. She wrote on Twitter that the plan would “bring relief to millions of debt-crushed student borrowers.”

Progressives are likely to criticize the new amendment.

Other elements of the spending program elicited negative reactions. Democrats are trying to temporarily suspend a cap on the amount of state and local taxes that can be deducted from federal income tax – this would primarily benefit high-income taxpayers in heavily taxed states and cost around $ 137 billion to put implemented, according to the Joint Committee. on taxation, a non-partisan branch of Congress.

The Cares Act, enacted in March, suspended interest, payments and collection on student loans until September 30, according to the Washington Post. The Democratic bill would extend those breaks until September 2021.

Republicans strongly opposed the House legislation and described it as an unrealistic Liberal wish list that would rack up more money on the federal debt. Senate Majority Leader Mitch McConnell on Thursday also slammed another provision that would send $ 1,200 stimulus checks to immigrants excluded from the first wave of direct payments.

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But calls have grown for lawmakers to adopt new relief measures to save a cratered economy and limit the financial suffering of Americans during the coronavirus pandemic.

McConnell said in an interview with Fox News Thursday that there was a “high probability” of another big spending program to deal with the pandemic.

More than 36 million people have filed for unemployment in the past two months and the unemployment rate has reached levels not seen since the Great Depression, underscoring the severity of the crisis.

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