Proposal: Postone student loan payments, pay off min. of $10K for federal student loan borrowers

(WAND) - U.S. Senators Dick Durbin (D-IL), Chuck Schumer (D-NY), Patty Murray (D-WA), Sherrod Brown (D-OH), and Elizabeth Warren (D-MA) have unveiled a new plan to postpone student loan payments during the coronavirus, COVID-19 outbreak.

The goal of the plan is to provide relief to federal student loan borrowers through the immediate cancellation of monthly student loan payments for the duration of the national emergency caused by the coronavirus.

The plan would also involve paying down a minimum of $10,000 for all federal student loan borrowers.

This proposal would require Congress authorize the U.S. Department of Education to make monthly student loan payments on behalf of borrowers, equivalent to the amount due for all federal student loan borrowers (including Direct Loans and Federal Family Education Loans for the duration of the national emergency declaration.

The proposal would guarantee a minimum of $10,000 loan payoffs for all federal student loan borrowers.

Borrowers would receive credit toward forgiveness and loan rehabilitation for payments made by the Department on their behalf. All payments made by the Department would be tax-free for borrowers.

The proposal would also suspend all involuntary debt collections and wage garnishments for borrowers who have defaulted while the Department is making payments on the borrowers' behalf. 

At the termination of the program, the Department would institute a 90 day "grace period" during which missed will not result in fees, penalties, or negative credit reporting.

The proposal is included as part of the Senate Democrats' Phase 3 proposal for at least $750 billion to fight against COVID-19 and the economic fallout.