If passed, the Senate bill would automatically suspend those payments without interest for the next six months. It would also suspend the collection on defaulted debts — including wage and tax refund garnishment.
The Senate bill offers an additional benefit for those borrowers seeking loan forgiveness through the Public Service Loan Forgiveness program, for example. Those borrowers should still see their debt wiped away after 10 years, without being penalized for not making payments over the next six months.
The Center for Responsible Lending is concerned that some federal student loan borrowers will be left out under the draft bill. It applies to those with federally held loans and excludes private loans, as well as some federally guaranteed loans — likely including some disbursed prior to 2008.
Under the bill, borrowers would still be allowed to make payments during the six months.