President Donald Trump on Friday afternoon announced that he is waiving interest payments on all federal student loans, in an effort to ease the economic stress on Americans caused by the coronavirus outbreak.
“To help our students and our families, I’ve waived interest on all student loans held by federal government agencies,” President Trump said during a news conference in the Rose Garden, adding that the decision will be “until further notice.”
The president’s announcement comes hours after U.S. Secretary of Treasury Steven Mnuchin said that a temporary suspension of interest payments on federal student loans was one of many proposals that might become a part of the relief package in the wake of the coronavirus threat.
“I can tell you that’s on our list of 50 different items we’re bringing to the president for a decision,” said Mnuchin, when asked by CNBC’s Jim Cramer whether the Trump administration is considering pausing student loan interest payments for three months. “That will be something we’re looking at.”
“We have lots of authorities,” Mnuchin added. “Things where we don’t have authorities, we’re going to work with both the House and Senate on a bipartisan basis. I can assure you the president is all about action, action, action.”
Earlier this week, Senate Democrats proposed payment forbearance for six months on federally insured or guaranteed mortgages, and federal student loans. Borrowers would be given the flexibility to make loan payments without incurring additional fees, compounding interest or negative incidents reflected in their credit scores.
Student loan forgiveness has been frequently brought up along the 2020 presidential campaign trail. Former Vice President Joe Biden has an income-based plan to Lower or eliminate monthly student loan payments, which would cost $750 billion in 10 years. Another Democratic primary contender, Sen. Bernie Sanders (I-Vt.), is in favor of a more radical plan to wipe out all $1.6 trillion of student loan debt, including both federal and private student loans.
By the end of 2019, there are 42 million borrowers who collectively owe more than $1.5 trillion in student loan debt. Federal Student Aid has surpassed J.P. Morgan and Bank of America to become the largest lender in the country.