The House passed President Biden’s massive $1.9 trillion stimulus package on Friday.
The House has formally approved President Biden’s massive $1.9 trillion stimulus package, dubbed the “American Rescue Plan,” designed to buttress the economy in response to the continuing pandemic and economic downturn.
The legislation contains hundreds of billions of dollars in aid, including the following:
The bill also includes an increase in the minimum wage to $15 per hour. That provision remains in doubt once the bill gets to the Senate. Earlier this week, the Senate parliamentarian ruled that a minimum wage increase cannot be included in a budget reconciliation measure under the Senate’s rules.
Importantly, the legislation provides for $170 billion to K-12 schools and higher education institutions to cover reopening costs and student aid. Of that figure, $35 billion would be dedicated to public colleges and universities as well as Minority Serving Institutions and Historically Black Colleges and Universities. A portion of that could be dedicated to financial assistance to millions of struggling college students.
The direct cash payments, extended unemployment benefits, and new child tax credit will benefit millions of Americans — including student loan borrowers. The direct payments and child tax credits should not be considered “taxable income” for purposes of income-driven repayment plans, so they should not result in higher student loan payments. Unemployment benefits, however, are considered to be taxable income.
In addition, President Biden recently eased restrictions for the Paycheck Protection Program, expanding its eligibility to include business owners with defaulted or delinquent federal student loans.
However, the stimulus plan does not provide for any direct student loan relief. There had been some speculation that in the process of allowing earlier amendments to the package during the initial debate in Congress that student loan relief (such as student loan forgiveness) could be inserted into the bill. But that did not happen.
Instead, the Biden administration has maintained that the White House will push Congress to pass additional legislation in the coming months providing for student relief, including some level of student loan forgiveness for borrowers. Biden has supported $10,000 in student loan forgiveness, but recently came out against $50,000 in student loan forgiveness proposed by Democratic lawmakers and student loan borrower activists.
In the meantime, Biden has extended the current pause on most federal student loan payments, interest, and collections to September 30, 2021. And he has directed the Justice Department to review the legality of cancelling student debt through executive action. Biden has expressed skepticism that he has authority to unilaterally cancel student debt.
Democrats in Congress are trying to pass the stimulus package through a process called budget reconciliation in order to avoid an expected filibuster in the Senate, which would require the support of at least 10 Republican senators to overcome. By passing the stimulus bill through the reconciliation process, the legislation can be enacted through a simple majority vote. Democrats hold narrow majorities in both chambers of Congress.
The bill now moves to the Senate. However, the Senate may change the bill to exclude the $15 per hour minimum wage hike, in light of the recent ruling by the Senate parliamentarian that changes to the minimum wage cannot be passed through the budget reconciliation process.
Once the bill has been finalized and passes the Senate, it will go to President Biden for his signature. The White House has been pushing to get the bill enacted by mid-March.
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Adam S. Minsky is an advocate, innovator, and entrepreneur who established a unique law practice devoted entirely to assisting student loan borrowers and their families.