New Coronavirus Stimulus Proposal: $1,200 checks, $10,000 student loan forgiveness

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Efforts are underway to come up with a second round of a coronavirus stimulus package. The new coronavirus stimulus package is expected to overcome the shortcomings of the first one, as well as expand the scope of benefits. Adhering to such objectives, Democrats in the House of Representatives proposed a new coronavirus stimulus package yesterday.

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New coronavirus stimulus package: what does it offer?

Referred to as the Heroes Act, this new stimulus package was unveiled by House Speaker Nancy Pelosi and House Democrats. This new package, which is being pitched as Phase Four of coronavirus relief, allots money to the states and local governments, offers direct money to the Americans and lends support to students and the education sector as well. In all, the bill is expected to be worth more than $3 trillion, which if passed would be the biggest relief package in history.

The Heroes Act promises checks of $1,200 per person, or up to $6,000 per household. The structure of the stimulus checks in the second round is similar to the first one. A single person would be eligible to get $1,200, while couples get $2,400. Those with dependants can claim $1,200 per eligible child (maximum of three).

Other highlights of the bill include $1 trillion for the cities, states and tribal governments. The bill also allocates $375 billion to smaller suburban and rural municipalities, which were not included in the earlier programs. Further, the proposal has a provision of $200 billion in hazard pay for the essential workers on the front lines.

The Heroes Act also promises a $175 billion housing assistance fund to help pay mortgages and rents. Additionally, the proposal also sets aside $75 billion for testing and offers additional help to pay employer-backed health coverage.

Moreover, if the proposal gets passed, it would bolster the $600-per-week of unemployment benefits through January. The proposal also carries a 15% bump for food stamp recipients, as well as an employee retention tax credit. Other provisions of the bill are extensions for family and medical leave and a provision to assist farmers.

Student loan forgiveness

A big highlight of the Heroes Act is the assistance toward students’ loan debt. The proposal extends the student loan relief offered by the CARES Act for another year, i.e. stopping student loan payments until September 30th, 2021. There won’t be interest accrual during the period as well.

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One major provision that the new coronavirus stimulus package includes is a $10,000 student loan forgiveness. A similar proposal was made by Senate Democrats, which called for payments for borrowers through the emergency and a minimum of $10,000 in student loan forgiveness after the emergency. However, the program was criticized as many thought it would likely benefit those with higher incomes.

The forgiveness plan under the Heroes Act works a bit differently. It won’t make the payment, but rather suspend them, and would make the $10,000 cancellation within thirty days from the passing of the bill, notes a report from Forbes.

The proposal to forgive $10,000 of federal student loans is much less than what has been proposed by three 2020 presidential candidates - Joe Biden, Bernie Sanders and Elizabeth Warren.

Further, the new stimulus package also includes $90 billion for a state stabilization fund of which 30% should be directed toward public higher education. Under the CARES Act, the funds were sent directly to the colleges and universities, irrespective of the sector. Further, the new Act also allots $10 billion for Historically Black Colleges and Universities (HBCUs) and Minority-Serving Institutions (MSIs).

However, the act requires states to contribute as well to be entitled to get federal money.

Will it get passed?

This new proposal comes at a time when the U.S. government is still sending the stimulus checks authorized by Congress through the Cares Act. According to the IRS, the government has already sent out 130 million payments amounting to over $200 billion. In the first round, the government is expected to send over 150 million total payments to taxpayers.

It would be interesting to see if the Heroes Act is able to win approval. This latest proposal from House Democrats is less generous than some of the proposals that have come up lately. For instance, Sens. Kamala Harris, Bernie Sanders and Ed Markey proposed to give $2,000 per month to Americans during the outbreak.

Democrats on Capitol Hill are planning to present the bill for a vote as early as Friday. House Speaker Nancy Pelosi, while speaking to reporters on Capitol Hill, said they are “presenting a plan to do what is necessary to address the corona crisis." Later, she told MSNBC that there is a "monumental" need to help Americans, who are struggling financially due to the coronavirus pandemic.

However, a report from CBS News noted that Senate Majority Leader Mitch McConnell recently said that he plans to “hit pause” on further coronavirus relief funds. Also, Sen. John Barrasso, a member of Republican leadership in the chamber, said that the bill won’t get the necessary support.

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