The Senate proposal automatically suspends these payments without interest over the next six months. It also interrupts the collection of bankruptcy – including salary and tax refund.
The Senate proposal offers an additional benefit to borrowers who, for example, seek loan forgiveness through the public loan program. These borrowers should still see their debt wiped out after ten years without being penalized for not having paid in the next six months.
The Center for Responsible Lending is worried that some federal student borrowers will be released under the bill. This applies to individuals with federally held loans and excludes private loans as well as some federally guaranteed loans – probably including those paid out before 2008.
According to the bill, borrowers would still be able to pay during the six months.