(The Center Square) – U.S. Sen. Cory Booker, D-New Jersey, is sponsoring a bill that would end wage garnishments for anyone who has defaulted on a student loan.
The Ending Administrative Wage Garnishment Act of 2020 would also revise income-driven repayment plans.
The measure bars the U.S Department of Education from garnishing wages from anyone with loans outstanding for more than 10 years. It also requires the secretary of education to pay a borrower double what they paid if their wages were “improperly garnished.”
“Even before the public health and economic crisis created by this pandemic, nearly 45 million Americans were burdened by student loans and hundreds of thousands of student loan borrowers were having their wages garnished for past due payments,” Booker said in a news release. “Suspending wage garnishments for student loan borrowers is a common sense and urgently needed step we can take to help those who are already struggling financially to confront and recover from the economic instability created by this pandemic.”
Booker is sponsoring the legislation with U.S. Sen. Elizabeth Warren, D-Massachusetts. They point to a finding from the Pew Research Center, which revealed one in four (25%) U.S. adults say either they or someone in their house lost their job because of the COVID-19 pandemic.
“Student debt is an anchor dragging down our struggling economy and holding millions back, especially for Black and Brown borrowers,” Warren said in a statement.
This month, U.S. Secretary of Education Betsy DeVos announced an extension of the federal student loan forbearance period through Jan. 31, 2021. Meanwhile, CNBC recently reported that President-elect Joe Biden could push forgiving “at least $10,000 of student loans next year.”
In a November blog post, the Committee for a Responsible Federal Budget (CRFB) argued canceling student loan debt is an inadequate economic stimulus. Canceling student debt would cost $1.5 trillion annually and only “increase cash flow” by $90 billion per year.
“There is a debate over whether the President has the legal authority to cancel debt by executive order and whether or not it would be good policy overall,” CRFB wrote. “However, one thing is clear: student debt cancellation would be an ineffective form of stimulus, providing a small boost to the near-term economy relative to the cost.
“There are a number of benefits and costs associated with cancelling student debt,” CRFB added. “But as a stimulus measure, its ‘bang for buck’ is far lower than many alternatives under consideration or the COVID relief already enacted.”