Amid the recent coronavirus pandemic, the U.S. government passed a piece of legislation called the CARES Act. In it, there are dozens of provisions for aiding small businesses, sole proprietors, people with education debt, and more. Already, millions of people who struggle with large student loans have noticed that the new laws:

• Only cover federal, not private debt
• Allow for deferment, not forgiveness, of principal payments for six months
• Only forgive interest on the debt for an unnamed amount of time, which many people expect will be no longer than six months

In light of the act’s limitations, many individuals and organizations are seeking a comprehensive solution to the student loan crisis. There are legislators in Congress who feel that there should be a national forgiveness package that offers much more relief than what is in the recent set of regulations. What could be the outcome of this renewed push for a total solution to the education debt situation in the U.S.? Here are some of the most likely ways that the two parties could approach the situation, based on previous attempts to pass legislation before the COVID-19 crisis.

The Total Solution

For at least a decade, members of the U.S. House and the Senate have attempted to pass a 100 percent cancellation of student loans for all holders of education debt. Most of the proposals include some sort of cutoff period or prorated relief for new graduates of those who are currently in school. This is the most extreme of all the formal proposals and has little chance of passing for at least several years. Even during the recent virus pandemic, it took many weeks for the rival parties to agree on a simple six-month deferment and interest write-off plan.

A 50-50 Strategy

A halfway plan has been proposed as recently as this year. It is almost identical to the total solution but only erases one half of each borrower’s balance. The cost to the federal government would be much less under this plan, and loans would still need to be repaid under the same conditions, interest rates, and original repayment periods. If you owed $50,000, for example, and had 12 years left to pay, at 4 percent interest, you’d owe $25,000 under the 50-50 plan, at the same rate, and still have 12 years to repay the debt.

A One Year Plan

Since the first round of coronavirus legislation, some members of Congress have proposed an expansion of the forgiveness doctrine in which borrowers have not six months, but an entire year of no payments and no interest. Some versions of the new plan include the all-important provision that the entire payments are neither deferred nor delayed but completely written off. In other words, if you owe, you simply get 12 months of interest and principal wiped off your books, thus reducing your obligation by a set amount. The rest of your repayment plan would continue as previously scheduled. Of all the plans discussed, this one has attracted the most interest from lawmakers, probably because it is the least extreme and allows the federal government to recoup most of what people owe.

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