A6| Saturday/Sunday, March 21 - 22, 2020 *** THE WALL STREET JOURNAL.
New York. Student debt soared
during the recession and early
in the recovery, as Americans
enrolled in college and gradu-
ate school in droves to escape
the weak labor market. Delin-
quencies rose sharply around
2012 and remain high com-
pared with other forms of debt.
Roughly 1 in 5 Americans with
a student loan in the repay-
ment cycle is at least three
months behind on a payment,
New York Fed data show.Under the change Mr.
Trump announced Friday, bor-
rowers can suspend payments
for two months by contacting
their servicers and enrolling in
“forbearance.” No interest
would accrue during that time.
The plan would apply to all
loans made directly by the fed-
eral government and to a por-
tion of those made by private
lenders and guaranteed by the
government under a program
that ended in 2010. However,loans made under the federal
guarantee program that are
held by commercial institutions
won’t qualify, an Education De-
partment spokeswoman said.
Neither Mr. Trump nor Sen-
ate leaders have said how
much their plans might cost.
The government makes money
on many student loans but not
all, depending on the interest
rate and other factors. It has
charged higher interest rates
for graduate students, whoWASHINGTON—The federal
government has a new tool to
stimulate the coronavirus-buf-
feted economy: its $1.5 trillion
student-loan portfolio.
President Trump said Friday
the government would give al-
most all federal student-loan
borrowers the option to sus-
pend payments for two months
without penalty. The govern-
ment already has stopped
charging interest on these loans
indefinitely under a directive by
Mr. Trump a week earlier.
Meanwhile, Senate Republi-
cans and Democrats are push-
ing to provide more relief to
borrowers as part of talks to
pass a broad spending package
to address the novel coronavi-
rus outbreak.
Senate Republican leaders
BYJOSHMITCHELL
ANDJOSHUAJAMERSON
THE CORONAVIRUS PANDEMIC
want to waive payments for
three to six months, with no
interest accruing until borrow-
ers resume paying. Senate
Democratic leaders back a
more-generous package: for-
giveness of at least six months
of payments to reduce each
borrower’s balance by $10,
and possibly more.
About 43 million Americans
owe roughly $1.5 trillion in
federal student loans. The typ-
ical family spends $179 a
month on payments, according
to a July 2019 report by the
JPMorgan Chase Institute.
“This is the first time we’ve
entered a recession in the stu-
dent-debt economy,” said
James Kvaal, a former adviser
to President Obama who now
heads the Institute for College
Access & Success, a student
advocacy group. “So it is a
new tool in the government
playbook that’s not being
taken advantage of.”
At the start of the last re-
cession, in late 2007, Ameri-
cans owed roughly $550 billion
in student loans, according to
the Federal Reserve Bank ofare more likely than under-
graduates to repay loans.
In Congress, bipartisan sup-
port for loan relief shows how
student debt has become a ma-
jor source of anxiety among
voters. Sens. Elizabeth Warren
and Bernie Sanders backed
broad debt relief in their Dem-
ocratic presidential primary
campaigns. Now the concept
has crossed from the progres-
sive flank into the party’s
mainstream, getting a cosign
from Senate Minority Leader
Chuck Schumer, as lawmakers
scramble for solutions to curb
the economic fallout from the
pandemic.
Joe Biden, who is leading in
the race for the Democratic
nomination, doesn’t support
the debt-cancellation plans
backed by Mr. Sanders and
Ms. Warren.
Democratic advocates say if
student-loan debt cancellation
becomes law even temporarily
as part of the coronavirus re-
sponse, it could spur the party
to make relief a part of its
platform going into the No-
vember election.Student-Debt Holders Get Some Relief
U.S. letsborrowers
suspend payments as
Capitol debates more-
generous measures
ther did Tesla.
Mr. Musk has for more than
a decade cultivated a persona
as a visionary truth-teller,
pushing back against doubters,
critics, short-sighted nonbe-
lievers and stodgy government
agencies. His contrarian stance
is core to his business model.
His bravado and sense of cer-
tainty have created both ardent
believers and plenty of skeptics
on Wall Street and in the pub-
lic eye. His legions of superfans
are vocal on Twitter.
The billionaire has attri-
buted his business success tothe scientific approach called
First Principles, which is
rooted in Aristotle’s writings
and among other things rejects
solving problems with copycat
solutions.
“When you want to do
something new, you have to ap-
ply the physics approach,” he
said during a 2013 TED Talks
appearance.
The decision to keep his fac-
tory open flows from such a
mindset, according to Gene
Munster, who follows Tesla
closely as managing partner at
investment and research firm
Loup Ventures.
“It’s a first principle for him,
do everything in his power to
move forward even when peo-
ple say it’s not possible,” he
said.
In 1995, when he was 24, Mr.
Musk took on the phone book
industry with his first startup,
Zip2. The sale of that startup
helped fund his next venture,
an online company to compete
with the banking industry that
would eventually become
knownasPayPal.Thatbet
gained him the fortune he used
to fund the early days of
SpaceX, formally known as
Space Exploration Technolo-
giesCorp., and Tesla—passions
he developed after nearly dying
from malaria contracted in- His family has said the
prospect of dying led him to
reconsider his life, concluding
he should focus on ways to
help humanity through coloniz-
ing Mars and creating sustain-
able transportation.
Mr. Musk isn’t shy about
airing his opinions, having de-
veloped a reputation for bat-
tling any threat to him or his
companies—in person, and
usually on Twitter—with a
vigor most other CEOs would
never consider. He attacks
Tesla’s short sellers with a ven-
geance, calling them “value de-
ants soon did the same.
Mr. Musk continued to take
a lighthearted tone. “Coachella
should postpone itself until it
stops sucking,” he wrote on
Twitter on March 10, as the
popular music festival decided
to move from April to October
over coronavirus fears.
Unlike other Silicon Valley
companies that have built their
businesses with coding and
keyboards, Tesla depends on an
army of workers to turn metal
and parts into vehicles. Other
U.S. auto companies started
taking action this past week.
Wednesday evening, Mr. Musk
was still expressing skepticism
about the virusk. The next day,
around 2 p.m. in California,
Tesla announced that the Fre-
mont plant would suspend car
production on March 23.
After Thursday’s announce-
ment, Mr. Musk highlighted on
Twitter a news report that no
new coronavirus cases had
been reported locally in China
and said he expected an end of
new diagnoses in the U.S. by
the end of April.
Also on Thursday, California
ordered its 40 million residents
to stay at home except for es-
sential activities beginning
Thursday night.
The coronavirus outbreak
threatens to mar what ap-
peared to be a possible turning
point for Mr. Musk and Tesla in
which he seemed to have
proved his doubters wrong,
posting two consecutive quar-
ters of profit in the second half
of 2019 and opening a new fac-
tory in China.
Wall Street had cheered,
sending Tesla’s shares to re-
cords. Analysts believed 2020
might be the year that Tesla
posts its first annual profit.
This week Tesla celebrated
deliveries of the Model Y, a
compact sport-utility vehicle.
The Model Y is a key part ofMr. Musk’s plan to deliver
more than 500,000 vehicles
this year, a more than 36% in-
crease from last year.
Now analysts increasingly
doubt that is possible. China
industry auto sales fell almost
80%inFebruaryfromayear
earlier.
Instead, Tesla is trying to
reassure investors that it can
weather the uncertainty, not-
ing that it had $6.3 billion in
cash on hand at the end of De-
cember before raising an addi-
tional $2.3 billion in new
shares. Tesla also has access to
about $3 billion in working
capital plus financing available
for its Shanghai factory.
Morgan Stanley estimates
Tesla has enough cash to
weather revenue falling 90%
for several months. In such a
case, the bank estimates, Tesla
would burn about $800 million
in cash a month.
But the decision to suspend
production could put Mr. Musk
back in a familiar position: hav-
ing to manage a period for the
company with no certainty
when production can resume.
The mythology of Mr. Musk is
rooted in his ability to stare
into the abyss and carry on
when others might fold. He
faced down near bankruptcy in
2008 when financing dried up.
He found a way to keep Tesla
alive and in turn leveraged
himself to the hilt.
In a memo to Tesla employ-
ees on Monday, Mr. Musk
played down the threat of the
virus. “I do not think, when we
look back on 2020, that the
causes of deaths or serious in-
jury will have changed much
from 2017.”
As one former senior Tesla
executive mused about the for-
mer boss: “He is a climate be-
liever and a corona denier.”
—Mike Colias
contributed to this article.stroyers” and “jerks who want
us to die.” He has tangled with
safety regulators who he
thought were stifling innova-
tion and fought with the Secu-
rities and Exchange Commis-
sion over 2018 tweets that said
he had lined up funding to take
Tesla private. (The SEC consid-
ered it misleading shareholders
when it became clear a deal
wasn’t so certain; the two sidessettled with a deal that is sup-
posed to curtail some of Mr.
Musk’s Twitter use.)
Over the past month, as offi-
cials in the U.S. grew more con-
cerned about Covid-19, Mr.
Musk sounded off. “The coro-
navirus panic is dumb,” he
tweeted on March 6. The same
day,AppleInc. began encour-
aging employees to work from
home. Most Silicon Valley gi-Time to Deliver
Tesladeliveries,byyearSource: the company500,0100,200,300,400,2015 ’16 ’17 ’InJanuaryTesla
forecastdeliveries
thisyearwillexceed
500,000vehiclesalready,” Mr. Musk said
Wednesday evening on Twitter,
doubling down on skepticism
he expressed earlier. He didn’t
respond to a request for com-
ment about his thinking; nei-
ContinuedfromPageOne
Musk Was
Defiant
On Teslas
JACKSONVILLE, N.C.—After
13 weeks of grueling basic
training at the U.S. Marine
Corps boot camp at Parris Is-
land, S.C., and San Diego, new
Marines have for decades
marched in a graduation cere-
mony attended by crowds of
cheering family and friends.
Those days have come to a
halt, for now.
Military bases are imple-
menting new restrictions on
troops as they try to limit the
spread of the novel coronavi-
rus. The Marine graduation cer-
emony will continue, but it can
now only be viewed online. The
newly minted Marines aren’t
allowed to take leave to go
home after graduation, and in-
stead have to ship out directly
to their next phase of training.
At the same time, bases
across the country are strug-
gling with how much to pull
back, aware that any significant
limitations on boot camp, train-
ing, operations or deployments
could pose a national security
threat. Senior officials said
they are struggling to find the
right balance and policies are
changing by the minute.
Cutting back too much on
operations “can absolutely par-
alyze or weaken the force,” said
Army Secretary Ryan McCar-
thy. But he said more signifi-
cant changes could be neces-
sary.
Mr. McCarthy said com-
manders are asking troops and
civilians to do as much tele-
work as possible, cut back to
mission-essential personnel and
rethink large unit movements
for things like training, lessons
learned from commanders in
South Korea and Italy.
“We’ve got to still be able to
grow the force even under
these incredibly, quite frankly,
extraordinary set of conditions
that none of us have ever faced
before,” he said.
One potential issue: As long
as bases remain open, soldiers
and personnel who live off base
can easily bring the virus with
them when they enter the se-
cure facility every day.
Decades ago, the military
started incentivizing off-base
living by providing housing sti-
pends to senior personnel and
to married troops. Now tens of
thousands of troops commute
from houses in the suburbs to
their base jobs.
If the military declared a
lockdown, with troops confined
to base, families would either
have to accompany them or be
forced to live in town, sepa-
rately.“Doing a massive quarantine
and locking down and closing
up shop is just not possible for
us,” said Capt. Brien Dickson,
base commander at Naval Base
Point Loma, Calif. “We don’t
have the capacity to house ev-
eryone on the base.”
The base was initially fo-
cused on prevention, but after
a sailor tested positive for the
virus on Sunday, the mind-set
shifted.
“Then it became clear weneed to think, how do we care
for those who are infected?”
said Capt. Dickson.
Thousands of civilians come
on base every day because the
military has become dependent
on legions of nonuniformed
personnel who fill a host of
jobs from working alongside
generals and admirals, to tak-
ing out trash or working in the
chow halls.
On towns near bases, sol-
diers are left to make up theirown minds about how much to
pull back socially, though their
commands have told them to
practice social distancing and
many local governments are
closing up bars and restaurants.
For now, the military contin-
ues what it deems mission-es-
sential training, like boot camp
or major training exercises with
schedules set months in ad-
vance and difficult to upend,
and if delayed can cause ripple
effects throughout the force.“Right now, we continue to
train Marines just as we always
have,” said Parris Island
spokesman Warrant Officer
Bobby Yarborough.
Senior military officials say
things are changing by the min-
ute, though, and even training
may need to be re-evaluated.
Mr. McCarthy from the
Army said if the spread contin-
ues it will re-evaluate boot
camp. “This is new ground for
us,” he said.BYBENKESLING
Military Bases
Change Routines
Drill Instructor Jennifer Arnett yelled at Marine recruits arriving at boot camp in Parris Island, S.C., in 2019.VICTOR J. BLUE FOR THE WALL STREET JOURNAL‘The coronavirus
panic is dumb,’ the
Tesla CEO tweeted
on March 6.Tax-Filing Deadline
Extended to July 15WASHINGTON—The U.S. is
extending the April 15 tax-filing
deadline to July 15, Treasury
SecretaryStevenMnuchin said
Friday. That will give people
more time to prepare and pay
their taxes as workers lose jobs
and businesses close during the
coronavirus pandemic.
Earlier this past week, the
Internal Revenue Service saidthat most taxpayers could de-
fer payments until July but
would still have to file their tax
returns or seek extensions by
April 15. That announcement
drew quick criticism from law-
makers and tax preparers, who
warned that they couldn’t get
those filings done or would
have to risk their safety and
health to do it.
And tax filers who typically
get help at sites staffed by IRS
volunteers or use IRS tax help
for the elderly may have trou-
ble getting the informationthey need as the government
limits face-to-face interactions
during the pandemic.
So Mr. Mnuchin offered the
additional extensions on Friday.
Still, he urged Americans
who are expecting tax refunds
to file when they can, so that
they can get their money.
Mr. Mnuchin’s tweets didn’t
specify how the updated dead-
lines would work. The IRS typi-
cally handles that with a de-
tailed notice, but that hasn’t
been released yet.
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