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Public Citizen Calls on President-elect Biden to Cancel Student Loan Debt

By Alex Goldstein

Student borrowers hold an astounding $1.7 trillion in debt. This number is expected to rise to $2 trillion in 2021. It has become increasingly difficult for borrowers to feed their families, pay rent, and save for retirement all while trying to pay down their student loans. These difficulties have become even more acute during the coronavirus health and economic crises.

Recently, Senate Democratic Leader Chuck Schumer and Senator Elizabeth Warren introduced a resolution calling on President Trump to use executive authority to cancel $50,000 in student loan debt. If Trump does not take action, it is imperative that President-elect Biden do so when he enters the Oval Office. To that end, last week, Public Citizen along with 237 other organizations called on President-elect Biden and Vice President-elect Harris to use executive authority on day one of their administration to cancel student loan debt.

The student loan debt crisis existed long before the coronavirus public health emergency began. College costs have risen by 250 percent over the past three decades and it has become nearly impossible to find a job to climb the economic ladder without a college degree—especially in the aftermath of the Great Recession. As a result of the high cost of a college degree, many borrowers had no option but to take on debt to fund their education.

The student debt emergency is no more acute than with Black Americans.

Student debt compounds systemic racism and contributes to wealth inequality. For Black borrowers who attain a degree, they often have to borrow more because they own less family wealth and are paid less after graduation, which makes it harder to pay back their loans. According to one study, twenty years after attending college, the median white borrower paid off 95% of their debt while the median Black borrower still owed 95% of their debt. Also, African- American borrowers are often targeted by expensive for-profit colleges, which leads to many Black borrowers being saddled with high levels of debt. And, worse, many for-profit schools leave students with a worthless degree that does not secure them a job, leading to higher loan delinquency rates. Additionally, student debt disproportionately impacts other communities, including Latinx borrowers and women.

In a year in which the nation has confronted racism in its own communities and an election in which Black Americans helped secure the presidency for Joe Biden, the incoming Biden Administration has pledged to work to end systemic inequality in America. In his speech right after he became president-elect, Biden stated, “especially for those moments when this campaign was at its lowest — the African-American community stood up again for me. They always have my back, and I’ll have yours.” One tangible way for soon-to-be President Biden to make this promise a reality is to cancel student loan debt for millions of Americans. The coronavirus pandemic has both shed light on and exacerbated the precarious financial position of student borrowers. A recent report found that more than 8 million Americans had fallen into poverty during the course of the coronavirus pandemic. Tragically, 31.9% of Americans live in households where it has been difficult to afford household expenses. The coronavirus pandemic has also increased fears of mass evictions for those unable to afford rent. Many families have difficulty putting food on the table.

Student debt cancellation would not just provide needed relief to Americans struggling through one of the worst economic crises in recent memory. It would act as a much-needed stimulus with positive cascading effects across the economy. Importantly, it would likely lead to “consumer-driven economic stimulus, improved credit scores, greater home-buying rates and housing stability, higher college completion rates, and greater business formation.” It would also provide a needed boost to small businesses who have been devastated by the pandemic and lead to an increase in GDP growth, job creation, and, possibly most importantly, the work necessary to close the racial wealth gap.

During the presidential campaign, President-elect Biden committed to work to pass legislation to cancel student loan debt up to $10,000. But if Democrats do not win control of the United States Senate, it is very unlikely that Senate Republicans will support this critical relief for working families. Fortunately, President-elect Biden need not pass legislation to give him authority to cancel federal student loan debt. Congress gave the Secretary of Education broad authority to cancel student loan debt under the Higher Education Act of 1965. The Act states that the Secretary of Education, as an agent of the President, has the authority to “compromise, waive, or release” and to “modify” any claims against students. As a result, all the president has to do to cancel student loans owned by the federal government (which is about 92 percent of all student loans) is to order the Secretary of Education to do so.

In addition to our current advocacy with the Biden transition team, Public Citizen has advocated for immediate protections for student borrowers as well. Recently, Public Citizen, along with 76 other civil rights, consumer, student advocacy, and community organizations urged Secretary of Education Betsy DeVos to extend the moratorium on federal student loan payments through September 2021. (It is set to expire on December 31, 2020.) The groups urged DeVos to suspend involuntary collections as well. Congress originally paused student loan payments in the CARES Act, but that moratorium ended in September 2020. Payments were scheduled to begin again on October 1 because Senate Republicans refused to pass the House of Representative’s COVID stimulus bill, the HEROES Act. Thankfully, the Trump administration continued the pause through the end of this year. But, without additional executive action, borrowers will be required to begin payments again on January 1 at a time when millions are still struggling. A continued repayment pause would provide much needed relief for many of the 44 million borrowers with student loans.

As critical as it is to continue to pause repayments during the COVID-19 crisis, the most comprehensive solution to the student loan crisis is to cancel federal student debt.  Not only would canceling student loan debt lessen racial economic inequity and stimulate the economy, it would set the stage for additional bold, progressive administrative action on behalf of hardworking people. After four years of corruption and corporate handouts, and months without any economic relief, it is time to demonstrate, once again, that our government is willing to fight on behalf of the American people.