Today, Congresswoman Pressley, in partnership with Congresswomen Omar and Adams and Chairwoman Maxine Waters, introduced a House companion to Senators Schumer and Warren resolution calling upon President-Elect Biden to cancel $50,000 of federal student loan debt for each borrower. This House resolution demonstrates continued momentum and growing Congressional support for the urgency of administrative student debt cancellation. On the campaign trail, President-Elect Biden promised to provide wide-spread cancellation to all federal student loan borrowers (here at 1:10, here at 16:22, here at page 26, here).
Student debt makes existing systemic inequities and racial disparities worse and prevents economic recovery from reaching already marginalized groups who are still reeling from the effects of the Great Recession even as they navigate the worst of the COVID-19 health crisis. Extensive research has shown that Black borrowers and other borrowers of color tend to have more difficulty in student loan repayment and more often default than their white peers because of past and ongoing racial discrimination. Abusive debt collection practices seize critical safety net funds, such as Social Security and the Earned Income Tax Credit. With no time limit on collection, these practices can follow borrowers to the grave. These factors indicate that student debt cancellation will reduce a substantial burden that is felt most acutely by Black and Latino borrowers.
Legislative debt cancellation proposals have ranged from a minimum of $10,000 for a subset of economically distressed borrowers to total cancellation. Importantly, President-Elect Biden does not need Congress to provide student loan cancellation. Existing law already gives the Department of Education the authority to cancel federal student debt with the stroke of a pen.
As the National Consumer Law Center and Center for Responsible Lending wrote in our recent report, Road to Relief, more than 75% of borrowers would be debt-free with $50,000 of cancellation, and almost 50% of borrowers would be rendered debt-free with even $20,000 in cancellation. In both scenarios, the household budgets of the remaining millions of borrowers in repayment would experience substantial relief. For instance, if $20,000 were cancelled per borrower, we could eliminate the loan burden of an estimated 79% of federal borrowers who are currently in default, and reduce by an average of almost one-third the remaining debt burden of those in default whose balances are not zeroed out.
Broad, universal debt cancellation should be provided for all federal student loan borrowers (including PLUS loan borrowers and those with commercially- or institutionally-held loans) so that the benefits of cancellation reach the most vulnerable borrowers.
How much debt do you have? How would student loan cancellation impact you? Share your story.
