According to a letter sent Thursday morning.
“We are writing to urge you to act now to extend the pause on federally held student loan payments until at least the end of the year and to provide meaningful student debt cancellation,” the letter signed by Sens. Chuck Schumer (D-NY), Elizabeth Warren (D-MA) and Raphael Warnock (D-GA) and Representatives Ayanna Pressley (D-MA), Ilhan Omar (D-MN), Pramila Jayapal (D-WA) and Jim Clyburn (D-SC) said. 87 other lawmakers added their names to the letter.
Student loan payments and interest on the federal debt have been suspended since March 2020, meaning a valued 37 million borrowers failed to repay their loans. The New York Fed recently found that the payment pause has led to “an estimated $195 billion in canceled payments through April 2022.” About 10 million other borrowers who hold private loans or Federal Family Education Loans (FFEL) held by commercial banks did not benefit from the payment pause.
“The payment pause has been an important federal investment throughout the pandemic, providing essential relief to millions of families during the economic and public health crisis and saving them an average of $393 per month,” it said. the letter, later adding that most borrowers “are not financially ready to take on another bill as they face skyrocketing costs for basic necessities like food and gas.”
White House Chief of Staff Ron Klain recently said that President Biden “is going to look at what we should do on student debt before the break expires, or he’ll extend the break.” The letter noted that Klain’s comments “about the possibility of extending the payment pause and administratively canceling student loan debt are encouraging for millions of borrowers across the country.”
Biden backed a broad $10,000 student loan forgiveness on the campaign trail in 2020 amid more generous proposals from then-rivals Sen. Bernie Sanders (D-VT) and Warren. A $10,000 write-off for all borrowers with federally guaranteed loans would cost about $371 billion and wipe out the loans of about a third of borrowers.
During the current administration, Democrats have repeatedly urged a seemingly skeptical President Biden to enact a full-scale reversal of up to $50,000 via executive branch action (as opposed to legislation passed by Congress) . The letter echoed Warren’s previously stated argument that canceling student loans would stimulate the economy.
“Cancelling a significant amount of student debt will bring long-term benefits to individuals and the economy, helping families buy their first home, open a small business or invest in their retirement,” indicates the letter.
“Your administration must act as soon as possible”
The debate around another extension of the pause and the possible direct cancellation of student loans has increasingly potential policy implications with midterm elections in November.
“The majority of Americans support you by taking action; a recent poll shows that more than 60% of likely voters support the continued suspension of student loan repayments and cancellation of student debt, with support strongest among likely voters of color,” the letter reads. , adding that “your administration must act as quickly as possible to extend the pause and make clear to the American public your intention to cancel a significant amount of student debt.”
Rep. Pressley has repeatedly argued that student loan forgiveness is “a matter of racial and economic justice” given the disproportionate burden placed on borrowers of color.
“Cancelling student debt is one of the most powerful ways to address issues of racial and economic equity,” the new letter reads. “The student loan system reflects many of the inequities that plague American society and widen the racial wealth gap. Black students in particular borrow more to attend college, borrow more often while in school, and have harder to repay their debt than their white peers.”
A recent analysis from the California Policy Lab and the Student Loan Law Initiative found that if the payment pause ends after May 1, about 7.8 million borrowers — about one in three student debtors — are at “high risk” of struggling to repay their loans.
‘WWe applaud your efforts to date’
Thursday’s letter was the latest in efforts by lawmakers and lawyers to push the administration to make a decision on canceling the loans.
Warren, Schumer and Pressley have repeatedly called on Biden to forgive $50,000 in student loan debt immediately by decree on the assumption that there is sufficient legal support for the administration to do so.
The basic argument, as detailed by the Harvard Law School’s Legal Services Center, is that the Secretary of Education has the power “to cancel existing student loan debt under separate statutory authority – the power to modify existing loans found in 20 USC § 1082(a)(4).” (Toby Merrill, who founded the Project on Predatory Student Lending at Harvard Law School and co-author of the legal analysis, currently working for the Ministry of Education.)
A memo relating to the president’s legal authority to cancel student loans, sent to Secretary of Education Miguel Cardona in April 2021, became public in November in heavily redacted form.
The Biden-era ED has taken several steps — in addition to extending the payment pause multiple times — to fine-tune the burdensome student loan system and wipe out debt. These include revamping the troubled Public Service Loan Forgiveness Program (PSLF) for student borrowers in the public service, erasing debt held by some students who were defrauded by a for-profit predatory college, debt relief for totally and permanently disabled borrowers, and increased control. student loan managers. A estimate is that 700,000 borrowers saw more than $17 billion wiped out during Biden’s tenure.
“While we applaud your efforts to date – including targeted relief for disabled borrowers, victims of for-profit colleges and others, as well as work to fix existing programs like the Loan Forgiveness Service public – these efforts still leave the majority of federal student loan borrowers out,” the Democrats’ new letter said.
Aarthi is a reporter for Yahoo Finance. She can be contacted at firstname.lastname@example.org. Follow her on Twitter @aarthiswami.