Cancel student debt in the next stimulus bill
A coalition of 103 civil rights groups, consumer rights organizations and think tanks sent a joint letter to Congressional leaders in the House and Senate, calling on them to include a broad student loan sorry for all borrowers in the next economic stimulus package.
With 44 million Americans grappling with unprecedented levels of student debt, massive unemployment and a pandemic showing no signs of ending, a large student loan forgiveness gained ground as a means of economic stimulation and relief.
While the CARES Act suspended payments, interest and collections on student loans, the implementation of these protections were unequal at best. And consumer advocates have argued that the CARES law falls far short of what borrowers actually need. “Canceling student debt offers a much more effective solution than suspending short-term payments,” the organizations argued in the letter.
The house recently adopted the HEROES law, which would extend the student loan relief provisions of the CARES Act by one year and also provide $ 10,000 for student debt cancellation, but only for the most economically struggling borrowers. The organizations wrote in their letter that this was not enough. “This limitation excludes 25 million Americans, or more than half of all borrowers. This would exclude people in economic distress due to the coronavirus crisis, such as those laid off due to the pandemic, ”the organizations wrote. “We call on you to fight for student debt cancellation that helps all borrowers. Removing limitations based on economic distress would not only avoid unfair cuts, but would also facilitate administration. “
The organizations further noted racial disparities in the student debt system. Studies have shown that student loan debt has a disproportionate impact on communities of color, and black people in particular. Federal data released in 2017 show that nearly half of black student loan borrowers who entered college in the 2003-2004 academic year had defaulted on at least one student loan 12 years later. These same data shows that black students who enrolled in school in 2004 owed more on their student loans after 12 years than the amount originally borrowed.
“Black and brown communities have been hit hardest by the devastating health and economic consequences of this crisis, just as they were hit hardest by the Great Recession ten years ago,” the coalition wrote. “At the same time, student debt has a disproportionate impact on black and brown borrowers. “
“As the economy slows down, jobs remain hard to find, and people face extraordinary hardships, the federal government could provide immediate relief and enable a more widespread and equitable recovery by canceling student debt.” said Alexis Goldstein, senior policy analyst at Americans. for financial reform, one of the organizations that have adhered to the letter. “The cancellation of student debt is an incredibly powerful tool available to Congress to reduce inequalities and bring dramatic relief to communities of color hardest hit by the pandemic.”
“Even without experiencing a major public health crisis or recession, student debt exacerbates systemic inequalities and existing racial disparities,” said Ashley Harrington, federal director of advocacy at the Center for Responsible Lending, another organization that signed the letter. “This is why substantial relief for the more than 44 million student borrowers already in repayment is so desperately needed. Going forward, any legislation enacted during the pandemic must include broad universal debt forgiveness for all borrowers, including private and federal student loan holders … Student debt relief is miniscule compared to the relief used to bail out large corporations during the financial crisis.
The blanket cancellation of student loans is now more politically realistic than any time before, but that’s still a long shot in the Republican-controlled Senate. Senate GOP leaders immediately refused to even consider the HEROES law when it was passed by the Democratic-led House. And the Republican Senate leadership recently expressed concerns on additional spending related to a second major stimulus bill, which could limit any further student loan relief.
Major organizations that signed the letter calling for student debt cancellation include the American Federation of Teachers, Bend the Arc: Jewish Action, Consumer Reports, Greenpeace, Habitat for Humanity, NAACP, National Women’s Law Center and the National Young Farmers Coalition.