As Republican-Appointed Judges Block Relief from Millions of Borrowers, Federal Student Loan Payments Set to Resume in Fewer than 45 Days, Advocates Warn Restarting Payments Before Fully Implementing Debt Cancellation will Lead to Economic Catastrophe
November 21, 2022 | WASHINGTON, D.C. — Today, a coalition of more than 220 organizations representing students, workers, and people of color called on President Biden to extend the pause on federal student loan payments set to expire on December 31, 2022, and utilize every legal authority available to enact debt relief.
A copy of the letter to President Biden can be found here.
The groups wrote that resuming repayment in fewer than 45 days “threatens to set borrowers back financially as our country grapples with the lasting effects of the COVID-19 pandemic, as our economy continues to experience the highest level of inflation in nearly four decades, and as government regulators sound alarms on rising levels of borrower distress.”
“Just two weeks ago, a new generation of voters were mobilized and driven to the polls in part by the momentum from your promise to deliver on student debt. We urge you to use every legal tool in the government’s toolbox in order to keep their faith in government and show them that, despite the threats to it, our democracy is capable of listening to their concerns and meeting their needs,” the group letter continued.
“We cannot allow these blatantly political lawsuits to throw millions of borrowers into financial catastrophe. Throwing millions of borrowers back into repayment as the state of debt relief remains uncertain is a recipe for disaster and will result in widespread confusion and set borrowers up for failure.”
Along with the letter, borrowers have shared their stories on the importance of debt cancellation and the economic and mental toll that would result if payments were to resume:
“I don’t know how I can make payments again. I have over $90K in student debt, and I’m a single mom who lives hand to mouth. I am drowning in financial insecurity due to the pandemic, inflation, and being a single parent. I am riddled with stress and anxiety. Being a paycheck away from extreme poverty at any moment, I worry every day about what straw will break my back. If payments unpause, I will certainly default on my loans. I’ve already filed for bankruptcy once and still have all this debt that I couldn’t possibly pay off in my lifetime. I don’t know where to turn at this point and am so distressed. Borrowers like me are relying on President Biden to extend the pause and deliver on student debt cancellation.” – Robin, California
“As a single mother and someone working in the nonprofit industry, I live paycheck to paycheck. I have no other debt except my student loans, and I have the intention to repay them, yet the incredible interest rates and requirements make repayment an endless and never-ending debt. It will be close to impossible for me to repay and still make ends meet. I will need another vehicle soon, and there will be no way for me to pay both student loans and a car payment. I have thought about returning to school, yet I do not want to incur additional debt. I am very worried about my child being able to seek higher education one day, given the current structure of student loans. Cancellation is the only way families like mine will see relief. President Biden has to keep fighting for us and extend the pause on payments in the meantime.” – Ingrid, California
“The current hold on President Biden’s student loan cancellation leaves so many of us with uncertainty about if we will be able to keep our families afloat. I just learned that I have MS and am in the process of getting a divorce. I am happy to be the first in my immediate family to graduate from university, but I’m living in poverty nonetheless. I’m unable to land a job and bills are piling up. Debt cancellation would be such a relief.” – Erica, Maryland
Analyses from the Consumer Financial Protection Bureau and the Student Borrower Protection Center highlight growing rates of consumer distress as the country faces the highest level of inflation in nearly four decades. Restarting student loan payments as millions wait for debt cancellation will cause confusion and result in economic catastrophe.
In a matter of weeks following President Biden’s historic student debt cancellation announcement, 26 million borrowers submitted applications– further evidence of the crushing burden this debt has had on workers and families from all walks of life. According to the Department of Education, 16 million borrowers have already been approved for relief. As a result of these overtly political lawsuits, tens of millions of borrowers are now left in economic limbo–with the looming threat of payments set to resume on January 1, 2023.
No student loan borrower with a federally-held loan has been required to make a student loan payment since March 2020 when former President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, pausing student loan payments and suspending interest charges for federal borrowers. This set of protections was extended via executive actions in August 2020, December 2020, January 2021, August 2021, December 2021, April 2022 and in August when President Biden announced his historic debt relief plan.
On November 15, 2022, a panel of judges in State of Nebraska et. al. v Biden granted the motion by six Republican-led states to block President Biden’s plan to cancel up to $20,000 in student debt for tens of millions of federal student loan borrowers. These states sought a preliminary injunction, arguing that debt cancellation must be stopped because the profits of lenders and servicers, like student loan giant Missouri Higher Education Loan Authority (MOHELA), were more important than—and threatened by—the Administration’s efforts to ensure the financial well-being of millions of Americans saddled with student loan debt in the time of a national emergency. The Administration has argued that this cancellation of debt is critical to ensure that student loan borrowers are not harmed as it ends the payment pause.
On Wednesday, October 12, 2022, a federal judge heard oral arguments to consider whether to grant MOHELA’s motion to block student debt relief for tens of millions of people. That judge denied the motion and dismissed the case. The plaintiffs appealed to the 8th circuit and motioned for an emergency injunction pending the appeal. That injunction was granted on November 14, 2022.
Last week, the Department of Justice applied to the Supreme Court to vacate the national injunction.
A copy of the complaint in Nebraska, Missouri, et. al. v. Biden is available here: https://storage.courtlistener.com/recap/gov.uscourts.moed.198213/gov.uscourts.moed.198213.1.0_1.pdf
A copy of the reply brief filed by the U.S. Department of Justice is available here: https://storage.courtlistener.com/recap/gov.uscourts.moed.198213/gov.uscourts.moed.198213.27.0.pdf
Recorded arguments in Nebraska, Missouri, et. al. v. Biden from October 12, available here: https://www.youtube.com/channel/UCIWD5tA9DvZskM37uuuPBMg/
Cease and desist letter from American Federation of Teachers, AFL-CIO (AFT) and the Student Borrower Protection Center (SBPC) to student loan giant MOHELA for unlawful loan servicing practices: Missouri-Based Student Loan Giant Accused of Illegal Scheme to Block Student Debt Relief for Millions of Borrowers
About Student Borrower Protection Center
The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.