By Amy Czulada and Peter Perkowski | May 30, 2023
This week marks Memorial Day, and we honor the servicemembers who have made the ultimate sacrifice to protect and defend our country and its most deeply held principles. As we support all veterans and servicemembers, we cannot overlook the $2.9 billion of student loan debt that inhibits more than 200,000 of them from fully realizing the American Dream. The Biden Administration must continue to uphold promises of fixing the broken student loan system to ensure that programs designed to make education affordable and attainable for all veterans, servicemembers, and their families remain a viable option.
Over the past two years, programmatic changes have provided increased pathways to student debt cancellation, but recent attacks on student debt relief could imperil this relief for this vulnerable population.
In fact, over just this past Memorial Day weekend, President Biden and Speaker McCarthy announced a deal to raise the federal government’s debt limit. Unfortunately, this deal includes an agreement to codify the end to the pause on federal student loan payments, interest charges, and debt collection that has been a vital lifeline for financially vulnerable servicemembers for more than three years. The payment pause will now end regardless of the Supreme Court’s decision on President Biden’s debt relief plan, which is expected in June.
This rapid (and reckless) return to repayment also raises the stakes for military families counting on Public Service Loan Forgiveness (PSLF). The promise of PSLF is simple: after ten years of working in public service and making payments, any remaining student debt is cancelled.
Despite this very clear promise, bureaucratic hurdles and servicing abuses have historically blocked veterans and servicemembers from achieving PSLF cancellation. Veterans looking to get their time in service to count for PSLF have had trouble getting their PSLF forms signed by their former superior officers, often hitting roadblock after roadblock. After serving our country, they were repaid with a PSLF program plagued with administrative failures, thus leaving them with debt that the law says should be cancelled.
Enter the PSLF waiver in October 2021. To address the multitude of administrative issues that kept student loan borrowers from accessing debt relief through PSLF, the U.S. Department of Education implemented a time-limited PSLF waiver to increase borrowers’ ability to accrue PSLF credit. Borrowers were able to receive past credit for time spent working in public service, making it easier for veterans and servicemembers to have their past military service – which was previously excluded due to administrative barriers and an array of clerical errors – finally recognized. During the waiver period, the Department announced that it would allow former and current servicemembers to submit DD214s to verify their service in the military, rather than tracking down former superior officers to personally do so. This fundamentally changed the landscape for veterans seeking PSLF and resulted in PSLF cancellation for tens of thousands of borrowers who served in the military.
PSLF is a valuable incentive tool to support an all-volunteer service – so valuable that the military itself has advocated for its preservation:
Eliminating or restricting the PSLF Program would have a significant impact on recruiting and retention … at a time when the services are vying with an expanding and robust private sector to recruit and retain our most capable people.
Consistent with this sobering reality, Congress and the Administration must avoid taking actions that undermine the PSLF promise we made to people in or formerly in uniform.
But Congress appears poised to do so anyway. While the PSLF waiver offered a lifeline to veterans and servicemembers struggling with their student debt, recent attacks on student debt relief could reverse the cancellation that has recently freed them from their student debt. Proposed legislation would use a process known as the Congressional Review Act (CRA) to undo the cancellation and credit toward cancellation that tens of thousands of servicemembers and veterans have earned towards loan forgiveness.
In March 2023, legislators in the House and Senate introduced CRA resolutions in order to block President Biden’s debt relief plan and retroactively overturn one of the most recent extensions of the student loan payment pause on federally held student loans. Not only would this effort block millions from the up to $20,000 in promised debt relief announced by President Biden last summer, but it would also force borrowers and their families to pay back at least four months of payments and previously relieved interest. Moreover, by retroactively overturning the payment pause, borrowers who achieved cancellation through PSLF or received credit toward PSLF could see their debt reinstated or the credit that they have gained erased.
The House passed this egregious resolution last week, and the Senate is expected to consider it over the next couple of days.
Overturning the cancellation that servicemembers and veterans have earned via PSLF exacerbates the economic injustices the military community experiences. Before the pandemic, veterans had a 46 percent default rate compared to a 29 percent rate from their non-military serving peers. At the height of the pandemic, veterans saw an 11.8 percent unemployment rate, significantly higher than the national average. Veterans and servicemembers – especially veterans and servicemembers of color – are disproportionately affected by the deleterious facets of the student debt crisis. If the CRA efforts succeed in denying student loan borrowers relief, an estimated 46,320 veterans and servicemembers could see their balances reinstated or see the PSLF credit during this time period clawed back.1
Our servicemembers, veterans, and their families deserve better. Now is the time to stand against efforts seeking to wreak havoc on longstanding programs that student loan borrowers are entitled to under the law. Our veterans and servicemembers make countless sacrifices to protect our country, and abruptly revoking their progress toward or achievement of loan forgiveness leaves them in an unjust and shameful lurch. This Memorial Day, let’s honor our fallen soldiers and protect all those who have served our country by not revoking their right to a critical program meant to broaden their access to higher education.
1 This is an estimation based on data from the Consumer Financial Protection Bureau, the Department of Education, and the U.S. House of Representatives Health, Education, Labor, and Pensions Committee regarding the number of servicemembers holding student debt and how many borrowers are seeking PSLF will be affected by the CRA efforts.
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Amy Czulada is the Outreach & Advocacy Manager at the Student Borrower Protection Center. Previously, Amy was a Research Analyst at 32BJ SEIU in New York City.
Peter Perkowski is the Legal & Policy Director of Minority Veterans of America.