Experts Outline Actions for the Biden Administration to Immediately Cancel Student Loan Debt for Millions of Borrowers
November 23, 2020 | WASHINGTON, DC — Today, the Student Borrower Protection Center and Demos released a new report featuring contributions from leading student loan experts and advocates outlining how the Biden administration can take immediate action to cancel student debt for millions of Americans. For decades, borrowers have had the right to have their student debt wiped clean as a safeguard against economic hardship. However, this debt relief has been denied to millions due to systemic mismanagement and abuse across the student loan system. The report details how to deliver relief to servicemembers, public service workers, defrauded borrowers, and other vulnerable groups who have been forced to shoulder debts that should have been canceled under the law. The recommendations build on calls by advocates and elected officials for President-elect Biden to immediately deliver broad-based debt cancellation for all student loan borrowers.
“For too long, our student loan system has punished students and families for simply pursuing the American dream,” said Seth Frotman, executive director of the Student Borrower Protection Center. “The Biden administration has a unique opportunity to reform the broken student loan system and immediately cancel student debt for millions. The administration can enact these reforms to provide meaningful debt relief, deliver justice for the millions of borrowers denied the promise of loan forgiveness, and protect the next generation of students.”
“The student debt crisis is yet another example of the deep and structural racial injustice at that heart of our economy. It prevents Black and Brown families from building wealth and economic power and has undermined the fundamental goal of higher education as a public good,” said Sabeel Rahman, president of Demos. “Millions of Americans are looking to the Biden administration to right the wrongs of an economy that makes unbearable debt a prerequisite for prosperity. The executive actions outlined in this series are a step in the right direction as we fight for a just, equitable economic recovery.”
Today, the nation’s outstanding student debt stands at $1.7 trillion. Without significant action by the federal government, student loan debt will continue to rise, surpassing $2 trillion by 2025. Research increasingly shows the ripple effects of this debt on households, cities, and the economy at large, exacerbating widespread racial, gender, and wealth disparities.
Millions Denied Right to Relief
As student debt loads ballooned, lawmakers put in place protections for vulnerable borrowers against burdensome debt as well as programs to allow for debt forgiveness for those who serve our country and our communities. Unfortunately, millions of Americans with student loans today face financial hardship after being denied access to these critical safeguards. The failure of these programs to deliver promised relief has hit Black and Brown borrowers particularly hard and exacerbated existing systemic inequities. Examples of borrowers denied their right to relief include:
- Hundreds of thousands of borrowers defrauded by predatory schools languish while awaiting promised debt cancellation for loans that never should have been made in the first place.
- Millions of borrowers are steered away from or kicked out of repayment plans that are tied to their income and which allow them to have their loans discharged after a period of time. These programs have been plagued by government mismanagement and industry abuse since their inception.
- Hundreds of thousands of teachers, nurses, front line workers, and other public service professionals face financial hardship and uncertainty after being denied promised debt relief. The government’s broken Public Service Loan Forgiveness Program promises to provide debt cancellation for millions, but rejects 98 percent of borrowers seeking to access this relief.
- Tens of thousands of borrowers who have become severely disabled are denied access to protections that offer a lifeline out of debt as they struggle with medical expenses and increased costs of living. Instead, this broken system often jeopardizes their benefits as they teeter on the brink of poverty.
- Servicemembers risking their lives to serve our country are denied access to the promised loan forgiveness earned through their service. Each year, thousands of military borrowers seeking relief are derailed by cumbersome paperwork and administrative requirements that should be automatically waived for men and women in uniform.
- Hundreds of thousands of students enrolled at schools that closed before they could finish their degree now face financial distress and mounting debt, despite the right to relief under federal law. These borrowers often include students who attended large for-profit school chains that collapsed over the past decade. Rather than automatically receiving student loan discharges, they are forced to navigate a complicated system and too often miss out on relief.
A Roadmap to Deliver Relief
The papers contained in this new report propose comprehensive reforms, including how to use existing authorities and legal tools to protect the most vulnerable borrowers from the crushing weight of student debt. The authors draw on the wide range of provisions enacted by Congress in past decades to provide a legal roadmap to cancel student debt by clearing away administrative barriers and automating access to debt relief. The series also explores how the next administration can avoid hitting borrowers with unjust and unaffordable tax bills when pursuing student debt cancellation.
- Relief for Public Service Workers
Mike Pierce, Policy Director at the SBPC & Rebecca Maurer, Counsel and Program Manager at the SBPC
- Relief for Borrowers with a Defense to Repayment
Toby Merrill & Eileen Connor, Co-Founders of Harvard Law School’s Project on Predatory Student Lending
- Relief for Borrowers in Income-Driven Repayment
Persis Yu, Director of the Student Loan Borrower Assistance Project at the National Consumer Law Center
- Relief for Borrowers with Disabilities
John Whitelaw, Advocacy Director at Community Legal Aid Society, Inc. (Delaware) & Bethany Lilly, Director of Income Policy at The Arc
- Relief for Borrowers Whose Schools Closed
Robyn Smith, Of Counsel at the National Consumer Law Center
- Relief for Borrowers with a Disqualifying Status
Rye Salerno & Erik Manukyan, students at Harvard Law School in Harvard’s Project on Predatory Student Lending
- Relief for Servicemembers and Veterans
Mike Saunders, Director of Military and Consumer Protection at Veterans Education Success & Military Affairs Fellow at the SBPC
- The Tax Treatment of Student Loan Discharge and Cancellation
John R. Brooks, Professor of Law at Georgetown University Law Center
The report features a foreword co-authored by UC Irvine Law Professor Dalié Jiménez, UCLA Law Professor Jonathan Glater, and SBPC Executive Director Seth Frotman. The introduction is by Ashley Harrington, Federal Advocacy Director & Senior Policy Counsel at the Center for Responsible Lending and Mark Huelsman, Associate Director for Policy and Research at Demos.
SBPC and Demos to Host Virtual Conference
Building on today’s report, the SBPC and Demos will host a virtual conference on student debt cancellation next month to discuss these policy reforms and the urgent need for action by the incoming administration to protect borrowers as well as to support the nation’s economic recovery and address racial disparities.
The event will feature leading advocates, academics, and policymakers from organizations including: Demos, the Harvard Project on Predatory Lending, the Student Borrower Protection Center, the National Consumer Law Center, Veterans Education Success, the Legal Aid Foundation of Los Angeles, Americans for Financial Reform, the Center for Responsible Lending, and more.
Learn more and register for the virtual conference here: https://protectborrowers.org/events-debtcancelconference/
Student Borrower Protection Center
This paper series and conference are part of the Student Loan Law Initiative, a partnership between the Student Borrower Protection Center and the University of California, Irvine School of Law to develop a body of rigorous research around how to address the student loan crisis.
The Student Borrower Protection Center 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.
Demos is a dynamic “think-and-do” tank that powers the movement for a just, inclusive, multiracial democracy. Through cutting-edge policy research, inspiring litigation and deep relationships with grassroots organizations, Demos champions solutions that will create a democracy and economy rooted in racial equity.