“This is a time to be bold.”
Wednesday, July 15
Over 100 organizations on Wednesday urged Congress to make sure cancellation of all U.S. student loan debt is part of the next coronavirus relief package, saying the “evidence is clear” and the “need is urgent” to end the economic burden of millions of Americans.
“Left unaddressed, the student debt trap will deepen our current recession, exacerbate inequality, widen the racial wealth gap, and slow our economic recovery,” the groups wrote to congressional leaders.
The letter was led by the Center for Responsible Lending, American for Financial Reform, Demos, and Freedom to Prosper, and comes as October 1 looms large for many student loan holders.
That’s because September 30 is when the pause in payments and collections for people with federal student loans—a reprieve included in a provision of the CARES Act—ends.
“I already assumed I was going to be paying my student loans forever,” 30-year-old Sam Seagraves, who has about $75,000 in student loans, recently told CNBC. “But this is just a nightmare.”
Heightening the need for a student debt jubilee is the ongoing economic fallout from the coronavirus pandemic. Yet student debt, which stands at roughly $1.5 trillion, was a national crisis even before the Covid-19 outbreak.
From the letter:
The existing burden of the student debt left 45 million Americans even less prepared to weather the economic crisis triggered by the coronavirus pandemic. This burden weighs especially heavy on communities of color. Black graduates, for example, owe on average $7,400 more on student loans than their white counterparts. Additionally, women hold two-thirds of the country’s student debt and on average borrow $3,000 more than men to attend college—yet because of the wealth and wage gap, women find it harder to repay their loans.
The 101 signatories—including the NAACP, Indivisible, and the National Education Association—also pointed out that the CARES Act “left out an estimated nine million federal student loan borrowers with either commercially-held FFEL [Federal Family Education Loan Program] loans or Perkins loans.”
But simply extending the payment pause deadline would be inadequate, the groups wrote, and while the House-passed HEROES Act would provide some student debt cancellation, that relief would only go to “economically distressed” borrowers.
“This is a time to be bold,” the groups wrote.
“As Congress directs funds to corporations, small businesses, and individuals, immediate debt relief for 45 million borrowers and their families should be an essential part of our coronavirus response,” wrote the groups. As they see it, debt relief makes good economic sense.
A 2018 Levy Economics Institute report found that student debt cancellation would boost GDP and job creation while reducing unemployment, producing economic gains that help mitigate its budgetary cost. Another study shows that federal student debt cancellation—even for borrowers who were not paying monthly—makes drastic changes in their lives, increasing borrowers’ incomes, enabling them to pay down other debts, and increasing both geographic mobility and their ability to pursue better jobs.
Ashley Harrington, federal advocacy director at the Center for Responsible Lending, said the need for student debt cancellation is clear.
“Even without experiencing a major public health crisis, or a recession, student debt exacerbates existing systemic inequities and racial disparities,” Harrington said in a statement. “This is why substantial relief for the more than 44 million student borrowers already in repayment is so desperately needed.”
“Moving forward, any legislation enacted during the pandemic must include broad universal debt cancellation for all borrowers,” she said, “including private and federal student loan holders, to ensure that the most vulnerable borrowers such as borrowers of color experience the benefits of cancellation.”
Further, said Harrington, “student debt relief is minuscule compared to the relief used to bail out big companies during the financial crisis.”
Our work is licensed under a Creative Commons Attribution-Share Alike 3.0 License. Feel free to republish and share widely.