October 28, 2021
The Honorable Joseph R. Biden, Jr. President of the United States
The White House
1600 Pennsylvania Avenue, NW Washington, DC 20500
Dear Mr. President:
We, the undersigned 105 organizations, write to you with greater urgency to cancel student debt and, until that happens, continue the payment pause that has been a lifeline to millions.
At the outset, in the interest of transparency and accountability, we urge you to release the memorandum laying out the legal analysis on whether you have the authority to cancel student debt as soon as you receive it.1 We believe that you do have the legal authority to cancel student debt and that the memorandum will confirm that analysis.2
We would also like to remind you how dire the student debt crisis is in our country.
Almost 45 million people hold more than $1.8 trillion of student debt. That number will soon rise to $2 trillion. Over the last 20 years, an entire generation of students were told that the best way to climb the economic ladder in an ever-changing competitive world was to go to college, and that student loans were a “good debt” product that could help them attain that education.
However, the price of college has risen exponentially while wages have remained stagnant, and an entire generation spent their formative years fighting to keep up in the midst of two recessions and a pandemic. “Among college graduates the average student debt was $12,750 in 1996 and has more than doubled to almost $30,000 just 20 years later.”3
Canceling student debt isn’t just an opportunity to realize the full promise that higher education can provide by allowing each person to build wealth for themselves and their families, but will also be a down payment towards fixing the broken higher education system. Broad-based debt cancellation remains the best way to tackle the built-up problems that have caused the student debt crisis. It was also the approach you endorsed during the campaign.4
In addition, canceling student debt would work to address longstanding issues of systemic inequality that have left Black and Brown borrowers with more debt and less wealth, as well as stimulate the economy in ways that would benefit the entire country.
Cancelling student debt would grow the economy and allow borrowers to begin much needed asset building.
A recent report by the National Association of Realtors, the nation’s largest association of real estate agents, found that “pproximately half of student loan debt holders say their debt has impacted their life choices Over one quarter of student loan debt holders say their debt has
impacted their decision or their ability to purchase a home (29%), take a vacation (35%), or purchase a car (31%).”5 And 14% of student debt holders said that student debt has delayed their decision to begin a family.6
The U.S. Department of Education’s own data finds that “borrowers are saving approximately $5 billion per month from the temporary 0% interest rate.”7 It is no surprise, then, that canceling student debt would lead to “consumer driven economic stimulus, improved credit scores, greater home-buying rates and housing stability, higher college completion rates, and greater business formation.”8 Indeed, research indicates that canceling student debt would increase the gross domestic product and create 1.2-1.5 million jobs per year.9
Moreover, student debt cancellation would allow working people to begin saving in earnest. Bloomberg reported that “Millennials are running out of time to build wealth.”10 The nation as a whole isn’t doing much better. Many people in this country are just one emergency away from financial strain or ruin, which was made worse by the COVID-19 pandemic.
According to the financial website Bankrate, more than half (51%) of Americans surveyed this year said they did not have three months’ worth of savings for an emergency, and one in four (25%) responded they did not have one months’ worth of savings. That latter number increased from closer to one in five (21%) the previous year.11
Moreover, “trends on saving behavior amid the quasi-experiment of the CARES Act payment freeze provide new evidence that student debt burdens represent a substantial impediment to asset building.”12
Student debt cancellation would begin the long overdue work of addressing systemic racism that contributes to massive wealth inequality for Black and Brown people in America.
Historically, access to higher education has been dramatically unequal. “This pattern persists today as African American and Latino students struggle to fund their college experiences due to the effects of compounding wealth and educational inequities rooted in discrimination.”13 Canceling student debt would be a lifeline for millions, but in particular for Black borrowers who have not benefited as much from the promise that a degree brings.14 As a result of historic and ongoing systemic racism, discrimination in the job market, lower wages, and other factors that contribute to wealth inequality, Black borrowers experience more negative financial events including loan default, higher interest payments, and higher graduate school debt.15 Black borrowers hold almost twice the amount of debt four years after graduation16 and default on their loans at nearly double the rate as white borrowers.17 And the most shocking statistic: Twenty years after starting college, the median white borrower has paid off 94% of their debt while the median Black borrower still owes 95% of their debt.18
And 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 burden is heaviest on Black women.19 According to a report released by the Roosevelt Institute, “Contrary to common misperceptions, careful analysis of household wealth data shows that student debt cancellation—at all proposed levels—is progressive; it would provide more benefits to those with fewer economic resources and could play a critical role in addressing the racial wealth gap and building the Black middle class.”20
The Wall Street Journal reported this summer that “the median net worth for Black households with a college degree in their 30s has fallen to $8,200 from $50,400 three decades ago Over the same period, their white peers saw their median net worth grow 17% to
$138,000.”21 We are running out of time to correct the massive wealth inequality that excludes Black borrowers from the middle class and makes it impossible for them to catch up to their white peers. And at a time when home ownership for Black people is the lowest it has been since the Fair Housing Act was enacted in 1968,22 canceling student debt would unleash a new middle class among everyday working people, which you have continued to call the backbone of America.23
You won’t erase all issues related to racial wealth inequality for all Black and Brown people by canceling student debt, but it would be a significant start.
Operational challenges make anything less than broad-based cancellation impracticable to implement.
Broad-based debt cancellation remains the best way to tackle the systemic problems that have caused the student debt crisis.
Attempts to distinguish borrowers who need or deserve student loan relief from those who do not are fraught, ignore the systemic and universal flaws in our system of debt-based higher education financing, and inevitably leave out many borrowers in need of relief. An income-based means-testing regime, for instance, will direct relief to borrowers based only on a short-term snapshot of a borrower’s finances that does not take longstanding disparities related to the racial wealth gap into account. Furthermore, income data such as annual tax records may be out-of-date due to the volatility in the labor market caused by the pandemic, which has hit Black and Latino households the hardest.
Moreover, basic operational issues related to so-called means-testing would make targeted relief difficult to implement. At the outset, the U.S. Department of Education (the Department or ED) lacks access to most borrowers’ income information, such as IRS data that would be necessary to decide if a borrower qualifies. Obtaining such information would require the borrower’s consent, filling out forms, and creating barriers to obtaining relief. Inevitably, the borrowers who are the most vulnerable and distressed—including borrowers without a stable address or access to email, limited English proficiency speakers, and individuals who have lost trust in the student loan system—would be left out due to such barriers.
Implementation of a targeted benefit is unlikely to be successful given the history of servicing errors at ED.
A long history of pervasive and significant servicer errors has eroded public trust that the student loan servicers that manage the vastly complicated system prioritize borrowers’ financial wellbeing. Litigation against the Department’s contracted student loan servicers offer evidence to support this view. Since 2017 alone, eight state attorneys general and the U.S. Consumer Financial Protection Bureau have filed lawsuits against the Department’s two largest servicers alleging schemes to deny borrowers the benefits of income-driven repayment (IDR) and other consumer protections, such as engaging in “shortcuts and deception.”24 As a result of these alleged widespread abuses, millions of student loan borrowers have been unable to, or failed to, make significant progress toward debt cancellation.
In addition, the requirement that borrowers individually apply for relief through ED’s targeted cancellation programs—such as IDR, borrower defense, disability discharge, and closed school discharge—leaves out in the cold many who are entitled to relief, including those who are most distressed. Furthermore, recent investigations indicate that the IDR program alone cannot deliver debt relief to low-income borrowers. New evidence shows that the promise of debt cancellation for those borrowers is broken—more than 4.4 million student loan borrowers owe decades-old debts.25 At the same time, data released by the National Consumer Law Center shows that of the approximately two million people who have been in repayment for 20 years (and are thus eligible for cancellation), only 32 borrowers have ever successfully had their debts cancelled under IDR.26 And this failure is not merely temporary. Internal student loan industry records show that debt cancellation under IDR will remain illusory for years into the future.27
In effect, none of ED’s existing discharge options, as currently constructed, are viable substitutes for broad-based debt cancellation. Instead, this history serves as a stark warning to the Department that the current administratively burdensome and highly technical system of targeting cannot be relied upon to act as an effective safety valve for those experiencing long- term financial hardship. Broad-based debt cancellation is the fastest and administratively simplest way to deliver justice to these borrowers. It is also the best path forward that does not rely on the same student loan companies accused of cheating borrowers and providing advice that better served the company than the borrower.
Universal student debt cancellation would most help those with the least wealth.
Information in the public sphere continues to misrepresent just how transformational student debt cancellation would be for the entire country. First, canceling student debt would benefit those who need it the most. Families on the higher end of the wealth scale often do not take out student loans to pay for college. And, when they do, they often take out private student loans—which you do not have the authority under the law to cancel. The Roosevelt Institute report noted that:
rior studies have treated total student debt holdings as synonymous with debt that could be cancelled. Because private loans are held disproportionately by higher-income and higher-asset borrowers (private loans constitute 23 percent of student debt for those in the top 30 percent of the household asset distribution, versus 12 percent of student debt for those in the bottom 30 percent), properly accounting for private loans reveals a more progressive picture of leading proposals for student debt cancellation.28
Moreover, “ebt cancellation leads to the highest reductions in the debt-to-income ratio for people with the lowest incomes. As household income increases, the reduction in the debt-to income ratio decreases.”29 In short, student debt cancellation would help the people who need it the most and lead to a significant decline in the debt-to-income ratio that keeps so many people out of the middle class.
Indeed, data provided by the Department shows this clearly. Canceling up to $50,000 in student debt would provide transformational relief to about 80% of those with student debt, including a sizeable number who cannot pay back their loans.30 As the White House has indicated, only three out of five students complete their degree in six years.31 It is no surprise, then, that nearly 40% of those with student loan debt have not graduated, and that those students are about three times as likely to default on their student loans as those who do graduate.32 Canceling student debt would ensure we are not punishing those who ultimately could not finish their education with years of default, bad credit, and personal stigma.
Cancelling debt before the end of the payment pause would protect families’ Child Tax Credit and Earned Income Tax Credit payments.
Cancelling student debt now, before payments resume, is critical to support American families and the Build Back Better agenda. Families across America have (or will) receive thousands of dollars in cash relief, paid out through their tax refunds, that will lift millions of children out of poverty due to the groundbreaking expansion of the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) in the American Rescue Plan. However, unless the administration takes swift and decisive action, these cash payments will be denied to struggling student loan borrowers and instead intercepted by ED.
The nearly nine million borrowers who are in default on federal student loans, most of whom are low-income and many of whom have young children, will be subject to having their entire tax refunds including CTC and EITC payments seized through the Treasury Offset Program. For those student loan borrowers—and, most importantly, for their children—this entirely preventable outcome will unwind one of this administration’s signature achievements. The time to act is now.
More than 415 organizations33 and over 300 faith leaders34 have already urged you to use your executive authority to cancel student debt. They hear from borrowers just how difficult out of control student debt has been for their lives and futures. And don’t just take our word for it: listen to borrowers who assert how worried they are about the resumption of student loan payments.35 To be sure, while this issue has burdened younger generations more than their parents, according to the AARP, student loan debt has become a “threat to retirement security” because “borrowers frequently wind up carrying into retirement, long beyond their working years.”36 Older adults are increasingly holding student debt for themselves and their children. In fact, “=">">he percentage of families headed by someone 50 or older with student loan debt more than tripled between 1989 and 2016.”37 The concern is that this trend continues unless you take action now.
Thank you for your leadership as we work to bring America back from the health and economic challenges of the last twenty months. Please do not hesitate to contact Remington A. Gregg at email@example.com for more information on anything discussed above. We look forward to discussing this issue with you in the weeks to come.
1K Women Strong Accountable.US
Action Center on Race and The Economy (ACRE) Affordable Homeownership Foundation, Inc.
AFGE Local 704 AFT-Oregon
Alliance for Youth Action
American Association of University Professors American Association of University Women (AAUW) American Civil Liberties Union (ACLU)
American Federation of Teachers
Americans for Financial Reform Education Fund Asian Pacific American Labor Alliance, AFL-CIO Association of Young Americans (AYA)
Autistic Women & Nonbinary Network Bet Tzedek Legal Services
Cambodian Association of Greater Philadelphia Carolina Jews for Justice
Center for Economic Integrity
Center for LGBTQ Economic Advancement & Research (CLEAR) Center for Responsible Lending
CenterLink: The Community of LGBT Centers CFPB Union NTEU 335
Chicago Foundation for Women
Church Women United in New York State Clearinghouse on Women's Issues Communities for Our Colleges, WA
Community Oriented Correctional Health Services Consumer Federation of America
Consumer Federation of California Cooperative Baptist Fellowship of Texas Council on Social Work Education
Debt-Free MD, INC. (Maryland)
Fayetteville Police Accountability Community Taskforce Forward Montana
Franciscan Action Network
Fund for Community Reparations for Autistic People of Color's Interdependence, Survival, & Empowerment
Greenpeace USA Groundwork Action Hildreth Institute Hometown Action
Housing and Economic Rights Advocates Indivisible
League of United Latin American Citizens (LULAC) Legal Services Staff Association, NOLSW/UAW 2320 Long Beach Alliance for Clean Energy
Maine Center for Economic Policy
Mainers for Accountable Leadership Action Massachusetts Affordable Housing Alliance Mazzoni Center
Michigan Student Power Network Minority Veterans of America
Modern Military Association of America MoveOn
National Association of Consumer Bankruptcy Attorneys (NACBA) National Association of Pediatric Nurse Practitioners
National Black Justice Coalition
National Consumer Law Center (on behalf of its low-income clients) National Education Association
National Employment Law Project National League for Nursing National Women's Law Center National Young Farmers Coalition
NC Coalition for Responsible Lending New Era Colorado
New Hampshire Youth Movement
New Jersey Appleseed Public Interest Law Center NextGen California
Nonprofit Professional Employees Union, IFPTE Local 70 Oasis Legal Services
Ohio Student Association Our Revolution Michigan People's Action
People's Parity Project
Piedmont Alliance for the Prevention of Substance Abuse Progressive Change Campaign Committee
Public Good Law Center
Public Higher Education Network of Massachusetts (PHENOM) Revolving Door Project
SC Appleseed Legal Justice Center SEIU Local 500
Social Security Works Social Work Helper PBC
Student Borrower Protection Center Student Debt Crisis Center
Take on Wall Street
The Coalition of Labor Union Women The Collaborative
The Education Trust UltraViolet
United Church of Christ, Justice and Local Church Ministries URGE: Unite for Reproductive and Gender Equity
We All Rise Women Employed
Women's Rights and Empowerment Network Woodstock Institute
Workplace Fairness Young Invincibles
Zero Debt Massachusetts
1 Lauren Egan, The White House promised a memo on Biden’s authority to cancel debt. Where is it?, NBC NEWS (May 29, 2021, 6:00 AM), https://www.nbcnews.com/politics/white-house/white-house-promised-memo-biden-s- authority-cancel-student-debt-n1268681.
2 Letter from Eileen Connor, Deanne Loonin & Toby Merrill, Project on Predatory Student Lending, Legal Services Ctr. of Harvard L. Sch., to U.S. Sen. Elizabeth Warren (Sept. 14, 2020), https://www.warren.senate.gov/imo/media/doc/Ltr%20to%20Warren%20re%20admin%20debt%20cancellation.pdf. 3 LAURA SULLIVAN, TATJANA MESCHEDE, THOMAS SHAPIRO & FERNANDA ESCOBAR, INST. ON ASSETS AND SOCIAL POL’Y, STALLING DREAMS: HOW STUDENT DEBT IS DISRUPTING LIFE CHANCES AND WIDENING THE RACIAL
4 See Joe Biden, Students React to Joe Biden on Climate Change, Student Debt, & Gun Control, YOUTUBE (Oct. 29, 2020), https://youtu.be/NJ66KFY78g4?t=68 (“I’m going to make sure that everybody in this generation gets
$10,000 knocked off their student debt, as we try to get out of this God-awful pandemic.”).
5 National Ass’n of Realtors & Morning Consult, The Impact of Student Loan Debt, NATIONAL ASS’N OF REALTORS, 11-13 (Sept. 2021), https://www.nar.realtor/research-and-statistics/research-reports/the-impact-of- student-loan-debt.
6 Id. at 11.
7 OFFICE OF U.S. SEN. ELIZABETH WARREN, Education Department Responses to Data Request by Senator Elizabeth Warren, April 2, 2021, https://www.warren.senate.gov/imo/media/doc/Education%20Department%20Response%20to%20Sen%20Warren
%20-%204-8-21.pdf (last visited Oct. 15, 2021).
8 Letter from Raphaël Charron-Chénier, Thomas Shapiro, Louise Seamster & Laura Sullivan, Heller Sch. of Social Pol’y & Mgmt., to U.S. Sen. Elizabeth Warren (Apr. 19, 2019), https://elizabethwarren.com/wp- content/uploads/2019/04/Experts-Letter-to-Senator-Warren-.pdf.
9 Jillian Berman, Canceling $1.4 trillion in student debt could have major benefits for the economy, MARKETWATCH (Feb. 8, 2018, 9:40 AM), https://www.marketwatch.com/story/canceling-14-trillion-in-student-debt-could-have- major-benefits-for-the-economy-2018-02-07.
10 Olivia Rockeman & Catarina Saraiva, Millennials Are Running Out of Time to Build Wealth, BLOOMBERG (June 3, 2021), https://www.bloomberg.com/features/2021-millennials-are-running-out-of-time/.
11 Francisco Velasquez, Over half of Americans have less than 3 months worth of emergency savings, CNBC (July 28, 2021, 12:02 PM), https://www.cnbc.com/2021/07/28/51percent-of-americans-have-less-than-3-months-worth- of-emergency-savings.html.
12.CHARLIE EATON, ADAM GOLDSTEIN, LAURA HAMILTON & FREDERICK WHERRY, ROOSEVELT INST., STUDENT DEBT CANCELLATION IS PROGRESSIVE: CORRECTING EMPIRICAL AND CONCEPTUAL ERRORS 12 (June 2021),
13.CTR. FOR RESPONSIBLE LENDING ET AL., QUICKSAND: BORROWERS OF COLOR & THE STUDENT DEBT CRISIS 1
14.DARRICK HAMILTON ET AL., UMBRELLAS DON’T MAKE IT RAIN: WHY STUDYING AND WORKING HARD ISN’T
ENOUGH FOR BLACK AMERICANS (Apr. 2015), http://www.insightcced.org/wp- content/uploads/2015/08/Umbrellas_Dont_Make_It_Rain_Final.pdf.
15.JEN MISHORY, MARK HUELSMAN & SUZANNE KAHN, THE CENTURY FOUND. ET AL., BRIDGING PROGRESSIVE POLICY DEBATES: HOW STUDENT LOAN DEBT AND THE RACIAL WEALTH GAP REINFORCE EACH OTHER, 4 (Sept. 9,
16 See Judith Scott-Clayton & Jing Li, Black-white disparity in student loan debt more than triples after graduation, BROOKINGS INST. (Oct. 20, 2016), https://www.brookings.edu/research/black-white-disparity-in-student-loan-debt- more-than-triples-after-graduation/.
17 Jonnelle Marte, Black student loan borrowers are defaulting at nearly twice the rate of whites: NY Fed, REUTERS (Nov. 13, 2019, 11:30 AM), https://www.reuters.com/article/us-usa-fed-debt-race-idUSKBN1XN25M.
18 SULLIVAN ET AL., supra note 3, at 1.
19 See <,span class="s12">NATL. WOMEN’S LAW CTR., HIGHER EDUCATION, RECESSION, AND COVID-19: WHAT STUDENT BORROWERS
NEED FROM A FEDERAL STIMULUS PACKAGE (April 2020), https://nwlc.org/wp-content/uploads/2020/04/COVID- Stimulus-and-Higher-Ed-Factsheet.pdf.
20 EATON ET AL., supra note 12, at 1.
21 Rachel Louise Ensign & Shane Shifflett, College Was Supposed to Close the Wealth Gap for Black Americans. The Opposite Happened., WALL ST. J. (Aug. 7, 2021, 5:30 AM), https://www.wsj.com/articles/college-was- supposed-to-close-the-wealth-gap-for-black-americans-the-opposite-happened-11628328602.
22 Jacob S. Rugh, Why Black and Latino Home Ownership Matter to the Color Line and Multiracial Democracy, 12 RACE & SOC. PROBS. 57 (2020), https://doi.org/10.1007/s12552-019-09275-y.
23 See President Joe Biden, Remarks by President Biden on the American Jobs Plan (Mar. 31, 2021), https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/03/31/remarks-by-president-biden-on-the- american-jobs-plan/.
24 Press Release, Consumer Fin. Prot. Bureau, CFPB Sues Nation’s Largest Student Loan Company Navient for Failing Borrowers at Every Stage of Repayment (Jan. 18, 2017), https://www.consumerfinance.gov/about- us/newsroom/cfpb-sues-nations-largest-student-loan-company-navient-failing-borrowers-every-stage-repayment/; see also Teddy Nykiel & Anna Helhoski, Navient Lawsuit: What Student Borrowers Need to Know, NERDWALLET (Oct. 1, 2021), https://www.nerdwallet.com/article/loans/student-loans/navient-student-loan-lawsuit (reporting on the Consumer Financial Protection Bureau lawsuit against Navient); Press Release, Washington State Office of the Attorney General, AG Ferguson: Judge rules national student loan servicer Navient broke the law in servicing student loan debt (Mar. 5, 2021), https://www.atg.wa.gov/news/news-releases/ag-ferguson-judge-rules-national- student-loan-servicer-navient-broke-law (discussing a Washington state court order holding that Navient violated the Consumer Protection Act in servicing student loans).
25 STUDENT BORROWER PROT. CTR., DRIVING INTO A DEAD END: WHY IDR HAS FAILED MILLIONS WITH DECADES-
OLD DEBTS 3 (Sept. 2021), https://protectborrowers.org/wp- content/uploads/2021/10/SBPC_Driving_Into_A_Dead_End.pdf.
26 Press Release, Nat’l Consumer L. Ctr., New Government Data Exposes Complete Failure of Education Department’s Income-Driven Repayment Program (Mar. 8, 2021), https://www.nclc.org/uncategorized/new- government-data-exposes-complete-failure-of-education-departments-income-driven-repayment-program.html. 27 STUDENT BORROWER PROT. CTR., supra note 24.
28 EATON ET AL., supra note 12, at 7.
29 Id. at 2.
30 OFFICE OF U.S. SENATOR ELIZABETH WARREN, supra note 7.
31 THE WHITE HOUSE, FACT SHEET: The American Families Plan (Apr. 28, 2021), https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/28/fact-sheet-the-american-families-plan/. 32 Abigail Johnson Hess, Millions of student loan borrowers don’t have a diploma to show for their debt, CNBC (Jul. 23, 2021, 10:54 AM), https://www.cnbc.com/2021/07/23/millions-of-student-loan-borrowers-dont-have-a- diploma-to-show-for-it.html (detailing that 40% of borrowers who have taken on student debt but have no degree after six years and that the default rate among borrowers who did not graduate is three times as high as for those who did).
33 See Americans for Financial Reform, Sign-on Letter: Over 415 Orgs Call on President Biden to Cancel Federal Student Debt Immediately via Executive Action (Apr. 13, 2021), https://ourfinancialsecurity.org/2021/04/sign-on- letter-over-410-orgs-call-on-president-biden-to-cancel-federal-student-debt-immediately-via-executive-action/.
34 See Press Release, Ctr. for Responsible Lending, Over 300 Faith Groups and Leaders Call on White House to Ease Student Loan Burden with Widespread Debt Cancellation (Aug. 16, 2021), https://www.responsiblelending.org/sites/default/files/uploads/files/faith-release-studentdebt-aug2021.pdf.
35 See Telling the Story of the Student Debt Crisis, STUDENT DEBT CRISIS CTR., https://studentdebtcrisis.org/stories/ (last visited Oct. 15. 2021).
36 Lori Trawinski, Rising Student Loan Debt Continues to Burden Older Borrowers, AARP (Mar. 24, 2021), https://blog.aarp.org/thinking-policy/rising-student-loan-debt-continues-to-burden-older-borrowers.
37 Helaine Olen, Student Debt Increasing the Strain on Older Americans, AARP (March. 6, 2021), https://www.aarp.org/money/credit-loans-debt/info-2019/parents-student-loan-debt.html.