President Joseph R. Biden The White House 1600 Pennsylvania Avenue, NW Washington, DC 20500
December 8, 2021
Dear Mr. President:
In fewer than 60 days, tens of millions of student loan borrowers are slated to be thrown back into repayment on federal student loans they are ill-equipped to pay as the deadly COVID-19 pandemic continues to devastate Americans’ health and financial security. We, the undersigned 207 organizations, write to urge you to put a stop this crisis in the making before it begins and extend the current pause on student loan payments. It is clear that payments should not resume until your administration has fully delivered on the promises you made to student loan borrowers to fix the broken student loan system and cancel federal student debt.
The U.S. Department of Education (“the Department”) holds nearly $1.6 trillion in federal student loans and more than 45 million individual borrowers live in the shadow of that massive debt. Payments on most of these loans have been paused since March 2020, during which time interest charges have also been suspended and the federal government has halted collection efforts against most borrowers in default.
The Department’s own data reveal the powerful impact this payment pause has had on Americans’ lives, finding that “borrowers are saving approximately $5 billion per month from the temporary 0% interest rate.” For the first time, millions of student loan borrowers find themselves with the financial resources they need to make ends meet each month, pay down other debts, save for down payments on homes, or plan for retirement.
The student loan payment pause has been one of the most important investments the federal government has made in Americans' financial lives in a generation. Before the pandemic struck, tens of millions of borrowers struggled every day to navigate a badly broken student loan system. America’s student debt crisis wreaked havoc on the financial lives of families across the country, despite payment relief and debt forgiveness programs that promised that these debts would never be a life-long burden.
You ran for president on the promise that you would reform the student loan system to ensure that student loan payments would be affordable for all. Your administration’s decision to extend the payment pause, alongside the Department’s recent overhaul of the programs for Public Service Loan Forgiveness and Total and Permanent Disability Discharge are critical and welcome first steps. Right now, your administration has the opportunity to continue repairing the damage caused by policy failures at the federal and state level and decades of government mismanagement and industry abuses—an opportunity and an obligation that must be fulfilled before any action is taken to resume monthly student loan payments.
It is critical that your administration continue to deliver on your promises made to student loan borrowers and their families before ending the pause in payments and collections. Borrowers need immediate relief from the crushing burdens of massive student loan debt as the pandemic exacerbates financial strain for all Americans and throws existing racial disparities in wealth and educational attainment into especially stark relief.
The burden of student debt and the costs of our broken student loan system fall disproportionately on Black and Brown borrowers—those who, as a result of decades of racially discriminatory policies and practices that created and sustain the racial wealth and income gaps, most often lack the familial wealth necessary to avoid taking on student debt. A growing body of evidence also demonstrates that these borrowers are disproportionately blocked from accessing existing avenues for debt relief enacted by Congress.
Each day, we are met with new evidence that the student loan system is unable to meet the needs of student loan borrowers and our country. As 2021 draws to a close, we would like to remind you of a few of this year’s examples of that failure:
The National Consumer Law Center received data through FOIA showing that, as of January 2021, only 32 borrowers had successfully navigated the IDR repayment plans and received cancellation, out of more than 4 million with decades-old debts.
The Education Department acknowledged a backlog of 175,000 applications for Public Service Loan Forgiveness—borrowers who may be forced to pay a student loan bill as they remain stuck in the government’s red tape. The recent announcement of the limited and temporary PSLF waiver does offer a new path to relief for some borrowers, but inconsistent servicer implementation of the new rules threatens its promise.
The Education Department also acknowledged a backlog of more than 128,000 applications for Borrower Defense discharges—the number of unprocessed claims for debt relief due to fraud by a school have climbed by more than 20,000 during the first months of the Biden administration.
These are just a few recent examples of how the student loan system is failing borrowers entitled to immediate debt relief under the law. The prospect of a hasty and reckless return to repayment should be cause for alarm.
That is because the companies responsible for managing this transition and the system itself have repeatedly proven unable to avoid widespread failures even when performing basic functions. For example, in two separate scandals at the height of the pandemic, the Education Department and its student loan contractors improperly garnished the wages of hundreds of thousands of people and damaged the credit reports of nearly five million others.
There is a broad consensus among borrowers, advocates, industry, regulators, enforcement officials, and lawmakers that a rush to resume student loan payments is a recipe for disaster and will result in widespread confusion and distress for student loan borrowers. Before resuming payments on student loans, the Department of Education must undertake significant structural reforms; provide real, immediate relief; and cancel a significant amount of federal student debt. This will ensure that millions of borrowers don’t remain trapped in a broken system just as the economy begins to recover.
For the reasons outlined above, we strongly urge you to take immediate action to extend the current pause on student loan payments. We look forward to supporting your administration as you take this necessary action and work to deliver on the promises made to student loan borrowers across the country.
Sincerely,
Student Borrower Protection Center Adasina Social Capital Affordable Homeownership Foundation, Inc. African American Ministers In Action Alaska PIRG Albuquerque Mennonite Church Alliance for Youth Action American Association of University Professors American Baptist Home Mission Society American Civil Liberties Union American Federation of State, County and Municipal Employees (AFSCME) American Federation of Teachers American Federation of Teachers – Vermont American Psychological Association Americans for Financial Reform Association of Latino Administrators and Superintendents (ALAS) Association of Oncology Social Work Association of Young Americans (AYA) Bend the Arc: Jewish Action Blue Future California Alliance for Consumer Education (CACE) California Asset Building Coalition California Association of Nonprofits Californians for Economic Justice CAMEO - California Association for Micro Enterprise Opportunity Campaign for America's Future Campus Action for Democracy Carolina Jews for Justice Center for Economic Integrity Center for LGBTQ Economic Advancement & Research (CLEAR) Center for Responsible Lending Charlotte Center for Legal Advocacy Chicago Consumer Coalition Chicago Foundation for Women Civil Service Bar Association Columbia Consumer Education Council Communities for Our Colleges, WA Community Service Society of New York Consumer Federation of America Consumer Federation of California Consumers for Auto Reliability and Safety Council on Social Work Education Debt Collective Debt-Free MD, Inc. 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Asian Pacific American Advocates Ohio Student Association Our Revolution PAPSA ParentsTogether Partnership for College Completion People's Parity Project Physician Assistant Education Association Progressive Change Campaign Committee Protect All Children's Environment Public Citizen Public Counsel Public Good Law Center Public Higher Education Network of Massachusetts (PHENOM) Public Justice Center Public Law Center Rachel Carson Council Rise Saint Paul's Baptist Church San Francisco Office of Financial Empowerment Service Employees International Union (SEIU) Service Employees International Union Local 500 Service Employees International Union Local 509 Sisters of St. Francis of Philadelphia Southern Echo Inc. SparkAction State of New Mexico Student Action Student Debt Crisis Center (SDCC) TEHope The Arc of the United States The Collaborative The Education Trust The Forum for Youth Investment THE ONE LESS FOUNDATION The United Church of Christ & The United Church of Canada Tzedek DC UnidosUS United Church of Christ, Justice and Local Church Ministries United Vision for Idaho United Way Bay Area Unity Fellowship of Christ Church University of California Graduate & Professional Council University of California Student Association UnKoch My Campus URGE: Unite for Reproductive & Gender Equity VOCAL-NY Voices for Progress We, the 45 Million Whitman-Walker Health Women Employed Young Invincibles Zero Debt Massachusetts