Our Partners and Allies on Congress’ Response for Student Loan Borrowers Amidst COVID-19
Last night, the Senate passed an updated version of the economic stimulus package, the CARES (Coronavirus Aid, Relief, and Economic Security) Act. This bill is the product of ongoing Senate negotiations, and will serve as the third round of support and direction from the federal government regarding the coronavirus pandemic and its ensuing economic fallout.
The CARES Act expands unemployment insurance for workers, provides $350 billion for the Paycheck Protection Program to help small businesses, and establishes a one-time $1,200 tax rebate per taxpayer. It is largely the consensus of the Higher Ed, Not Debt coalition that while there are some admirable components of this agreement, Americans and student loan borrowers in particular are clearly shortchanged in this negotiation.
Democrats in the House and Senate have introduced a bevy of legislation over the past weeks to center the 45 million American student loan borrowers and address the whopping $1.6 trillion of student debt in America. Reps. Pressley and Omar introduced legislation to cancel $30,000 of student debt per person, and Senators Warren, Brown, Murray, and Schumer proposed cancelling $10,000 per borrower.
It’s clear that this bill neglected those with student debt. Anything less than reducing the balances of student loan borrowers is simply equivalent to delaying their pain for a future date. Despite the best efforts of this economic stimulus package, the economy will never fully recover while borrowers are pinned down by their debt.
See what our partners have to say about the congressional response to student debt amid the COVID-19 pandemic.
The full statements by organizations are accessible via hyperlinks.
Americans for Financial Reform Senior Policy Analyst Alexis Goldstein:
“The 43 million federal student loan borrowers are not getting meaningful relief from the CARES Act. It leaves some federal student loan borrowers without any relief at all, does not guarantee that borrowers won’t face large principals when they return to repayment, and doesn’t include cancelling student debt, a move that both provides crucial relief to distressed borrowers and stimulates a fast-contracting economy.”
Education Reform Now Chief Policy Officer Charles Barone and Director of Strategic Initiatives for Policy Michael Dannenberg:
“The CARES Act ensures a six-month moratorium in Direct Loan payments without interest accrual, but it provides no such moratorium and utterly fails older borrowers (pre-2009 students) struggling to pay federal FFEL student loans as well as borrowers of all ages with private student loans. At the same time, the new law provides billions in bail out funds to shoddy, for-profit trade schools and authorizes Governors to provide proprietary colleges and their shareholders with even more. Rather than a partial moratorium, a poll from Benenson Strategy Group found 69% of all voters would rather see full debt cancelation of every borrower ripped off by a predatory college with an unconscionably high dropout rate. In addition to exponentially increased and targeted funding for struggling public education, a Phase 4 bill should make lasting student loan relief a reality for those ripped-off by bad-actor colleges.”
National Consumer Law Center Student Loan Borrower Assistance Project:
“The Senate picked winners and losers by giving certain federal student loan borrowers a short break from making payments, from interest accrual and from involuntary collection, but withholding that help from others. “Why did the Senate fail to protect the estimated 9 million borrowers with other types of federal loans?” asked Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project. “Lawmakers missed an opportunity to both alleviate historic, inequitable student debt burdens through debt cancellation, and ensure that borrowers can make ends meet now and then recover along with the economy.”
National Consumer Law Center Associate Director Lauren Saunders:
“While the Senate package contains some first steps to relieve the economic crisis, many families will continue to struggle and will be unable to meet basic needs without further action. The enhanced unemployment benefits, stimulus payments, and temporary relief for some mortgage and student loan borrowers are welcome, but many people are left out. The bill fails to provide the widespread relief critically needed to stop foreclosures, evictions, utility shut-offs, bank account garnishments, car repossessions, harsh enforcement of government fines and fees, relief for student loan borrowers, and debt collection activities in general. The bill won’t stop severe consequences for American families who are struggling with debt, have little to no savings, are being crushed by the economic fallout, and have rent, mortgages, student loans, utilities, and other bills to pay on April 1 and in the weeks to come.”
Project on Predatory Student Lending Director Toby Merrill:
“Congress and the Department of Education must ensure that all federal student loan borrowers are able to get the relief offered to some borrowers by this stimulus package. There is no reason to exclude people who filed taxes early from receiving a refund of their tax returns, nor to exclude over a million borrowers who do not choose their type of federal student loan and typically don’t know who holds their federal student loan, and are usually unaware of the holder of their loan.
“Even in the best of times, student debt collection methods like taking people’s earned income tax credits to pay student loans is inhumane, and we’re glad to see it stop during this crisis. It should become a permanent policy moving forward that the government will not take your wages or tax refunds to pay for federal debt that it created. This is especially true for borrowers who have been cheated by for-profit colleges, whose debt is unenforceable.
Student Borrower Protection Center Executive Director Seth Frotman:
“Unfortunately, the stimulus package put forth by Congress threatens to leave struggling borrowers even further behind. Senate Republicans stonewalling real relief for student loan borrowers is both short-sighted and dangerous. The legislation’s temporary pause of some borrowers’ payments simply kicks the can down the road, leaving millions to face inevitable hardship in a short six months. Moreover, the legislation leaves millions of vulnerable borrowers without a lifeline—receiving no assistance and no way out of this crisis.
“Further, implementation of the proposed borrower relief relies on a student loan system that is fundamentally broken. Federal and state investigations have repeatedly shown how student loan servicing is rife with abuse and mismanagement. Student loan companies are ill-equipped to turn these relief benefits on and off for tens of millions of borrowers. These companies have an abysmal track record of setting up struggling borrowers for long term success—and the number of struggling borrowers is about to increase dramatically.”
Student Debt Crisis Executive Director Natalia Abrams:
“There are millions of Americans with student loan debt that find themselves facing the same financial disaster today that they were confronting one-week ago. The stimulus package includes temporary relief for borrowers but fails to ensure that people don’t have their livelihoods threatened by the impacts of the Coronavirus in the months and years ahead. The Senate secured the safe futures of airlines and big businesses and left families still feeling frightened and insecure of theirs.”
“We applaud Senator Elizabeth Warren, Congresswoman Ayanna Pressley, and others in Congress who worked as champions for student loan borrowers during this uncertain time. Their plans would have provided an immediate reduction in debt for millions of borrowers. Further, we commend many lawmakers who fought tirelessly to ensure that at least some relief was included in this stimulus package.”
The Century Foundation Senior Fellows Robert Shireman and Jennifer Mishory:
“Many have called for the outright cancellation of some amount of student loans. The bill does not include any cancellation beyond setting interest at zero percent temporarily. And, the bill does not pause payments or reduce interest for borrowers with private student loans or federally guaranteed loans held by private companies.“
The Institute for College Access & Success (TICAS) President James Kvaal:
“[The CARES Act’s] student loan relief provisions last only six months and fail to address the urgent needs of struggling borrowers that will certainly remain beyond that time period – such as students who were left impoverished by predatory for-profit colleges and who have submitted borrower defense claims left to languish by the Department of Education.
“The bill also unfortunately fails to extend benefits to all types of student loans. Specifically, older guaranteed FFEL (Federal Family Education Loan Program) debt that is not owned by the federal government and campus-based Perkins loans are excluded from this bill, as are private education loans. We urge policymakers and the Education Department to address this coverage gap immediately.
The Roosevelt Institute Vice President of Research Julie Margetta Morgan and Deputy Director of the Great Democracy Initiative and Education Program Suzanne Kahn (via TeenVogue):
“But let’s be clear. The short-term stimulus of canceling monthly payments during this crisis is essential but insufficient to address the challenges young people face. Student debt was weighing down the economy well before the current crisis, keeping millennials and older Gen Zers from investing in homes and starting families. To help stabilize and grow the economy, a recovery package should bring down outstanding student debt levels by canceling a portion of student debt balances over the long term.”
UnidosUS President and CEO Janet Murguía:
“An unprecedented health and economic crisis requires urgent, significant, bipartisan action, and the Senate delivered that. Families and workers from across the country are suddenly facing unemployment and worried about staying healthy, paying their bills, feeding their families and keeping their homes. I am gratified to see that some of the policy and relief priorities developed by UnidosUS in response to the pandemic are included. We are committed to helping to ensure the effective implementation of these provisions so that all workers and their families receive the aid they so desperately need and deserve.”
Young Invincibles Senior Director of External Affairs Jesse Barba:
“Today’s coronavirus bill is a life raft — but not a rescue boat — for the millions of young people who are still grappling with how they will make ends meet as they navigate challenges like unemployment, student loan debt, and paying their daily expenses. By freezing involuntary student loan payments, ensuring low-income students have their basic needs met, preserving Pell Grants, and expanding unemployment insurance, Congress has taken the first few steps that young people need to maintain stability and security during these unprecedented times.
That being said, this legislation is far from comprehensive, and it’s clear that Congress must do more in future legislation if they want to truly support young people. Young people are still demanding meaningful relief from the student debt crisis, more access to affordable housing and food, and expanded opportunities to get quality, affordable health coverage. While what was passed today will help, it doesn’t do nearly enough to put money back in young people’s pockets and ensure they can keep their life on track.”
Posted on 26 March 2020