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student debt relief
'Shameful': Trump Threatens to Redirect Student Loan Borrowers to Most Expensive Repayment Plans
More than 7 million borrowers booted from a Biden-era loan forgiveness program will have to quickly switch to a new plan using a system that's been backed up for months.
Mar 27, 2026
After axing a Biden-era student loan repayment program, the Trump administration is threatening to kick its millions of mostly low-income beneficiaries onto the government's most expensive plan unless they switch to a new one quickly.
The Washington Post reported on Friday that the Department of Education was beginning to email the more than 7 million people enrolled in the Saving on a Valuable Education (SAVE) program, telling them they needed to change their plan within the next 90 days.
Around 4.5 million of those borrowers earn incomes between 150% and 225%, allowing them to qualify for zero-dollar monthly payments under SAVE, which the Trump administration effectively killed in December after settling with Republican states who'd brought lawsuits against the program under former President Joe Biden.
Anonymous officials told The Post that those who do not switch plans within three months of receiving the email will automatically be re-enrolled in the Standard Plan. Unlike SAVE, which is income-based, the Standard plan has borrowers pay a fixed rate over 10 years.
Standard typically carries the highest monthly payments, and those transitioning to it from SAVE could pay more than $300 extra per month in some cases, with the poorest borrowers seeing the sharpest increases.
While 90 days may seem like plenty of time to switch to a less expensive repayment plan, it's not nearly that simple.
Due to the large exodus of borrowers, the Department of Education has struggled to process all the forms, processing only about 250,000 per month. Many borrowers who have tried to transition have found themselves waiting months for a reply.
To make matters more confusing, many of these borrowers will have to switch programs again soon, since all but one repayment program will be dissolved on July 1, 2028 as a result of last year's Republican budget law. The remaining plan will also be income-driven, though it is still expected to cost borrowers more each month.
According to a report released last month by the Century Foundation and Protect Borrowers, two groups that support loan forgiveness, nearly 9 million student loan borrowers are in default. During Trump's first year back in office, the student loan delinquency rate jumped from roughly zero to 25%, which it called "precedent-shattering."
"Much of the rise in delinquencies can be linked to the Trump administration’s actions aimed at increasing student loan payments," the report said. “The US Department of Education blocked borrowers from accessing more affordable payments through income-driven plans, having ordered a stoppage in application processing for three months and mass-denying 328,000 applications in August 2025. As of December 31, 2025, a warehouse’s worth of 734,000 applications sat unprocessed.”
Being in default has major ramifications for borrowers' finances. Those with delinquent loans saw their credit scores decrease by an average of 57 points during the first three quarters of 2025, dragging around 2 million of them into "subprime" territory, which forces them to pay thousands of dollars more for auto and personal loans and makes them more likely to have difficulty finding housing and employment.
The report estimated that if those booted from SAVE defaulted at the same rate as other borrowers, the number of student loan borrowers in distress could rise as high as 17 million.
According to Protect Borrowers, the typical family will pay more than $3,000 per year in additional costs as a result of the end of SAVE.
The end of SAVE comes as oil shocks caused by Trump's war in Iran have spiked gas prices and threaten to raise them throughout the economy, adding to the already elevated costs of food, housing, and transportation resulting from the president's aggressive tariff regime.
"In the middle of an affordability crisis driven by Donald Trump," said Sen. Elizabeth Warren (D-Mass.), "Trump is killing a plan that lowers student loan costs. It's shameful."
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Advocates Decry Senate Confirmation of 'Anti-Abortion Extremist' to Lifetime Federal Court Seat
"Divine's confirmation makes clear that Trump lied to voters when he said he would 'leave it to the states,' and he is actively working to eliminate abortion access nationwide," said a prominent reproductive rights advocate.
Jul 22, 2025
Several advocacy groups expressed outrage on Tuesday after the United States Senate voted to confirm Missouri Solicitor General Joshua Divine to be a United States District Judge for the Eastern and Western Districts of Missouri.
Divine, who was confirmed by a vote of 51 in favor to 46 against, is one of several judicial nominees of U.S. President Donald Trump who has been singled out by advocates for what they describe as his extreme record on a number of issues ranging from reproductive freedoms to LGBTQ rights to relief for student loan borrowers.
Every member of the Senate Democratic caucus voted against Divine’s confirmation with the exception of Sen. Angus King (I-Maine), who voted in favor. All Republicans voting in the Senate on Tuesday supported Divine’s confirmation, while three GOP senators—John Kennedy of Louisiana, Markwayne Mullin of Oklahoma, and Mitch McConnell of Kentucky—did not vote.
Mini Timmaraju, president and CEO of abortion rights advocacy organization Reproductive Freedom for All, argued that Divine's nomination and confirmation were a sign that Trump and the GOP would not be content to leave abortion rights up to individual states.
"Divine's confirmation makes clear that Trump lied to voters when he said he would 'leave it to the states,' and he is actively working to eliminate abortion access nationwide," she said. "Federal courts are a critical line of defense to preserve reproductive healthcare, and these appointments are a dangerous sign of what's to come."
Winston Berkman-Breen, legal director of the Student Borrower Protection Center (SBPC), accused Divine of building a political career on the backs of student loan borrowers who were in dire need of relief from the massive debts they incurred while pursuing an education.
"Time and time again in his lawsuits challenging legal student loan payment and relief programs, Divine took extreme positions at odds with traditional judicial interpretations related to injury, standing, and venue," he said. "Because of Divine, millions of student loan borrowers remain buried in crushing debt. Divine's actions exceeded the bounds of zealous advocacy and were a direct affront to judicial procedure. Americans deserve a judge who will review the facts of the case before them and apply the law under the Constitution and as passed by Congress—not an ideologue who will manipulate those laws to obtain the outcome he prefers."
Lena Zwarensteyn, senior director of the fair courts program and an advisor at The Leadership Conference on Civil and Human Rights, didn't focus on any specific issue and instead took an all-of-the-above approach to condemning what she described as Divine's unfitness for the federal bench.
"The Senate's confirmation of Joshua Divine to the federal bench in Missouri... installs into a lifetime judgeship an individual who does not possess the requisite experience to be a federal judge and who has time and time again demonstrated significant hostility to our civil and human rights," she argued. "His limited legal career—which includes a record of intense opposition to reproductive rights, LGBTQ equality, student loan borrowers, and more—is disqualifying. Our courts, our communities, and our democracy deserve better. Senators must ensure that judicial nominees are fair-minded, actually qualified for the job, and faithful to the rule of law and Constitution rather than to an anti-civil rights agenda."
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'Death Should Not Be the Only Relief': Seniors Lead Their First Action Against Student Debt
"This week for the first time in history, older student debtors have gone to Washington to demand our student loan debts get canceled in our lifetime, not at our funerals," one older debtor said.
Sep 13, 2024
Carrying mock tombstones reading, "Death is not a relief plan" and "Stop burying us in debt," a group of older debtors held the first-ever senior-led mass action for student debt relief outside the White House on Thursday.
Borrowers over 50 are the fastest-growing demographic of student debtors, and some of them are calling on the Biden-Harris administration to take advantage of federal regulations that empower the Department of Education to cancel debt based on age.
"The only comprehensive student debt relief plan that the federal government offers right now is death," Debt Collective creative media strategist Maddie Clifford said in front of the White House. "That is the only way people can escape from these student loan payments."
The participants in the vigil, who collectively owe more than $1 million in student loans and include members of the Debt Collective's "50 Over 50" caucus, shared their stories as they demanded relief.
"I would have never imagined approaching my 60th birthday with $211,388 worth of student debt," said Renita Walker, a Debt Collective member from Sandy Springs, Georgia. "The idea itself is paralyzing. It is the realization that I will probably work myself to death, literally."
Walker took out loans both to continue her education as a single mother after her husband died and to help her two children pay for school. The loan payments ballooned to the point that she was paying $1,800 a month until she took money out of her 401(k) to bring the payment down to around $1,300 a month, still more than her mortgage.
"I just want to say like many of the people here standing behind me, this was not something we asked for," Walker said. "Unfortunately, the system is broken and we have to live with the results of that."
"For decades, millions of older debtors have crouched in shame, imagining ourselves as failures when in reality the system has failed us. But we will no longer be duped into suffering alone."
Fellow Debt-Collective member and Georgia resident Athena Blue, a 67-year-old retired nurse, also took out Parent Plus loans to pay for her children's education.
Blue spoke of overcoming the shame of indebtedness by learning the history of how former U.S. President Ronald Reagan had pushed for the current student loan system in order to make it more difficult for working-class Americans to attend university as a backlash to campus protests in the 1960s and 70s.
"The debt that I'm in isn't my fault," Blue said. "It was created purposely by people like former President Ronald Reagan who believed that only certain people should have the right to higher education."
Blue said she had managed to pay off all of her interest on her loan in 2020 when it was transferred to another provider and she had to start over.
"This burden of a loan threatens my retirement," Blue said, "So how can you, Congress, the Department of Education, and the White House allow this to continue? How can you allow seniors to be subject to predators like this? Have you no moral compass? No shame?"
Debt Collective member Alicia Barnes, who joined the Navy to avoid taking on any more debt, said she had discovered in a meeting with the Department of Education that day that her service provider had illegally placed her debt into default while she was deployed.
"Instead of including a Suicide Hotline for veterans on every piece of communication we receive, the causes of these tragedies should be met with real solutions including absolving some of the debt we accrued during our service because of this compounded interest and illegal activity by these debt collectors," Barnes said.
Every speaker at Thursday's vigil was a woman, as are the majority of student loan debtors. A disproportionate number of student debtors are Black women in particular.
Many of the speakers went into debt to pursue careers in public service fields like education, pastoral counseling, and social work.
"We are caring human beings that wanted to help out the world," said Debt Collective member Mary Donahue of Maryland. "We just need a little help."
The Debt Collective insists that "death should not be the only relief plan for their old, unpayable student loans."
"Decades of broken student relief programs, corrupt loan services, and government neglect have meant that millions of older Americans dragged decadesold student debts into their retirement," said Gail Gardner, who is 77 years old and owes $549,497.20. "Absent swift, bold policy change, and clear political leadership, this crisis will only deepen. The debtors will get older. The debts will get bigger."
That is why she said she had joined with other older debtors to "demand the White House and the Department of Education finally take responsibility for clearing the student debts burdening myself and millions of older Americans."
Both Gardner and Clifford pointed out that discharging debts based on age was something that the Biden-Harris administration could do without running afoul of right-wing attempts to block President Joe Biden's other attempts at student debt relief.
"We are urging the Biden Harris administration to work as fast and as hard as Republicans are working to keep us in debt to free borrowers from these loans, and they can do it today," Clifford said.
Gardner concluded: "For decades, millions of older debtors have crouched in shame, imagining ourselves as failures when in reality the system has failed us. But we will no longer be duped into suffering alone. This week for the first time in history, older student debtors have gone to Washington to demand our student loan debts get canceled in our lifetime, not at our funerals. We can't afford to wait."
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One Year After Supreme Court Ripped Away Student Debt Relief, Borrowers Still Waiting for Promised Relief
The clock is ticking. Young borrowers must not lose out on urgently-needed debt relief should November bring a new administration.
Jun 30, 2024
Exactly one year ago, President Joe Biden stood before the American people after the politicized U.S. Supreme Court ripped away critical student debt relief from 40 million borrowers. The President reaffirmed his commitment to cancel student debt and pledged to use different authority under the Higher Education Act. Since then, President Biden has worked arduously to deliver debt relief to nearly 5 million student loan borrowers by making critical fixes to loan relief programs. But now, in nearly identically timed releases, federal judges in Kansas and Missouri issued a pair of injunctions blocking portions of the new Saving on a Valuable Education repayment plan (the SAVE plan)—making President Biden’s promise of relief more critical than ever.
Biden’s fixes to Public Service Loan Forgiveness and the Income-Driven Repayment Account Adjustment gave millions of borrowers the relief they should have received all along. And this cancellation has been life-changing for the borrowers who have been trapped in the broken student loan system for decades. But one fix that still remains elusive is the crushing burden that student loan debt is putting on our nation's youngest borrowers.
If this rule is pushed to the next Administration, young borrowers may be cut out of relief entirely.
Young people have not had decades to experience runaway interest or pay into the wrong payment plan, but they are being devastated by the student loan crisis nonetheless. For borrowers who are just starting out in their careers, their student debt is inhibiting their ability to start a family, buy a home, save for retirement, or start a business. Student debt is exacerbating racial and economic inequities and widening the racial wealth gap, worsening economic insecurity for people with disabilities, and increasing health disparities and the mental health crisis. And after this week’s rulings, these young borrowers may not even have the benefit of affordable payments and the guarantee of a light at the end of the tunnel.
A recent poll found that at least two-thirds of the youngest voters consider cancelling student loan debt to be an important issue in the upcoming election. It is no wonder why. In fact, younger voters are also far more likely to connect student debt relief with a stronger U.S. economy no matter their political affiliation—even Gen Z and Millennial Republican voters believe action to cancel student debt will help the economy by a 2:1 margin.
And yet, these are the last borrowers to see relief. Earlier this year, a U.S. Department of Education committee held a series of meetings to create a hardship rule for student debt relief. The committee came to consensus on a proposal to provide the Secretary with broad authority and flexibility to cancel debt for borrowers most likely to face difficulties repaying their student loans. It would allow the Secretary to consider a wide-ranging list of factors when considering whether a borrower is experiencing hardship. If enacted, this rule has the potential to unlock economic mobility for millions of young borrowers, workers, and families.
Despite the fact that the committee reached consensus in February, the Administration has yet to publish the proposed rule on hardship. It is no secret that time is running out for the Administration to finish its regulatory agenda. If this rule is pushed to the next Administration, young borrowers may be cut out of relief entirely.
It has been a year since the Supreme Court callously ripped vital relief from tens of millions. Providing relief to young borrowers must be a priority—the Administration cannot allow young student loan borrowers to be a victim of the clock.
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Sanders Leads Senate Dems in Push to Strengthen Student Loan Debt Relief
"We must act boldly so that the millions of Americans who are struggling to pay for basic necessities are not crushed by mountains of debt for getting a college education," said the Vermont senator.
May 21, 2024
Applauding the Biden administration for its proposal of "historic" methods of canceling student debt for millions of Americans after President Joe Biden's original plan was struck down by the U.S. Supreme Court last year, Sen. Bernie Sanders on Tuesday led members of the Democratic caucus in submitting a public comment with suggestions for strengthening the new proposal.
"We support the department's efforts to provide significant pathways to relief for student loan borrowers. These efforts are critical, especially in the wake of the Supreme Court's extreme, overreaching decision to strike down the Biden administration's original student debt relief plan," wrote the senators, including Sens. Elizabeth Warren (D-Mass.), Ed Markey (D-Mass.), and Cory Booker (D-N.J.).
The administration's plan—which would entirely wipe out the student loan debt held by 4 million people, provide at least $5,000 in debt relief to 10 million borrowers, and eliminate the interest of 23 million more—the letter states, "would undoubtedly eliminate the crushing student debt burden for borrowers who have long been waiting for needed relief."
But with 43 million people in the U.S. owing a collective $1.6 trillion in federal student loans—an amount that has prevented many from purchasing homes, starting businesses, and having families—the senators said the government must "act boldly so that the tens of millions of Americans who are struggling to pay the rent, put food on the table, and pay for the basic necessities of life are not crushed by a mountain of debt for getting a college education."
The lawmakers proposed:
- Eliminating all of the excess interest that has accrued over what a person originally borrowed, regardless of the repayment plan they are on or what their income is;
- Discharging debt for borrowers who have been in repayment for over two decades on a rolling basis, so no borrower has to delay or forego retirement because of their student loan debt;
- Providing relief to borrowers who have been victims of servicing errors or misconduct; and
- Providing debt relief to every eligible borrower automatically.
Eliminating excess interest would "help millions of borrowers get off the never-ending treadmill of student loan repayment and help them make progress toward eliminating their debt," said the senators. "Student loan debt should never be a life sentence."
Sanders (I-Vt.) and his colleagues also recommended full debt cancellation for borrowers who have repaid enough debt to cover their original principal, regardless of their income.
The lawmakers urged the Department of Education to promptly release its proposed final rule for debt relief for people experiencing economic hardship, which could "provide needed relief to borrowers not otherwise captured in this proposal."
"Every day spent without relief is another day borrowers experiencing economic hardship face unnecessary financial burdens," reads the letter.
The Biden administration has said it plans to finalize its student debt proposal by this coming fall, when Americans will vote in the general election. Former President Donald Trump, the presumptive Republican nominee, has opposed student debt cancellation.
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'A Big Deal': Progressives Applaud New Biden Plan to Provide Student Debt Relief for Millions
"Progressives have led the fight for student debt cancellation, and Joe Biden has responded," said one advocate.
Apr 08, 2024
Organizers who have tirelessly pushed for student debt cancellation applauded on Monday as President Joe Biden—who years ago dismissed the proposal as "unrealistic"—announced a plan to help tens of millions of Americans burdened with educational debt.
Biden announced his new plan at Madison Area Technical College in Madison, Wisconsin, less than a year after the U.S. Supreme Court struck down his previous program, which would have provided relief to 40 million borrowers by canceling up to $20,000 in debt per person.
Aissa Canchola Bañez, policy director of the Student Borrower Protection Center (SBPC) credited Biden with publicly resolving to find a solution for struggling Americans "only hours after the Supreme Court callously struck down his original debt relief program."
The president's new plan would wipe out the entire debt amount held by about 4 million people, give debt relief of at least $5,000 to 10 million borrowers, and reduce the undergraduate and graduate student debt of 23 million people whose interest would be eliminated.
The plan would allow millions of young people to "finally get on with their lives instead of their lives being put on hold," said the president.
Student debt is "not just a drag on them, it's a drag on our local economies," Biden said in Madison. "When you can't afford to buy a home, start that small business, chase that career that you'd been dreaming about for a long time."
I said I wouldn't back down from using every tool at our disposal to get student loan borrowers the relief they need.
That's why today we're announcing new plans that, if implemented, would cancel student debt for millions more. pic.twitter.com/rNiCxzzlU3
— President Biden (@POTUS) April 8, 2024
Bañez said in addition to bringing "tens of millions of borrowers one step closer to realizing the life-changing impact of student debt cancellation," Biden's announcement "also offers a roadmap for how this administration should deal with a hostile Supreme Court majority captured by right-wing special interests."
"Call the high court's bluff by aggressively using the full power of the law and delivering for working people," she said. "For too long, student debt has blocked homeownership, inhibited savings, limited career opportunities and economic mobility, and choked at the promise of entire generations. Taken together, the Biden administration's actions are setting a path to a debt-free, brighter economic future for more than 30 million Americans."
"Now, the president must move fast and finish the job," she added.
Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, said pressure from "borrowers, activists, and progressives in Congress" pushed Biden to develop a new plan after his original program was struck down.
"Progressives were the earliest and loudest champions of student debt cancellation, and this president is delivering—despite Republican obstruction," she said. "We are proud to continue our partnership with the Biden administration on its implementation of this and other pathways to cancellation."
The Biden administration said it expected Republicans to file legal challenges, which could prevent the new provisions from going into effect by the time Americans choose between Biden and former President Donald Trump in November.
"President Biden will use every tool available to cancel student loan debt for as many borrowers as possible no matter how many Republican officials stand in his way," Karine Jean Pierre, the White House press secretary, told The New York Times.
"At a time when young people across the country are struggling economically, President Biden's decision to reduce the outrageous level of student debt they face will be extremely helpful."
Americans who now owe more in student debt than the amount that they originally borrowed due to interest would have up to $20,000 in interest wiped out. People who make less than $120,000 per year could have all of their interest canceled.
People who took out federal loans for undergraduate degrees and began repaying them more than 20 years ago would have their debt automatically canceled. The same would apply for people who began repaying their graduate degree loans more than 25 years ago.
People who attended colleges that have since lost their certification or their eligibility to participate in federal student aid would have their debt wiped out, and Americans who are particularly burdened with other necessary expenses could apply to have their debt canceled.
The program "will change lives," said U.S. Rep. Cori Bush (D-Mo.) as she pledged to continue her push to "cancel student debt fully."
Andrew O'Neill, legislative director for progressive advocacy group Indivisible, noted that combined with the $146 billion in relief Biden has already provided to about 4 million borrowers through executive actions and other measures, "more than 30 million folks will now get relief from Biden's programs."
"Progressives have led the fight for student debt cancellation, and Joe Biden has responded," O'Neill told the Times.
Sen. Bernie Sanders (I-Vt.), a longtime advocate of student debt cancellation and tuition-free college, applauded Biden for "using every possible tool to reduce student debt."
Astra Taylor, a filmmaker and leading student debt cancellation activist, noted that Biden's plan falls short of complete debt relief, but said the power of economic justice campaigners' advocacy is undeniable, considering the president's decision to prioritize student debt.
"A reminder that a U.S. president leaning into debt cancellation like this was unimaginable not that many years ago," said Taylor. "Do we need to keep pushing so actions match words? Yes. Do we need to keep fighting to win not only debt relief but free college? Of course."
"Organizing," she added, "is everything."
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'It Will Be a Catastrophe': Student Loan Payments to Resume Even If GOP Shuts Down Government
"Forty million people are being thrown to the wolves," warned one advocacy group.
Sep 28, 2023
Despite advocates' pleas for the Biden administration to slam on the brakes, the U.S. Education Department confirmed Thursday that student loan payments will resume for the first time in three-and-a-half years on October 1—even if the federal government shuts down.
An unnamed Education Department spokesperson told Politico that payments will be due starting in October "even if Republicans needlessly shut down the government." Student loan debt began accruing interest again earlier this month after the coronavirus pandemic-related pause.
The official's comment came hours after the Student Borrower Protection Center (SBPC) issued a statement imploring the Biden administration to halt the planned restart of student loan payments.
"If House Republicans shut down the federal government, the Biden administration must shut down the student loan system too," said SBPC executive director Mike Pierce. "As it stands, the administration plans to keep paying the student loan companies botching this effort to restart payments while furloughing the federal employees who are supposed to help borrowers when things don't go according to plan."
"This will result in more borrowers receiving inaccurate and incorrect information with less oversight and fewer resources to fix problems," Pierce added. "Forty million people are being thrown to the wolves. It will be a catastrophe."
"To throw borrowers back into repayment with bad-faith loan servicers and an understaffed Department of Education is a recipe for disaster."
Rep. Ayanna Pressley (D-Mass.), a longtime champion of student debt cancellation, also urged the Biden administration to keep the repayment pause in place if the government shuts down this coming Sunday.
"The student loan payment pause has been a lifeline for borrowers across the nation," said Pressley. "As we stare down an impending Republican government shutdown, it is abundantly clear that student loan payments should not resume October 1."
Pressley continued:
To throw borrowers back into repayment with bad-faith loan servicers and an understaffed Department of Education is a recipe for disaster and would deeply undermine the progress we have made to advance economic justice for student loan borrowers. While the administration works diligently to push back on the corrupt Supreme Court's obstruction of President [Joe] Biden's historic cancellation plan, we should take immediate steps to prevent borrowers from entering into repayment at a time when the infrastructure is not there and bad actors will seize on the lack of government capacity caused by Republican dysfunction.
This Republican government shutdown stands to harm families across the nation, many who were just regaining their financial footing for the first time since the Covid-19 crisis. The administration should absolutely pause student loan payments and interest accrual in light of these stark realities.
The Education Department said earlier this year that it would lift the student loan repayment pause shortly after the Supreme Court's ruling on Biden's debt cancellation plan. That timeline was cemented by a debt ceiling agreement that the White House negotiated with House Republicans.
Advocates have been warning for months that a resumption of payments without broad-based relief for borrowers would be both unjust and unwise. The Consumer Financial Protection Bureau estimated in June that millions of borrowers "have risk factors that suggest they could struggle when scheduled payments resume," including "pre-pandemic payment assistance on student loans" and "delinquencies on other credit products since the start of the pandemic."
Additionally, analysts believe resuming student loan payments will yank $70 billion out of the U.S. economy each year.
In an effort to mitigate some of the looming financial pain, the Education Department has implemented a three-month grace period for missed payments once the pause is lifted in October and launched a new income-driven repayment plan known as SAVE, which is aimed at lowering borrowers' monthly payments.
But advocates and borrowers have already reported significant chaos in the weeks leading up to the end of the freeze, a signal that the resumption of payments in the coming days is likely to be nightmarish.
The American Prospect's David Dayen reported in late August that the "transfers of millions of student loan accounts to new private loan servicers, which have slashed staff and need to ramp up quickly, have led to what some borrowers believe are miscalculations and mistakes."
"One borrower, Melanie Neff, a pediatric palliative care social worker, said her payment under SAVE more than tripled, from $300 to $1,000 a month, even though her income hasn't significantly increased since 2019," Dayen wrote. "Some servicers even sent borrowers statements saying their debts were paid off in full based on the Biden administration's debt cancellation program, only to have to revoke that when the Supreme Court struck it down. Since that program was stopped almost immediately by court injunction, there's no way that servicers should have sent out payoff statements, which just added to the confusion."
The Debt Collective noted in a social media post on Thursday that "the Biden administration is already attempting to do the administratively impossible—resume a 45 million person portfolio of student debt payments after a three-year pause with broken servicers."
"Doing it during a government shutdown will only exacerbate problems," the group wrote. "This is bad bad bad."
The Biden administration is currently pursuing an alternative student debt cancellation plan using the Higher Education Act of 1965, but it has chosen to undergo a time-consuming rulemaking process instead of wiping out debt immediately—which advocates and experts say he has the authority to do.
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US Cities and Counties Demand Promised Student Debt Relief From Biden
The letter highlights "the crushing weight of the student debt crisis on borrowers and their communities, and the extended economic limbo millions of borrowers have been forced to endure."
Sep 21, 2023
Leaders of 20 U.S. cities and counties, representing more than 1.2 million borrowers with nearly $50 billion in student debt, wrote to President Joe Biden on Thursday demanding swift action on long-promised and long-delayed relief.
Biden's first plan to cancel up to $20,000 per borrower was struck down by the U.S. Supreme Court in June. The administration is now working on a new relief plan involving the Higher Education Act (HEA) of 1965 but has chosen to initiate a drawn-out rulemaking process that campaigners say is unnecessary.
While welcoming the HEA effort, the letter stresses the urgent need among borrowers whose loan payments are set to resume October 1 after being paused for over three years in response to the Covid-19 pandemic.
"Given the crushing weight of the student debt crisis on borrowers and their communities, and the extended economic limbo millions of borrowers have been forced to endure as partisan lawsuits blocked transformative debt relief in the courts, we urge you to continue the necessary work to deliver on your promise of up to $20,000 in student debt relief and enact your new debt relief plan as swiftly as possible," local leaders from more than a dozen states wrote to the president.
"The Supreme Court's decision to ignore the clear letter of the law and strike down your life-changing debt relief plan is further evidence of its willingness to put politics and special interests before the American people," they argued.
The letter is signed by mayors, city attorneys, and other officials from Little Rock, Arkansas; Berkeley, Oakland, and San Francisco, California; Evanston, Illinois; Gary, Indiana; Mount Rainier, Maryland; Boston, Massachusetts; Ann Arbor, Lansing, and Washtenaw County, Michigan; Kansas City, Missouri; Carrboro and Hillsborough, North Carolina; Hoboken and Newark, New Jersey; Cleveland, Ohio; Philadelphia, Pennsylvania; Travis County, Texas; and Madison, Wisconsin.
As they detailed:
America's cities are on the frontlines of the $1.7 trillion student debt crisis. This crisis has spiraled out of control, reinforcing deeply embedded inequities in our country and creating financial despair in our communities—and the pandemic has exacerbated these challenges. Relief is urgently needed to help alleviate the financial burden on residents, helping families cover rising costs and invest in our local economies and their own future. As officials in your administration have consistently stated, resuming loan payments this fall without first providing broad-based student debt relief would result in a catastrophic wave of borrower distress, dealing a punishing blow to millions of families in our communities while destabilizing our local economies and increasing demand for public benefits and services.
As the letter notes, the Consumer Financial Protection Bureau said in June that around 2.5 million student loan borrowers already have a delinquency on another loan. The federal agency also found that about 1-in-5 student loan borrowers "have risk factors that suggest they could struggle when scheduled payments resume."
Recent polling suggests that number could be even higher. As Common Dreams reported last month, 49% of borrowers surveyed by Intelligent.com said they aren't sure they can afford the looming loan bills, and 62% said they are likely to boycott repayments.
"Your administration is now only days away from restarting a fundamentally broken and underfunded student loan servicing system, throwing 45 million Americans into chaos," the new to Biden letter warns. "While we appreciate your administration's announcement to shield borrowers from the most severe economic consequences of default, millions of borrowers will be forced to navigate the complex system for the first time in more than three and a half years."
Potentially compounding the stress for borrowers, the resumption of payments could coincide with a looming government shutdown—and as Insider reported Monday, the U.S. Department of Education "does not yet have a contingency plan for managing Federal Student Aid's operations without funding in two weeks."
Whether or not the government will be shut down when payments resume, borrowers are bracing for the impacts of another monthly bill, as are restaurants, retailers, and overcrowded animal shelters—and economists are warning of the consequences for the U.S. economy.
Pausing payments "helped ensure that people did not face financial ruin as a part of a pandemic they did not cause, and borrowers found themselves on more solid financial footing, for many, for the first time in years," Angela Hanks, chief of programs at Demos and a former Biden administration official, told Newsweek on Thursday.
"This meant that people were able to pay other bills on time, including basics like rent and groceries," Hanks said. "For the millions of borrowers who will be forced into repayment in just a few weeks, this transition will undermine whatever stability they've been able to create for their families over the last few years."
"The end of the student loan forbearance risks disrupting an otherwise growing economy," she added. "Wages are outpacing inflation, and unemployment is down, but saddling families with another expensive bill risks undermining our collective economic progress."
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GOP Lawmakers Move to Block Biden's Helping Hand to Student Loan Borrowers
"We condemn this move to block a plan that will provide significant financial relief to low-income borrowers and communities of color," said one advocate.
Sep 06, 2023
Just as the Biden administration announced this week that 4 million people have enrolled in its new income-driven repayment plan for student loan borrowers just two weeks after it was launched, Republican lawmakers in Congress announced plans to rip the debt relief away from Americans—saddling them with a continued financial burden that has left many working people unable to purchase homes, provide for a family, and save money.
Led by Sens. Bill Cassidy (R-La.), John Thune (R-S.D.), and John Cornyn (R-Texas), 17 Republican senators said Tuesday that they would use the Congressional Review Act (CRA), a tool members of Congress can invoke to overturn final rules set by federal agencies, to repeal the Saving on a Valuable Education (SAVE) plan.
The plan bases student debt monthly payments on borrowers' income and family size, allowing those who earn $15 per hour or less to avoid any monthly payment. An estimated 1 million people are expected to have no monthly payments under the plan and other borrowers are expected to save at least $1,000 per year compared with other income-driven repayment plans.
Education Secretary Miguel Cardona said Tuesday that Americans are submitting new applications for the SAVE plan each day "so that they, too, can take advantage of the most affordable student loan repayment plan in history."
"This is real money President [Joe] Biden is putting back into the pockets of working families," Cardona said last month when the program was launched. "And when borrowers struggle to make ends meet, we're not going to kick them while they're down."
But Republicans including Reps. Virginia Foxx (R-N.C.) and Lisa McClain (R-Mich.), who have introduced a companion bill to Cassidy's in the U.S. House, claim the program is "illegal" and will "leave mountains of debt at the feet of taxpayers while absolving millions of borrowers of their loans."
Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending, said Wednesday that lawmakers should "oppose the CRAs to repeal SAVE."
"Senate Democrats will strongly oppose this Republican measure should it come to the floor for a vote, and we will stand with student loan borrowers as we continue to push for as much relief as possible."
"We condemn this move to block a plan that will provide significant financial relief to low-income borrowers and communities of color," said Herbin. "SAVE provides hope for borrowers as the administration continues to fight alongside advocacy groups to find other ways to achieve broad-based student loan relief. We continue to support President Biden in his quest to make our educational finance system fairer for all borrowers and oppose harmful legislation, such as these CRAs, that will set our already flawed student loan repayment system back to the pre-pandemic era."
Debt relief campaigners and legal experts have said for years that the Biden administration is legally able to wipe out student debt—going much further than the SAVE plan does—using the Higher Education Act of 1965, which allows the education secretary "to enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand" related to federal student loans.
Republicans including Cassidy previously tried to block Biden's debt relief plan which would have canceled up to $20,000 in debt for some student loan borrowers, before the right-wing majority on the U.S. Supreme Court struck down the proposal.
The GOP announced its latest plan to stop borrowers from benefiting from the income-based repayment plan as the administration works on a broad relief plan under the Higher Education Act, and just days after interest on federal student loans began to accrue again following a pause that began during the coronavirus pandemic.
About half of student borrowers in a poll released by Life and My Finances said they would not be able to afford monthly payments when they resume next month.
While "Democrats work hard to find new ways to provide relief for borrowers in need," said Senate Majority Leader Chuck Schumer (D-N.Y.), "Republicans, instead of working with us to find a fix to our broken student loan system, immediately shoot them down."
"Republicans use the same old, tired excuse: that student loan relief only helps the few, the wealthy. That's utter nonsense," said Schumer. "President Biden's SAVE plan will benefit the Americans who need it most: working and middle-class families, students of color, community college students, and borrowers working in public service."
"Senate Democrats will strongly oppose this Republican measure should it come to the floor for a vote," he added, "and we will stand with student loan borrowers as we continue to push for as much relief as possible."
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New Tool Creates Personalized Legal Memo Asking Education Department to Cancel Student Debt
"President Biden says he is going to use every tool he can to cancel student debt, but there is still much more he can do," said a co-founder of the Debt Collective. "With this new tool, we are calling his bluff."
Aug 28, 2023
"Filling out this form creates an individual demand letter, tailored to your own student debt story, calling on the Department of Education to use its powers to cancel not just your debt, but everyone's."
That's how the Debt Collective describes a tool it launched Monday to increase pressure on the Biden administration to deliver on long-promised relief from federal student loan repayments.
As the group's website explains, for those who want to use the tool:
- You answer some basic questions about your student debt.
- Based on your answers, we've created legal language to assert why your loans are BS and should be canceled. Those answers will generate a demand letter.
- When you've completed all the questions, the form will get sent automatically to key officials with the power to act at the Department of Education.
"Using this new tool can in no way harm you," said Debt Collective spokesperson Braxton Brewington. "The reality is, the Education Department has the authority to eliminate a person's federal student debts if they want to. We know because they've done it before. Whether they choose to cancel people's debts or not is completely up to their political rationale."
An FAQ section for the tool explains that filling out the form does not ensure debt cancellation, and "the Department of Education is not required to respond to these letters. However, our goal is to submit so many of them, they will HAVE to make a statement."
President Joe Biden—who is seeking reelection next year—announced his initial plan to use a 2003 law to cancel up to $20,000 per borrower last August, but the U.S. Supreme Court's right-wing supermajority struck down the program in June.
Now, with loan payments that have been paused throughout the Covid-19 pandemic set to resume in October, borrowers and some Democrats in Congress have renewed demands for urgent relief action by the Biden administration.
"President Biden says he is going to use every tool he can to cancel student debt, but there is still much more he can do," noted Debt Collective co-founder Thomas Gokey. "With this new tool, we are calling his bluff and demanding he cancel the debt for everyone today."
After the Supreme Court ruling, the Biden administration initiated a rulemaking process involving the Higher Education Act of 1965, but borrowers and campaigners are concerned about how long it is taking and warn that right-wing opponents of debt cancellation will use the time to come up with ways to keep blocking relief.
Hoping for swift and sweeping presidential action, the Debt Collective previously published a draft executive order that says in part, "The secretary of education shall immediately use the full extent of his power under the Higher Education Act and any other applicable law to cancel all obligations to repay federal student loans."
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