Joint statement by Americans for Financial Reform, Center for Responsible Lending, National Consumer Law Center (on behalf of its low-income clients), Student Borrower Protection Center, Student Debt Crisis, Young Invincibles:
We applaud Representatives Ayanna Pressley, Ilhan Omar, Alma Adams and House Financial Services Chairwoman Maxine Waters for introducing the House companion to the Schumer/Warren resolution calling for broad-based federal student debt cancellation via executive action.
Cancelling substantial student debt will provide both immediate financial relief to millions of Americans, and crucial economic stimulus for everyone during this protracted crisis — boosting GDP and job creation at a time of intense labor shocks and economic contraction.
Cancelling substantial student debt would relieve financial pressure in the Black and Brown communities suffering the most from the pandemic. A history of exclusionary policies has resulted in persistent racial inequities: Black young adults hold 10.4% less wealth on average than their white counterparts due to student debt, and Black graduates owe on average $7,400 more on student loans than their white counterparts. Research has also shown that Black borrowers and other borrowers of color tend to have more difficulty in student loan repayment and more often default than their white peers leaving these borrowers vulnerable to the government’s aggressive debt collection practices, such as the seizure of Social Security and the Earned Income Tax Credit. New research by Professor Raphaël Charron-Chénier of Arizona State University shows that cancelling $50,000 in federal student loan debt would get rid of 95 percent of Black low-income households’ educational debt.
During this ongoing health and economic crisis, it is critical that the next Administration use every tool available to provide relief. The U.S. Department of Education owns more than four out of every five dollars in outstanding student loan debt; there is no other class of consumer debt held in this disproportionate way by the federal government. Cancelling substantial student debt is a clear and effective tool to bring relief to millions of borrowers, their families, and their extended networks.
This resolution is an important, urgent call to use the tools of government to provide immediate relief to millions, and tackle the crisis head-on. We applaud the resolution, and urge all Representatives to co-sponsor this critical call to action.