President Joseph R. Biden
The White House
1600 Pennsylvania Avenue
Washington, DC 20500
June 24, 2021
Tens of millions of student loan borrowers are slated to resume making student loan payments on October 1, 2021. We, the undersigned 128 organizations representing millions of students, student loan borrowers, workers, people of color, veterans, people with disabilities, people of faith, consumers, and many others, are writing to urge you to extend the pause on student loan payments until your administration has 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 holds $1.4 trillion in federal student loans, making the United States one of the largest holders of consumer debt in the world. Payments on 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 borrowers in default.
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—a recognition that the inadequacies of the existing student loan safety net could not protect families in the midst of an economic and public health crisis.
For the first time, millions of student loan borrowers find themselves with the financial resources they need to make ends meet each month. Millions of others have been able to use this financial lifeline to pay down other debts, save for down payments on homes, or plan for retirement.
You ran for president on the promise that you would reform the student loan system to ensure that student debt would not be a lifelong burden and that student loan payments would be affordable for those in repayment. You further promised that your administration would cancel a significant amount of student debt—including by providing broad-based cancellation for all borrowers as well as clearing the books of all debts owed by borrowers defrauded by for-profit schools, borrowers who are totally and permanently disabled, and borrowers who have worked in public service for a decade or more.
It is critical that your administration deliver on these promises made to student loan borrowers and their families before ending the pause in payments and collections.
Before the pandemic struck, tens of millions of borrowers struggled 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. Your administration now has a once-in-a-generation chance to repair 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.
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 disproportionately miss out on 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. For example, this year alone:
● The Government Accountability Office found that the Public Service Loan Forgiveness program, which was established nearly fourteen years ago, has only cancelled the loans of 124 members of the military, even as hundreds of thousands of borrowers have served.
● 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 government has identified more than 500,000 people with disabilities who are eligible to have their debts immediately cancelled based on data provided by the Social Security
Administration to the Education Department. Instead, they face the looming prospect of another student loan bill.
● The Education Department acknowledged a backlog of nearly 150,000 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 Education Department also acknowledged a backlog of more than 100,000 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.