Effort calls for student debt cancellation specifically targeted toward borrowers facing financial hardship
New letter from Senator Reverend Warnock and his colleagues urges the Department of Education to hold a fourth negotiated rulemaking session to consider student debt relief
Senator Reverend Warnock and Lawmakers: “The Biden Administration must continue to use its authority to deliver on the promises made to student loan borrowers and hold a fourth negotiate rulemaking session, as quickly as possible, to complete discussion of hardship-based relief—and once complete, swiftly propose and implement debt relief for millions of hard-working Americans”
The new bicameral letter is Senator Reverend Warnock’s latest effort to push the Biden Administration to provide meaningful student debt relief
Washington, D.C. – Today, U.S. Senator Reverend Raphael Warnock (D-GA), Majority Leader Chuck Schumer (D-NY), and Senators Elizabeth Warren (D-MA), Bernard Sanders (I-VT), and Alex Padilla (D-CA), along with Assistant House Democratic Leader Jim Clyburn (D-SC, 6th), and U.S. Representatives Ayanna Pressley (D-MA, 7th), Frederica Wilson (D-FL, 24th), and Ilhan Omar (D-MN, 5th), led their colleagues in a bicameral effort urging Secretary of Education Miguel Cardona to host a fourth session of the student debt negotiated rulemaking to consider relief for borrowers experiencing financial hardship.
Since the Supreme Court struck down President Biden’s original student debt relief plan, the administration has been pursuing an alternative path for student debt relief through negotiated rulemaking (neg-reg) under the Higher Education Act. However, the Department of Education (ED) has not proposed language targeting relief to borrowers experiencing financial hardship, and the negotiators were unable to take a vote on a hardship category in the third and last scheduled negotiated rulemaking session. Many negotiators asked if another session would be scheduled to consider “those experiencing hardship that is not otherwise addressed by the existing student loan system.”
“While we appreciate the efforts of the Department and the negotiating committee, we are concerned that, without full consideration of cancellation targeted toward borrowers facing financial hardship, the rule will not provide adequate debt relief for the most vulnerable borrowers,” the lawmakers wrote. “The Department should announce a fourth session of the neg-reg to allow the appropriate time for negotiators to discuss and vote upon a relief proposal for borrowers experiencing financial hardship.”
In their new letter, Senator Warnock and his colleagues also explained how the agency could define “financial hardship,” giving the Department a framework to solidify regulatory language and finalize a vote on this category.
“The Biden Administration must continue to use its authority to deliver on the promises made to student loan borrowers and hold a fourth negotiate rulemaking session, as quickly as possible, to complete discussion of hardship-based relief—and once complete, swiftly propose and implement debt relief for millions of hard-working Americans,” the lawmakers continued.
The letter, which was authored by Senator Warren, was signed by 40 lawmakers from the Senate and House, including: U.S. Senators Richard Blumenthal (D-CT), Cory Booker (D-NJ), Tammy Duckworth (D-IL), Dick Durbin (D-IL.), Ed Markey (D-MA), Tina Smith (D-MN), Chris Van Hollen (D-MD), Peter Welch (D-VT), and Ron Wyden (D-OR), and U.S. Representatives Alma Adams (D-NC, 12th), Jamaal Bowman (D-NY, 16th), Cori Bush (D-MO, 1st), Greg Casar (D-TX, 35th), Kathy Castor (D-FL, 14th), Dwight Evans (D-PA, 3rd), Pramila Jayapal (D-WA, 7th), Ro Khanna (D-CA, 17th), Barbara Lee (D-CA, 12th), Gwen Moore (D-WI, 4th), Jerrold Nadler (D-NY, 12th), Eleanor Holmes Norton (D-D.C.), Katie Porter (D-CA, 47th), Jan Schakowsky (D-IL, 9th), Shri Thanedar (D-MI, 13th), Bennie Thompson (D-MS, 2nd), Rashida Tlaib (D-MI, 12th), Nydia Velázquez (D-NY, 7th), Bonnie Watson Coleman (D-NJ, 12th), and Nikema Williams (D-GA, 5th).
Read the letter HERE and below:
Dear Secretary Cardona:
We are writing regarding the Department of Education’s (“ED” or “the Department”) ongoing efforts to pursue student loan relief for millions of Americans through the negotiated rulemaking (“neg-reg”) process. While we appreciate the efforts of the Department and the negotiating committee, we are concerned that, without full consideration of cancellation targeted toward borrowers facing financial hardship, the rule will not provide adequate debt relief for the most vulnerable borrowers. We urge ED to hold a fourth session to consider student debt relief for borrowers experiencing financial “hardship that is not otherwise addressed by the existing student loan system” and deliver cancellation as soon as possible.
In the months since President Biden’s announcement that he would pursue an alternative path for student debt relief after the Supreme Court struck down his initial plan, ED and the negotiating committee have completed three sessions of the student debt neg-reg. In the most recent session, negotiators came to consensus on a few provisions that would provide relief for borrowers, including borrowers who were eligible for cancellation but were not enrolled in the right income-driven-repayment plan and borrowers who attended poor performing or predatory colleges. However, the negotiators were unable to vote on a final category, “those experiencing hardship that is not otherwise addressed by the existing student loan system,” because ED did not propose regulatory language. Much of the work to prepare such language had been done: following the second session, ED released an issue paper proposing that the rule address this category and presenting examples of forms of hardship that the rule could capture. But the negotiators only had a limited time to discuss hardship in the third neg-reg session, and several asked if another session would be scheduled to consider hardship.
We join the calls of those negotiators. The Department should announce a fourth session of the neg-reg to allow the appropriate time for negotiators to discuss and vote upon a relief proposal for borrowers experiencing financial hardship.
In an earlier letter to ED, some of us proposed what a hardship category could look like. Hardship could be measured using factors such as debt-to-income ratio and student-debt-to income ratio. A University of California study revealed that middle-income borrowers with a student-debt-to-income ratio of over 30 percent are likely to face serious financial hardship and that low-income households making below $71,000 typically face hardship repaying their student loans regardless of their debt-to-income ratio. Other indications of hardship could include whether a borrower has filed for bankruptcy, did not complete their degree, owns Parent PLUS loans while still repaying their own loans, has chronically been in default, or is over a certain age and has limited income. Besides income itself, income-based indicators could include whether a borrower was a Pell Grant recipient or had an Expected Family Contribution of $0 when applying for loans, given evidence that a borrower’s need when entering school is correlated with their degree of hardship in paying off debt. We also believe that regulatory text should provide the Secretary with the flexibility to waive debt based on other unanticipated forms of financial hardship.
We appreciate the Department’s efforts to provide student debt relief through negotiated rulemaking, but we believe that in order for any final rule to meet President Biden’s objective of “provid[ing] student debt relief to as many borrowers as possible as quickly as possible,” it must include relief for a broader set of borrowers experiencing financial hardship. The Biden Administration must continue to use its authority to deliver on the promises made to student loan borrowers and hold a fourth negotiated rulemaking session, as quickly as possible, to complete discussion of hardship-based relief—and once complete, swiftly propose and implement debt relief for millions of hard-working Americans.
Sincerely,