the authority to cancel student debt
By Giulia Carbonaro On 6/2/23 at 8:00 AM EDT
The resolution, and especially the addition of extra interest on student loans, have sparked anger among students' advocates, with the nonprofit Student Debt Crisis Center (SDCC) urging Biden to veto the "shameful resolution passed by the Senate that would unravel student debt relief."
"Today's Senate vote retroactively terminates the pause on federal student loan payments and interest accrual, obstructs @POTUS's debt-relief plan and even claws back Public Service Loan Forgiveness relief that has already been granted to teachers, veterans, and frontline heroes," the group wrote on Twitter.
"It is shameful that legislators would endorse measures that harm the very heroes in our communities—veterans and nurses—who are still grappling with the aftermath of the pandemic and its profound economic impact," SDCC president and founder Natalia Abrams said.
"The cold hard reality is that if Republicans were to get their way and pass this bill into law, people across the country would have relief they are counting on snatched away from them, plans they have made upended, less money in their pockets, and monthly payments not just abruptly restarted—but maybe even abruptly jacked up by hundreds of dollars," said Sen. Patty Murray (D-WA).
While Democrats and supporters of Biden's plans say that the program is necessary to help thousands of families, Republicans have argued that it adds an unjustified burden on taxpayers and is unfair to those who have already paid off their student debt or did not go to college.
Payments on federal student loans, which were paused during the pandemic and then during the cost-of-living crisis which hit most of the world last year, will resume on August 30 if the debt-ceiling deal negotiated between Biden and House Speaker Kevin McCarthy is signed into law.
Biden's plan to cancel student loan debt for 43 million Americans would still be in place, and the president has said he will veto the measure passed by the Senate on Thursday.
But the final say on the program belongs to the Supreme Court, which is expected to rule on two conservative challenges to Biden's plan in the coming weeks and decide whether the plan can take effect.
No debt has been canceled yet, as the plan has been held up for months in a legal battle that would be unlocked by the Supreme Court's decision this month.
President Biden has committed to forgive up to $20,000 in federal student loan debt for tens of millions of Americans. But getting it out the door presents a series of challenges.
The administration has assumed on the record that around 1 in 4 eligible borrowers will not actually get debt forgiveness, based on an estimated take-up rate of 75 percent. The hurdle was a deliberate policy decision—there didn’t need to be a complex income cap.
“If part of the theory of adding an income cap was to make this more progressive, the real-world impact was to make it more regressive. There’s going to be a larger percentage of people who make $124,000 per year, who actually jump through the hoops, than people who make $30,000 a year or who are unemployed,” Thomas Gokey, founder of the Debt Collective, told the Prospect in a recent Twitter Spaces event. Of course, Gokey added, the Biden administration can fix this any day they want, by canceling more debt.
But the White House’s chosen path is complex and means-tested. Kyra Taylor of the National Consumer Law Center and Mike Pierce of the Student Borrower Protection Center, who joined Gokey on the Spaces event, argued that the coming implementation challenges reveal the difficulty that government has in rolling out basic programs. For perspective: The Earned Income Tax Credit has been on the books for 30 years, and participation rates hover around 80 percent.
Even in instances where debt cancellation is absolute, relief is not immediate. The Department of Education relieved all loans for borrowers at Corinthian Colleges, the now-defunct for-profit school found guilty of extensive fraud. The announcement of full cancellation for Corinthian students was made June 1; to date, none have been processed, and Pierce said it is unlikely that they will be completely processed by January 1, when payments restart.
Student loan servicers, which are private contractors hired by the government to manage student loan accounts like Nelnet and MOHELA, all have different systems of record, Pierce said. Not only are they error-prone and clunky, but loan servicers have a terrible record of mishandling paperwork and misleading borrowers. “So, it’s a number on a ledger—but it’s actually a bunch of different ledgers, the number is sometimes different depending on the person, and we’re trusting companies that we shouldn’t trust to be able to connect the dots,” Pierce said.
Republicans have suggested challenging the program in court, but will struggle to establish standing. “It’s hard to imagine who’s actually harmed by this,” Pierce said.
“The thing that’s off about the discourse is that we are completely solid on the legal front,” Gokey said. “When Republicans talk about overturning, what they are trying to do is get the courts to ignore the law. At a certain level, this is about power. Can we organize and build on this victory.”
The Debt Collective is now trying to build on debt cancellation by organizing a student debt strike ahead of January 1, when payments restart. Getting on strike, he said, means getting down to $0 monthly payments—and one of the most effective ways to do that is to get your debt canceled entirely.
Taylor said the debt cancellation announcement “opens the opportunity to rethink the system.” In the immediate term, that means other forms of relief, like enrolling in an income-driven repayment (IDR) plan, or vetting eligibility for other forms of relief like borrower defense to repayment, where students defrauded by their colleges can ask for their loans to be forgiven. Further out, she said, “we should be thinking about free college, and ride the momentum of cancellation.”
Riding that momentum includes claiming the political victory of debt cancellation, Gokey said, which cuts across party lines.
“All these Ivy League politicians surrounded by rich people who think plumbers don’t have student debt” are deeply out of touch, he said. “If Team Biden was smart, they would hand Ted Cruz a microphone and put him on a tour bus.”
groups like Student Debt Crisis center https://studentdebtcrisis.org/
And the Debt Collective https://debtcollective.org/
Video by Molly Crabapple, Kim Boekbinder, Jim Batt
Covering thousands of years in just under seven minutes, “Your Debt Is Someone Else’s Asset” ends with a rousing vision of the future: a world after a jubilee, an ancient term for the abolition of debts and rebalancing of power between the rich and the poor.
A collaboration between The Intercept; artist Molly Crabapple and her creative partners at Sharp As Knives productions; and writer Astra Taylor, this short film invites us to understand our debt in new ways. Our monthly payments are a source of profit, a form of wealth transfer from struggling borrowers to the well-to-do. These profits are a source of power; debt is never just about money. In the United States, debt has long been used as a form of social control and a tool of white supremacy.
Taylor is a co-founder of the Debt Collective, the nation’s first debtors’ union. This film reflects Taylor and the Debt Collective’s conviction that debtors and their allies will need to get organized to fight for the political and economic transformations we deserve.
It’s been a busy few weeks in student debt, in Washington D.C., and the clock keeps ticking to January. Here’s a primer on some key bits:
Let’s work backward: last week, Representative Omar and other Congressional representatives sent a letter to Joe Biden demanding he release the memo. Remember the memo? 6 months ago, during our national week of action, the President asked the Department of Education to investigate his authority to cancel student debt. Now the clock is ticking: Members of Congress are demanding it, too, and they’ve given him two weeks to do it. Help build pressure on Biden to release the memo and cancel the debt. Click here to tweet at the President.
If he doesn’t release the memo in two weeks, we’re going to escalate our fight. Our next national day of action will be October 28th. We’ll be demanding our Representatives pressure Biden to cancel student debt -- all of it. Learn more about the day of action and our campaign at our upcoming call on Monday, October 18 @ 7 PM ET / 6 PM CT / 5 PM MT / 4 PM PT. RSVP here.
Of course, we’re still planning for our big week of action in January, a week of action in Washington D.C. and around the country before the moratorium ends. There’s a ton of games in Congress right now around infrastructure and reconciliation. There’s a lot of love for a watered down infrastructure bill -- which is why progressives are saying reconciliation has to pass with it. Reconciliation includes things our communities need, like two years of free community college, paid leave, childcare, and investments to address climate change.
All it takes for reconciliation to pass is 50 votes in the Senate (yes, the number of “Democrats” in the Senate!), but obstructionists are stalling everything, delaying by asking for nothing and fighting against everything. With such dysfunction, cancelling student debt is a simple action the president can take to help our communities without Congress -- so we’re demanding he do it, and why we’re building power to make him. Will you join us? Sign up to say you’ll take part in our big week of action in January in D.C. and across the country and if you can, donate $5 to help us get as many debtors to Washington D.C. as possible.
But wait, student debt doesn’t stop there! Last week the Biden administration announced they were taking executive action to issue a temporary waiver for the failed Public Service Loan Forgiveness (PSLF) program. The Department of Education estimates that these changes will result in roughly 22,000 people getting full cancellation. The PSLF changes are all bandaids on fundamentally broken bones, but for people who qualify it will be life changing. Some of our coalition partners will be leading trainings on how to understand and navigate the new PSLF waiver. For now the best source of information is the Department of Education’s website. Here is a good article from the New York Times that tries to answer questions people might have about this waiver.
And, the Department of Education is currently in the process of rewriting several of the key regulations that relate to student loans. That process is called “negotiated rulemaking” or “neg reg” for short. The regulations are being negotiated between Department of Education officials and representatives from the student loan industry, including predatory lenders, scam accreditation agencies, and for-profit colleges. There are strong consumer advocates involved fighting for students, but this is hardly a democratic process.
Last week the for-profit representative, with support from the Department of Education, excluded all students who had been defrauded by a for-profit university from participating in the process. Check out this powerful video of student Theresa Sweet scorching earth and speaking truth to power. And if you’ve been defrauded by your university, click here to learn more about borrower defense to repayment.
The system is broken, but when we take action and unite, we can move mountains. There’s now small changes and a national conversation about student debt -- we didn’t even mention all the incredible local resolutions, organizing and actions happening! -- and if we keep building power, together we’ll win full cancellation.
- The Debt Collective organizing team
PS - Don't forget, we have regular calls & events all the time. Check out our call calendar and join us!
Sent from the Debt Collective, a debtors' union fighting to cancel debts and defend millions of households. You are receiving this email because you opted in at our website or have signed up at one of our clinics or events. Follow us on Twitter, Facebook, and Instagram. You can send us a letter at: Debt Collective, PO Box 285, Canton, NY 13617.
Under the weight of COVID-19, every lie we’ve been told about how the economy works is busting open, and our institutions are revealing themselves to be incapable of offering a path to recovery. Worse yet, many governments are using the crisis as a pretext for a punishing return to austerity.
Why? The answer can be summed up in one word: debt, an issue that Astra Taylor has spent the last several years organizing around as co-founder of the Debt Collective. Also a prolific writer and documentarian, Astra is the author most recently of Democracy May Not Exist, but We’ll Miss It When It’s Gone and director of the companion film What Is Democracy? She has recently written about both the food system and debt crises as they intersect with the pandemic (and climate change, too).
On this week’s show, Kate and Daniel talk to Astra about what the coronavirus pandemic has to do with eating meat, whether we really need a technocratic savior, why debt relief is inherently tied to democracy, and more. Kate and Daniel also take a look at the toxic record of Larry Summers, and why Democrats shouldn’t let him anywhere near the party platform.
Frotman also accused Mulvaney and his staff of deliberately hiding a report from the public that raised alarms that banks were overcharging student loan borrowers.
“When new evidence came to light showing that the nation’s largest banks were ripping off students on campuses across the country by saddling them with legally dubious account fees, bureau leadership suppressed the publication of a report prepared by bureau staff,” Frotman wrote.