WASHINGTON, D.C. – U.S. Sen. Sherrod Brown, D-OH, joined Sen. Elizabeth Warren, D-Mass., Senate Majority Leader Chuck Schumer, D-N.Y., and Congresswoman Ayanna Pressley, D-Mass. Thursday in introducing a bicameral resolution outlining a bold plan for President Joe Biden to tackle the student loan debt crisis by using existing authority under the Higher Education Act to cancel up to $50,000 in student loan debt for federal student loan borrowers. The resolution calls on the President to use executive authority to cancel student loan debt and ensure there is no tax liability for Federal student loan borrowers resulting from administrative debt cancellation.
Over 43 million people in the United States are buried under $1.6 trillion in federal student loan debt. Studies show that cancelling student debt would substantially increase Black and Latinx household wealth and help narrow the racial wealth gap, provide immediate relief to millions of Americans during the pandemic and recession, and provide massive consumer-driven stimulus to our economy.
“Even before the pandemic, student loan debt in this country was already crushing for many, preventing people from starting families, purchasing homes, pursuing professions, and fully participating in the economy,” said Brown. “Student loan debt cancellation can provide immediate relief to families who are facing economic hardship, help close the racial wealth gap, and stimulate the American economy for millions of people. Debt cancellation is especially important as families – particularly Black and brown households, who are disproportionately affected by these issues – are navigating the public health and financial crisis of the pandemic. It is past time for action.”
Over 325 civil rights, climate, health, labor, consumer rights, and student organizations have called on President Biden to cancel federal student debt using executive action, including American Federation of Teachers, National Education Association, The Education Trust, Hispanic Federation, NAACP, National Urban League, UnidosUS, League of United Latin American Citizens (LULAC), Minority Veterans of America, National Women’s Law Center, SEIU, the American Psychological Association, Sunrise Movement, the United States Student Association, and Young Invincibles.
Congress has already granted the Secretary of Education the legal authority to broadly cancel student debt under section 432(a) of the Higher Education Act of 1965 (20 U.S.C. 1082(a)), which gives the Secretary the authority to modify, “… compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” The Department of Education has used this authority to implement modest relief for federal student loan borrowers during the COVID-19 pandemic.
Specifically, this resolution:
• Recognizes the Secretary of Education’s broad administrative authority to cancel up to $50,000 in Federal student debt, using the modification and compromise authority Congress has already granted the Secretary in law;
• Calls on Biden to take executive action to administratively cancel up to $50,000 in Federal student loan debt for Federal student loan borrowers using existing legal authorities under section 432(a) of the Higher Education act of 1965 and any authorities available under the law;
• Encourages Biden to use the executive’s authority under the Internal Revenue Code of 1986 to prevent administrative debt cancellation from resulting in a tax liability for borrowers;
• Encourages Biden, in taking such executive action, to ensure that administrative debt cancellation helps close racial wealth gaps and avoids the bulk of federal student debt cancellation benefits accruing to the wealthiest borrowers; and
• Encourages Biden to continue to pause student loan payments and interest accumulation for Federal student loan borrowers for the entire duration of the COVID-19 pandemic.