Padilla, Colleagues Push Education Department to Cancel Student Debt for Borrowers Facing Financial Hardship
WASHINGTON, D.C. — Today, U.S. Senator Alex Padilla (D-Calif.) led his colleagues in calling on Secretary of Education Miguel Cardona to consider additional student debt relief for borrowers experiencing financial hardship. In total, nearly 40 lawmakers from the Senate and House signed the letter, requesting Secretary Cardona host a fourth session of the student debt negotiated rulemaking.
Senator Elizabeth Warren (D-Mass.), Majority Leader Chuck Schumer (D-N.Y.), Health, Education, Labor, and Pensions Committee Chair Bernie Sanders (I-Vt.), and Senator Reverend Raphael Warnock (D-Ga.), along with Representative Ayanna Pressley (D-Mass.-07), Assistant Democratic Leader Jim Clyburn (D-S.C.-06), Representative Frederica Wilson (D-Fla.-24), and Representative Ilhan Omar (D-Minn.-05) co-led the letter.
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 under the Higher Education Act. However, the Department of Education 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 for another session to 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,” wrote the lawmakers. “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.”
The lawmakers 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 letter was also signed by Senators Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Tammy Duckworth (D-Ill.), Dick Durbin (D-Ill.), Edward J. Markey (D-Mass.), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), Peter Welch (D-Vt.), and Ron Wyden (D-Ore.), and Representatives Alma Adams (D-N.C.-12), Jamaal Bowman (D-N.Y.-16), Cori Bush (D-Mo.-01), Greg Casar (D-Texas-35), Kathy Castor (D-Fla.-14), Dwight Evans (D-Pa.-03), Pramila Jayapal (D-Wash.-07), Ro Khanna (D-Calif.-17), Barbara Lee (D-Calif.-12), Gwen Moore (D-Wis.-04), Jerrold Nadler (D-N.Y.-12), Eleanor Holmes Norton (D-D.C.), Katie Porter (D-Calif.-47), Jan Schakowsky (D-Ill.-09), Shri Thanedar (D-Mich.-13), Bennie Thompson (D-Miss.-02), Rashida Tlaib (D-Mich.-12), Nydia Velázquez (D-N.Y.-07), Bonnie Watson Coleman (D-N.J.-12), and Nikema Williams (D-Ga.-05).
Senator Padilla has consistently advocated on behalf of students and increasing their access to higher education. He has led numerous letters urging President Biden to provide meaningful student debt cancellation, including one he led last month urging Secretary Cardona to leverage his authority under the Higher Education Act to provide expanded student debt relief to working and middle-class borrowers. Padilla also cosponsored the College for All Act to make college tuition-free and debt-free for working families and introduced the Basic Assistance for Students in College (BASIC) Act to ensure college students are able to meet their basic needs while pursuing their education.
Full text of the letter is available 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.