EARTH FUTURE ACTION

TIME FOR ACTION ON THE STUDENT DEBT CRISIS

Update: The Supreme Court has struck down Biden's student-loan forgiveness program. Student loan payments will resume in the Fall of 2023.

See our updated page on how to obtain student debt relief.

Congress recently passed a law preventing further extensions of the payment pause. Student loan interest will resume starting on Sept. 1, 2023, and payments will be due starting in October. This will be a disaster for millions of borrowers across the country. The Biden Administration has launched a new income-driven repayment plan (IDR), called the SAVE Plan. The SAVE plan will reduce monthly payments by increasing the income exemption from 150% to 225% of the poverty line. This means a single person earning less than $32,805 a year will have monthly payments of $0. The same would happen to families of four that make less than $67,500. The Education Department estimates the plan will bring down payments by 40 percent.

Others argue that in the absence of further protections like bankruptcy, some of these IDRs distract from the larger problem.

“I really don’t even look at these IDRs on their advertising points anymore because in the absence of the leverage of bankruptcy protections, the Department of Education behaves in the worst of bad faith with all of these IDRs, and they truly have no intentions or desires of actually canceling anyone’s loans,” Alan Collinge, founder of StudentLoanJustice.org, told The Hill.

Student loan debt in America is currently a social catastrophe crippling millions with debt. Student loan debt has topped $1.7 trillion in recent years, making it the largest type of consumer debt outstanding other than mortgages. Consumers now owe more on their student loans than their credit cards. The average student loan borrower graduates with nearly $40,000 in debt. (Education Data Initiative)

In a letter to President Biden, the Student Borrower Protection Center and over 200 organizations representing millions of students, workers, people of color, veterans, people with disabilities, and people of faith, called on the Biden Administration to extend the pause on student loan payments. Unfortunately, Biden can no longer extend the pause and the student loan payments are due.

What is extra harmful is that student debt cannot be discharged by bankruptcy. The fact that these loans are not dischargeable through bankruptcy is a uniquely harsh measure that even gambling and credit card debt is not subject to.

Bold action is needed to protect student borrowers.

One action we support is to discharge loans in bankruptcy. The bill we list below is from 2021, but it is a good idea.

STEVE COHEN'S STUDENT BANKRUPTCY BILL

H.R.138 - Private Student Loan Bankruptcy Fairness Act of 2023

This bill modifies the treatment of certain student loans in bankruptcy.

Specifically, it allows private student loans to be discharged in bankruptcy regardless of whether a debtor demonstrates undue hardship. Under current law, student loans may be discharged in bankruptcy only if the loans impose an undue hardship on the debtor.

SENATOR DURBIN'S BILL TO DISCHARGE LOANS IN BANKRUPTCY

This is an older bill, but still relevant.

On August 7th, 2021, U.S. Senate Majority Whip Richard Durbin (D-IL), Chair of the Senate Judiciary Committee, spoke on the Senate floor about the introduction of the FRESH START Through Bankruptcy Act of 2021, a bipartisan bill he introduced with U.S. Senator John Cornyn (R-TX) that would restore the ability for struggling borrowers to seek a bankruptcy discharge for federal student loans after a waiting period of ten years. Currently 45 million Americans hold more than $1.7 trillion in student loan debt. Unlike most other types of debt, student loans are not dischargeable in bankruptcy except in extremely rare circumstances.

S.2598 - FRESH START Through Bankruptcy Act (2021-2022)

Durbin Speaks On New, Bipartisan Bill To Allow Federal Student Loan Borrowers To Discharge Loans In Bankruptcy (Richard Durbin United States Senator)

LETTERS

80+ Dems Tell Biden to Release Secret Memo on Student Debt Authority (Common Dreams, 1-26-22) PDF of Letter

Senate Majority Leader Chuck Schumer (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), and Rep. Ayanna Pressley (D-Mass.) letter to the White House PDF

More Than 200 Organizations Urge President Biden to Delay Restarting Student Loan Payments (Student Borrower Protection Center) PDF of Letter

Senator Warren Urges Department of Education to Remove Millions of Student Loan Borrowers from Default (Elizabeth Warren, 11-18-21) PDF of Letter

Over 415 organizations send letter urging President Biden to cancel student debt by executive action (Student Debt Crisis, 4-13-21)

RESOLUTIONS CALLING FOR THE PRESIDENT TO TAKE ACTION

H.Res.100 - 117th Congress (2021-2022): Calling on the President of the United States to take executive action to broadly cancel Federal student loan debt

S.Res.46 - A resolution calling on the President of the United States to take executive action to broadly cancel Federal student loan debt

ORGANIZATIONS