Senators introduce a resolution that calls on Trump and Education Secretary Betsy DeVos to use executive authority to eliminate some federal student loan debts.
Democratic Sens. Chuck Schumer and Elizabeth Warren have introduced a new resolution that calls on President Donald Trump and his Education Secretary, Betsy DeVos to use their executive authority to cancel up to $50,000 in federal student debts for borrowers.
In the resolution, the senators say the coronavirus pandemic has created an economic crisis, in addition to the ongoing public health crisis. And that has only worsened problems with the country’s massive student loan debts.
“Even before the COVID-19 pandemic, the United States also faced a historic student loan crisis, which is currently holding back our struggling economy and restricting opportunity and prosperity for millions of American families,” they wrote.
Nearly 44 million Americans currently hold more than $1.6 trillion in federal student loan debt, Schumer and Warren wrote in the bill. With historic unemployment levels, many are struggling to make their payments. Across the United States, many people are relying on unemployment benefits to get by after mass layoffs due to the pandemic. This means many families barely have enough money to pay rent and get food on the table, much less keep up with their loan payments.
The struggle is especially dire for recent college graduates who are entering into one of the shakiest job markets in recent history.
Borrowers of color disproportionately struggle to pay federal student loan debts when compared with other demographics, the senators wrote. They noted that without help the student debt crisis will, “worsen inequality, exacerbate the current recession, widen the radial wealth gap, and slow economic recovery.”
Student loan advocacy groups have called on elected officials to help borrowers during the pandemic. In a statement about the new resolution, Student Borrower Protection Center Executive Director Seth Frotman said the move would help tens of millions of student borrowers in the country.
“Student debt dampens economic growth, drives the racial wealth gap, pushes homeownership beyond reach, and jeopardizes retirement security,” Frotman said in a statement. “Borrowers need real, long-term relief from the crushing burden of student debt and they need it now.”
The resolution also encourages the president to extend the pause on student loan payments and accumulation of interest until the end of the COVID-19 pandemic. Right now some borrowers don’t have to make loan payments until 2021, due to an executive order signed in August. However, as the pandemic continues and experts warn of a slipping economy, those repayment bills are looming. If the president doesn’t extend the pause, or if Congress does not reach an agreement to provide relief, borrowers will be left with the same large payments to deal with in January.
Financial experts warn that lenders will see a major influx of delinquencies and defaults if borrowers are asked to repay their loans before the pandemic is over and the job market stabilizes.