Majority Leader Schumer, Senator Warren, Congresswoman Pressley Release New Analysis Showing That Resuming Student Loan Payments Will Strip $85 Billion From The Economy In 2022
Washington, D.C. – Senate Majority Leader Chuck Schumer (D-NY), US Senator Elizabeth Warren (D-MA), and Representative Ayanna Pressley (D-MA) sent a bicameral letter to President Joseph Biden releasing new data about the adverse economic impact of restarting student loan payments and calling on him to act without delay to cancel up to $50,000 of student debt.
According to the new analysis from the Roosevelt Institute, which was provided to the members of Congress at their request, if the payments of federal student loans resume as scheduled on February 1, 2022, approximately $7 billion a month and $85 billion annually will be stripped from over 18 million student loan borrowers’ budgets. By contrast, debt cancellation could add more than $173 billion to the nation’s GDP in the first year alone.
The letter calls for the President to immediately extend the pause on student loan payments, interest, and collections until the economy reaches pre-pandemic employment levels.
“The pause on federal student loan payments, interest, and collections has improved borrowers’ economic security, allowing them to invest in their families, save for emergencies, and pay down other debt. Restarting payments without cancelling student debt will undermine these families’ economic progress,” the lawmakers wrote.
Payments on federal student loans have been on pause since the beginning of the COVID-19 pandemic in March 2020. Recognizing the significant burden that student debt places on borrowers during an economic crisis, President Biden extended this pause through January 31, 2022, for the 87% of borrowers with direct federal loans. The resumption of student loan payments on February 1, 2022 could create an unnecessary drag on the economic recovery, undermining the effectiveness of the American Rescue Plan and causing unnecessary pain and stress for American families.
According to the Roosevelt analysis, “Black and Latinx households would feel a disproportionate negative impact from resuming student loan payments. Borrowers of color typically borrow more for college expenses than their white counterparts while also holding significantly less wealth.” Twenty years after starting college, the median Black borrower still owes 95% of their loans, compared to only 6% for the median white borrower.
Recent survey data from the Student Debt Crisis Center reveals that even among borrowers who are fully employed, 89% are not financially secure enough to be prepared for student loan payments to resume. More than a quarter of borrowers will be spending at least a third of their income on student loan payments when payments resume, and one in ten will see half their income go toward student loan payments. Nearly nine in ten borrowers said that the student loan payment pause has been critical to their financial well-being during the pandemic.
“[T]he cancellation of up to $50,000 of student debt would relieve an enormous burden from borrowers while pumping billions of dollars per year back into our national economy…we strongly urge you to act without delay. In the meantime, we strongly urge you to extend the pause on student loan payments, interest, and collections until the economy reaches pre-pandemic employment levels,” the lawmakers concluded.
Leader Schumer has been a fierce advocate for student borrowers and has been calling for $50,000 in student debt cancellation to boost our economy, help close the racial wealth gap for borrowers, and put an end to predatory practices that harm and trap borrowers in years of debt.
· September 17, 2020: Schumer and Warren introduced a resolution to cancel $50k in federal student loan debt
· November 24, 2020: Standing at Nassau Community College with students and local officials, Schumer pushed resolution to cancel $50k of federal student loan debt
· December 4, 2020: Schumer/Warren release Blavity Op-ed to call for use of Executive branch authority to cancel up to $50k in federal student loan debt on day one of the new Administration
· December 7, 2020: Standing in Brooklyn with Representatives-elect, Jamaal Bowman (D-NY), Mondaire Jones (D-NY), Ritchie Torres (D-NY), and local students, Schumer pushed his plan to cancel up to $50,000 in debt for federal student loan borrowers
· February 4, 2021: Schumer/Warren/Pressley reintroduced a resolution to cancel $50k in federal student loan debt. Sent out press release and held student debt presser with Senators Warren, Representatives Pressley, Adams, Omar, and Jones.
· February 17, 2021: Schumer/Warren release joint statement pushing Biden Admin to cancel $50k in federal student loan debt
· March 15, 2021: Schumer makes floor remarks highlighting the benefits for current and former students in the American Rescue Plan – including making student loan forgiveness tax-free through December 2025
· March 15, 2021: Schumer/Warren/Menendez hold press call to discuss ARP provision that makes student loan forgiveness tax-free, ensuring borrowers whose debt is fully or partially forgiven are not burdened with surprise taxes
· March 17, 2021: Schumer appears on the Late Late Show with James Corden. Mentions the resolution with Warren to call on Biden to forgive $50k in student loans.
· March 17, 2021: On phone call with NY college students, Schumer pushed resolution to cancel $50k of federal student loan debt
· March 18, 2021: Schumer interview with Brian Tyler Cohen. Mentions resolution with Warren on canceling $50k of federal student loan debt
· April 1, 2021: Schumer joins Warren and Secretary of Education Miguel Cardona for a roundtable discussion to listen as student loan borrowers shared their stories about the impact of student debt on their lives
· April 16, 2021: Schumer holds an event at Hunter College with veterans and calls on President Biden to cancel $50,000 of federal student loan debt
· May 10, 2021: Schumer and executive director of Common Defense, Jose Vasquez, pen op-ed titled: “Cancelling Student Debt Keeps Our Promise to Veterans”
· June 23, 2021: Schumer makes floor remarks urging the Biden Administration to extend the pause on student loan payments
· June 23, 2021: Schumer, Warren, Pressley, Courtney lead bicameral letter calling Biden to extend the pause on student loan payments through the winter
· July 27, 2021: Schumer makes floor remarks urging the Biden Administration to extend the pause on federal student loan repayments until next spring
· July 27, 2021: Schumer and Student Debt Crisis executive director, Natalia Abrams, pen USA Today Opinion piece titled: “Biden Should Extend Student Loan Payment Pause And Cancel $50,000 For Borrowers”
· August 6, 2021: Schumer, Warren, and Pressley released statement on Biden administration extending the pause on federally-held student loan payments, but continue to push for the cancellation for $50,000 of student debt
· September 21, 2021: Schumer speaks at The State of Student Debt Virtual Summit and renews his call for President Joe Biden to forgive $50,000 in student debt for all borrowers though executive action
· October 15, 2021: Schumer renewed his call for $50,000 in debt cancellation per borrower during “Scared to Debt,” an event hosted by the University of Southern California’s Casden Institute and School of Cinematic Arts
· October 26, 2021: Schumer speaks with Mike Alfaro, a prominent Latino digital influencer, to discuss the importance of student debt cancellation among Latino borrowers
· November 3, 2021: Schumer, Padilla, and UnidosUS President and CEO Janet Murguia host an Instagram Live to discuss the impact that student debt has on racial wealth gaps and push the Biden Administration to cancel student debt
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