New Data From Roosevelt Institute Reveals Threats to Families and Economic Growth From End of COVID Payment Pause
Text of Letter (PDF) | Roosevelt Institute Analysis (PDF)
WASHINGTON – Today, Congresswoman Ayanna Pressley (MA-07), Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY) sent a bicameral letter to President Joseph R. 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 canceling 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.
Rep. Pressley has led calls in Congress for President Biden to cancel student debt to boost our economy and help close the racial wealth gap.
Earlier this year, Congresswoman Pressley, Senator Warren, and Majority Leader Schumer led their colleagues in reintroducing their bicameral resolution outlining a bold plan for President Biden to tackle the student loan debt crisis by using existing authority under the Higher Education Act to cancel $50,000 in student loan debt for Federal student loan borrowers. The lawmakers renewed their calls earlier this month at a press conference to call on Biden to cancel up to $50,000 in student debt through executive action.
In July, Rep. Pressley, Sen. Warren and Majority Leader Schumer led their colleagues on a bicameral letter to President Biden calling on him to extend the pause on federal student loan payments until at least March 31, 2022, and held a press conference yesterday to reiterate those calls. They applauded his decision last month to extend the payment pause through January.
On April 13, Rep. Pressley testified at a Senate Banking subcommittee hearing to examine the student loan debt crisis in our country. In her testimony, Rep. Pressley discussed the racial and economic implications of canceling student debt, as well as her own experience with the student loan system. Full video and transcript of her testimony is available here.
On April 1, Rep. Pressley, Senator Warren, and Massachusetts Attorney General Maura Healey held a press conference at which they called on President 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.
Congresswoman Pressley has been leading the legislative fight for broad based student debt cancellation. Reps. Pressley, Alma Adams, and Ilhan Omar have repeatedly led their colleagues in calling on House leadership to take urgent action to combat the student debt crisis by including student debt cancellation in any COVID relief package. In March, Pressley and Omar introduced the Student Debt Emergency Relief Act, legislation to cancel student loan debt and shield borrowers from any involuntary payments and garnishment during the COVID-19 crisis.