Calls For Cancellation Of Federal Student Loan Debt

Published on February 19, 2021, 2:20 pm
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New York Attorney General Letitia James today co-led a multistate coalition of 17 attorneys general from around the nation in urging the adoption of U.S. House and U.S. Senate resolutions that call for the cancellation of up to $50,000 in federal student debt owed by each and every federal student loan borrower across the country. In their letter to Congress, Attorney General James and the coalition stress the immediate relief needed for borrowers struggling with unmanageable student loan debt, which has only been exacerbated by the coronavirus disease 2019 (CoViD-19) pandemic and the resulting financial crisis. The resolutions — Senate Resolution 46 and House Resolution 100 — call on President Joseph Biden to exercise his authority to cancel up to $50,000 in federal student loan debt per borrower.

“Student loan debt holds too many struggling borrowers down and prevents them from achieving financial stability,” said Attorney General James. “Many fall behind on their payments or enter default, leading to a downward spiral of ruined credit and dashed dreams. Cancelling up to $50,000 in student loan debt will not only free these borrowers to move forward with their lives, but will simultaneously help close the racial wealth gap and move our economy to new heights. This is about creating equal footing among all students and giving every borrower the opportunity to succeed.”

In their letter, the coalition lays out how the existing repayment system for federal student loans provides insufficient opportunity for struggling borrowers to manage their debts. As many as one in five federal student loan borrowers are in default. Options for student borrowers to obtain relief have also proven to be inadequate. Only two-percent of borrowers who applied for loan discharges under the Public Service Loan Forgiveness program have been granted a discharge, and efforts by state attorneys general to obtain student loan discharges for students defrauded by for-profit schools have been stymied by the U.S. Department of Education under the Trump Administration.

Today’s letter specifically highlights misconduct by for-profit schools, and how the industry’s predatory practices have disproportionately harmed people of color. The attorneys general state that cancelling federal student loan debt can substantially increase Black and Latinx household wealth and help close the racial wealth gap.

Today’s letter is the latest action Attorney General James has taken to help student loan borrowers. In July, Attorney General James and a multistate coalition sued the Trump Administration’s U.S. Department of Education and former Education Secretary Betsy DeVos to block their efforts to repeal critical protections for student-borrowers who have been misled or defrauded by predatory for-profit schools.

In June 2020, Attorney General James filed a multistate lawsuit to stop the Department of Education and former Education Secretary DeVos from repealing the “Gainful Employment” rule, which provides critical protections to students considering enrolling in for-profit colleges and vocational schools that promise students “gainful employment in a recognized occupation” after graduation.

Additionally, Attorney General James obtained multistate agreements to provide more than $7.5 million in debt relief to nearly 900 former ITT Tech students in New York after investigations found that ITT Tech, Student CU Connect CUSO, and PEAKS Trust preyed on students by deceiving them into taking out student loans.

Joining Attorney General James in co-leading today’s letter is Massachusetts Attorney General Maura Healey. The two are joined by the attorneys general of Connecticut, Delaware, Hawaii, Illinois, Maryland, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia.

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