BORROWERS CAN NOT AFFORD PAYMENTS TO RESUME WITHOUT PROMISED RELIEF
The US Supreme Court struck down President Biden’s student debt relief plan, which would have provided relief to 800,000 Minnesota student loan borrowers and their families.
“Student loan borrowers are screwed when student loan payments resume in August”, said John Runningen President of LeadMN. “President Biden must use alternative authority to deliver the debt relief promised to 40 million student loan borrowers.”
For the last several years, cancellation has been a normal tool in the Secretary of Education’s toolbox to provide mass relief for borrowers defrauded by their school and even disabled borrowers. The Secretary has both the authority to automatically cancel loans for certain borrowers and to create new relief programs through its rulemaking process, including ones that can go into effect immediately and before student loan payments resume.
If President Biden does not take immediate action, there will be catastrophic consequences for the US economy and borrowers are sent into default. Data from the Consumer Financial Protection Bureau shows that borrower distress is on the rise, with more than 2.5 million borrowers already behind on other forms of debt and nearly 6 million borrowers showing risk factors for delinquency. Without action by President Biden, we will quickly return to a failed status quo where over a quarter of borrowers were behind on payments and 9 million borrowers were in default. As bad as these numbers are, Department of Education data shows returning to repayment without cancellation will be even worse.