A group of leading Democratic Senators is pushing the Education Department to expand and reform existing student debt forgiveness programs so more debtors can access relief.
“We encourage the Department to pursue policies that reduce disparities in the burden of student debt, simplify loan repayment, close donut holes in forgiveness programs, and improve the overall confidence of borrowers in the federal student loan system," the letter to Education Secretary Miguel Cardona said.
Twenty-three lawmakers signed the letter, including Senator Patty Murray (D-WA), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, Senators Chuck Schumer (D-NY) and Elizabeth Warren (D-MA).
The letter comes as the payment pause on federal student loans is set to expire at the end of September. The Department of Education (ED). or the White House has so far not announced any plans to extend the pause.
Meanwhile, borrowers say they aren't prepared to resume paying their loans. In one survey by an advocacy group of 24,000 borrowers, 9 in 10 respondents across all 50 states were not ready to start making payments again in October.
Senators push Cardona to address range of broken forgiveness programs
The Democratic Senators urged Cardona to use his authority to reform key problem areas.
For instance, the Senators called on Cardona to simplify and consolidate how income-driven repayment (IDR) plans work and to expand the relief IDR plans provide to borrowers. The National Consumer Law Center, citing a public records request to the ED, found that less than 20 IDR participants total were slated to get forgiveness by the end of 2019.
The Senators also asked Cardona to establish a single standard for how defrauded students of predatory institutions can secure relief from the government — also known as "borrower defense." ED has been struggling with hundreds of thousands of cases of borrower defense applicants since the end of the Obama administration, and throughout the Trump era.
The Democrats also urged Cardona to reinstate automatic discharges of loans held by borrowers who attended schools that recently closed; to move faster and automatically discharge student loans held by borrowers with total and permanent disabilities (on top of expanding eligibility); and finally, to fix eligibility and problem areas for Public Service Loan Forgiveness and Temporary Expanded Public Service Loan Forgiveness.
In addition to Murray, Schumer, and Warren, the others who signed the letter were Brown (D-OH), Baldwin (D-WI), Durbin (D-IL), Reed (D-RI), Kaine (D-VA), Cortez Masto (D-NV), Wyden (D-OR), Blumenthal (D-CT), Padilla (D-CA), Hirono (D-HI), Hassan (D-NH), Warnock (D-GA), Markey (D-MA), Smith (D-MN), Klobuchar (D-MN), Gillibrand (D-NY), Van Hollen (D-MD), Menendez (D-NY), Booker (D-NJ), and Cardin (D-MD).
Meanwhile, Senators Schumer and Warren have repeatedly called for bigger action: Not only have they called for Biden to extend the pause on student loan payments until March 31, 2022, they've repeatedly pressed Biden to cancel $50,000 in student loan debt immediately via executive order.
Forgiving $50,000 would erase the entire debt burden for 36 million (84%) of the roughly 43 million borrowers holding federally-backed debt, while $10,000 in forgiveness would wipe out the debt for 15 million of those borrowers (35%).
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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.
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