15 major labor unions want Biden to cancel all student debt for public service workers, report says

joe biden
President Joe Biden.

  • 15 labor unions called on the DOE to fully cancel student debt for public service workers through executive action.
  • They cited problems with the Public Service Loan Forgiveness program, in which 98% of applicants were rejected.
  • This follows Biden’s request for the DOE to prepare a memo on his authority to cancel up to $50,000 in debt per person.
  • See more stories on Insider’s business page.

Student-debt cancelation was a major theme of the 2020 presidential campaign, and the issue is only gaining momentum. On Thursday, 15 of the largest labor unions in the country called on Education Secretary Miguel Cardona to fully erase debt for borrowers who have worked in public service for more than a decade.

According to a letter obtained by Politico, the National Education Association, the nation’s largest teachers’ union, led 14 other unions representing more than 10 million public service workers in calling for full student debt cancelation. The letter said the Public Service Loan Forgiveness program has been so mismanaged that 98% of applicants for the program were rejected.

“The COVID-19 pandemic underscores the need for immediate action,” the letter said. “Public service workers who should have already benefited from the Department of Education’s Public Service Loan Forgiveness (PSLF) program are serving on the front lines of our pandemic response – caring for patients, teaching our students, and delivering essential services in communities across the country.”

The letter, which was also signed by the Service Employees International Union and the American Federation of Government Employees, said the federal government has “fundamentally failed” public service workers because of difficulties in navigating the PSLF program.

To qualify for PSLF, a borrower must be employed by a federal, state, local, or nonprofit organization, work full-time, and have direct loans. However, a 2020 report from The American Federation of Teachers and the Student Borrower Protection Center found that due to poor communication from the DOE, only 1% of eligible borrowers were approved for loan forgiveness.

Democratic lawmakers have criticized Education Secretary Betsy DeVos’ oversight of the program, and in 2019, Sen. Elizabeth Warren of Massachusetts, along with other Democratic senators, wrote a letter to the Consumer Financial Protection Bureau requesting further information on PSLF oversight.

“Though one of the primary functions of the CFPB is to regulate the student loan industry, they have failed to adequately address these claims,” the letter said. “In particular, we are concerned that CFPB leadership has rolled back its supervision and enforcement activities related to federal student loan servicers. This suggests a shocking disregard for the financial wellbeing of our nation’s public servants, including teachers, first responders, and members of the military.”

Biden vowed to fix the PSLF program during his campaign, but given its mismanagement, unions want the DOE to use its emergency powers during the pandemic to carry out the loan forgiveness.

In terms of using executive authority, White House Chief of Staff Ron Klain said on Thursday that Biden asked Cardona to prepare a memo looking into his authority to cancel $50,000 in student debt through executive action, which follows Biden’s request to the Justice Department to review his authority to do so. Warren campaigned on the issue of canceling $50,000 per person, while Biden set a $10,000 figure and he has since been repeatedly pressured to revise that upward.

Cardona has already acted to cancel debt for about 72,000 borrowers defrauded by for-profit schools, along with over 41,000 borrowers with disabilities. He also expanded the scope of the pause on loan payments to apply to 1.14 million borrowers with private loans under the Federal Family Education Loan (FFEL) Program.

The DOE has not yet commented on the unions’ request.

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3 things Biden’s Department of Education has done so far to tackle the $1.7 trillion student-debt crisis

Kingston University graduation
Kingston University students prepare to graduate.

  • Progressives want Biden to cancel up to $50,000 of student debt per person, and he’s resisting.
  • But his DOE has already canceled billions in debt for defrauded borrowers and those with disabilities.
  • The DOE also expanded the pause on debt collection to those with privately held loans under the FFEL Program.
  • See more stories on Insider’s business page.

President Joe Biden has started to act on the $1.7 trillion student debt crisis in the country.

His Department of Education has already canceled student debt for about 72,000 defrauded borrowers, and for over 41,000 borrowers with disabilities. That means more than 113,000 people in the country are getting $2.3 billion of debt relief.

Another 44 million Americans still have student-loan debt and wonder if their turn will ever come.

During his presidential campaign, Biden said he was willing to cancel $10,000 in student debt per person, but he did not believe he had the authority to cancel up to $50,000 in student debt per person, a key progressive lawmaker’s agenda item.

While White House Press Secretary Jen Psaki said in a press briefing that the Justice Department will review Biden’s ability to cancel student debt through executive action, and while Biden asked the Education Department to compile a memo on the subject, Senate Majority Leader Chuck Schumer said there’s no reason it cannot be done.

“If it’s OK legally to do a small amount, it’s OK legally to do a larger amount,” Schumer said in a press call following Psaki’s remarks.

Here’s what the Biden administration has done so far to help Americans with student debt:

(1) Canceled debt for defrauded borrowers

On March 18, Education Secretary Miguel Cardona canceled student debt for about 72,000 borrowers who were defrauded by for-profit schools, such as Corinthian Colleges and ITT Technical Institutes.

Under the new regulations, borrowers eligible for relief would receive a 100% discharge of federal student loans, a reimbursement of any amounts paid on loans, requests to remove any negative credit report, and if applicable, a reinstatement of federal student aid eligibility.

Insider previously reported on five of the biggest colleges that were accused of defrauding their students through deceptive advertising and persuading students to take out loans knowing they would likely default. Of those, the University of Phoenix is the only one still open and which hasn’t admitted to any wrongdoing. Last week, the Federal Trade Commission sent $50 million in refunds to more than 147,000 former Phoenix students “who may have been lured by allegedly deceptive advertisements.”

(2) Canceled debt for borrowers with disabilities

In his second move on student-debt cancelation, Cardona on Monday canceled student debt for over 41,000 borrowers with permanent and total disabilities, and removed a requirement to submit income documentation for over 230,000 eligible borrowers.

A previous rule established under President Barack Obama required borrowers with disabilities who wished to receive debt cancelation to submit documentation verifying that their incomes did not exceed the poverty line, but Cardona waived that requirement, given that 98% of reinstated disability discharges occurred because borrowers did not submit the required paperwork.

(3) Expanded the scope of the debt payment pause

On Tuesday, Cardona expanded the pause on student-debt collections to 1.14 million borrowers with private loans. In January, Biden had extended a pause on student loan payments through September, but that didn’t apply to borrowers under the Federal Family Education Loan (FFEL) Program, whose loans were held by private lenders. Cardona’s new rule also applies a 0% interest rate on borrowers’ student debts.

The FFEL Program ended in 2010, but recent data from the Education Department showed that 11.2 million borrowers still have outstanding FFEL loans totaling over $248 billion, and while the department acquired some of the outstanding FFEL loans, many are still privately owned and were not affected by the pause on federal student loan payments.

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