Pelosi says Biden doesn’t have the power to cancel student loan debt, as Schumer pushes him to eliminate $50,000 per borrower

nancy pelosi chuck schumer
Speaker of the House Nancy Pelosi (D-CA) speaks as Senate Majority Leader Chuck Schumer (D-NY) looks on during a news conference about climate change on July 28, 2021.

  • Pelosi said that Biden does not have the power to cancel student loan debt.
  • The House speaker said student loan debt cancelation has to be “an act of Congress.”
  • Fellow Democrat Schumer has called for Biden to wipe out $50,000 in student loan debt.
  • See more stories on Insider’s business page.

House Speaker Nancy Pelosi said Wednesday that President Joe Biden does not have the power to cancel student loan debt, though some of her Democratic colleagues, including Senate Majority Leader Chuck Schumer, disagree.

The California Democrat told reporters during a press briefing that student loan debt is “a policy discussion” and that cancelation has to be “an act of Congress.”

“Here’s the thing. People think that the president of the United States has the power for debt forgiveness. He does not,” Pelosi said. “He can postpone, he can delay, but he does not have the power.”

“Not everybody realizes that,” she added.

Pelosi stands in opposition to Schumer, as well as Sen. Elizabeth Warren of Massachusetts, the two congressional Democrats leading the call for Biden to cancel $50,000 in student loan debt per borrower.

They claim that Biden can use his “existing authority” under the Higher Education Act to “immediately” wipe out debt for millions of borrowers across the country.

Approximately 45 million Americans have a $1.7 trillion student-debt burden. Borrowers on average have between $20,000 to $24,999 in college student loan debt, according to the Federal Reserve.

“President Biden can cancel $50,000 of student loan debt with the stroke of a pen,” Warren told Insider in June. “He doesn’t need Congress to act, he can do it on his own, and I hope that’s what he’s going to do.”

The pair re-upped their demands in a press event on Tuesday, arguing that student loan debt relief would help close the racial wealth gap and stimulate the economy.

“All President Biden has to do is flick his pen – sign it – make America a happier, better, more prosperous place,” Schumer said.

Warren compared student loan debt to a “sword hanging over” the heads of borrowers.

“Every day that goes by, that sword draws a little closer,” she said Tuesday. “This is a matter of economic justice. It is a matter of racial justice. The president of the United States can remove this sword. The president can prevent this pain.”

Spokespeople for Schumer and Warren did not immediately respond to Insider’s requests for comment on Wednesday.

On the 2020 campaign trail, Biden pledged to cancel up to $10,000 in student loan debt cancelation per person. Six months into his presidency, that has not come to pass.

The measure was left out his trillion-dollar economic plans released in May, and was also excluded from his $1.9 trillion American Rescue Plan passed in March.

White House press secretary Jen Psaki reiterated Biden’s support to wipe out $10,000 per student loan debt borrower in February, but added that he wants to see the legislation first approved in Congress, believing that he did not have the ability to cancel it unilaterally.

Biden has started to rethink that position amid increasing pressure to cancel student loan debt from congressional Democrats, including Schumer and Warren, as well as civil rights groups and student organizations.

The White House has asked the Justice Department and Education Department to review whether Biden has the ability to cancel student loan debt via executive action. But neither the White House nor the federal departments have provided an update as to when that assessment will come.

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Biden wants to hear the public’s stories about the student loan forgiveness program with a 98% denial rate

student debt graduation
  • The Education Dept. is launching a public inquiry on the Public Service Loan Forgiveness program.
  • The program, which is supposed to forgive student debt for public servants, rejects 98% of applicants.
  • Anyone can submit comments which the department will consider when implementing improvements.
  • See more stories on Insider’s business page.

If the Public Service Loan Forgiveness (PSLF) program worked as it should, then every qualifying public servant would be able to receive student debt relief after 120 qualifying monthly payments. But complicated paperwork and eligibility requirements have made it so that 98% of applicants have been denied relief, even if they qualify.

That’s why, on Friday, the Education Department launched a public inquiry to fix the program.

“Unfortunately, for too many public service workers, the program has not functioned the way they hoped it would,” Julie Margetta Morgan, senior advisor and acting under secretary for the Office of the Under Secretary of Education, wrote in a blog post.

“Fixing the PSLF Program has been a priority for the Biden-Harris Administration since day one,” she added. “While we have identified many opportunities for improvement by talking to experts and borrowers and reviewing our procedures, we want to hear from you as well.”

President Joe Biden campaigned on reforming PSLF following its high denial rate under President Donald Trump, and fixing the program was even included in the Education Department’s regulatory agenda that was released last month. But implementing changes to the program could take at least a year, and the public inquiry would help the department more easily identify the problems it needs to fix.

Starting next week, anyone can submit comments to the department regarding PSLF, and the department specifically wants to know:

  • What features of PSLF are most difficult to navigate?
  • What barriers are preventing public servants from receiving student loan forgiveness under PSLF?
  • For borrowers who have had loans other than from the Direct Loan program, what have your experiences been trying to access or participate in PSLF?

Many Democratic lawmakers have stressed the need to reform the program to give public service workers the student debt relief they deserve. In May, 56 Democrats sent a letter to Biden urging him to quickly reform the program and eliminate the “extraordinary confusion” it places on borrowers.

They wrote: “The program has been beset by numerous ‘donut holes’ that disqualify certain types of loans, repayment plans and the payments themselves, leading to extraordinary confusion and distrust of the PSLF program and, by extension, the federal government.”

Seth Frotman, executive director of the Student Borrower Protection Center – which advocates for borrowers’ rights – said in a statement that the move by the Education Department to launch a public inquiry “offers hope for public service workers who have been let down and cheated out of promised debt forgiveness.”

“For the first time, the federal government is asking those who depend on the program to help decide what comes next,” he said.

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23 Democrats are worried about ‘plunging’ student-loan borrowers back into repayment in October without a long-term plan for protecting their wages and credit scores

college graduates
  • 23 Democrats asked the Education Dept. how it will protect borrowers’ wages when student-loan payments resume.
  • They cited how nearly half of borrowers with defaulted loans can’t return to good credit standing.
  • Democrats are worried about “plunging” the borrowers back into repayment in October without long-term help.
  • See more stories on Insider’s business page.

Even if the pause on student-loan payments does get extended past October, it would only be temporary. Lawmakers want to ensure the Education Department has plans for long-term borrower protections.

On Wednesday, Sen. Elizabeth Warren of Massachusetts, Sen. Cory Booker of New Jersey, and Rep. Ayanna Pressley of Massachusetts led 23 of their Democratic colleagues in requesting information from the Education Department on practices that “harm student borrowers.” Specifically, in their letter to Education Secretary Miguel Cardona, the lawmakers wanted to know the steps the department is taking to protect borrowers’ wages and benefits when payments resume.

“Even before the coronavirus disease 2019 (COVID-19) pandemic, collections on defaulted student loans were catastrophic for borrowers in default, who saw their wages, tax refunds, and even Social Security checks confiscated, in addition to being forced to pay exorbitant fees,” the Democrats wrote.

The letter cited a report from the Center for American Progress that found 45% of borrowers in default have not found a path to return their loan to good credit standing, which makes housing and job opportunities more difficult to land.

Democrats added that although the CARES Act initially paused student-loan payments during the pandemic, the Education Department and Treasury Department still “improperly garnished and withheld” over $200 million from about 390,000 borrowers during this time.

“The Department’s failure to fully implement the collections moratorium raises concerns about how it will handle the upcoming scheduled resumption of collections and payments on October 1, 2021,” the letter said.

The Education Department also said it would refund any wage or tax refunds collected after the pandemic began, but over 23,000 borrowers who had their wages garnished have yet to receive refunds because the department didn’t have borrowers’ correct addresses on file, according to the National Consumer Law Center, which is why the Democrats are stressing the importance of proper preparation to transition into student-loan repayment.

Many Democrats who have signed this letter are also calling for the payment pause to be extended through at least March of next year, given that both borrowers and services have said they are not prepared to resume payments in just a few months.

The lawmakers wrote: “As we near the currently scheduled end of the suspension of payments and collections, we are concerned about plunging borrowers back into an untenable financial situation, causing long-term damage to their credit and financial stability and a sudden unnecessary drag on our recovering economy.”

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Student-loan companies aren’t prepared to restart payments in October, which could be a ‘financial catastrophe’ for borrowers

Elizabeth Warren
  • Elizabeth Warren asked student-loan servicers last month how they were preparing borrowers to restart payments.
  • They responded on Tuesday that they need more time, calling the transition into repayment “unprecedented.”
  • Lawmakers and advocates are calling on Biden to extend the payment freeze through next year.
  • See more stories on Insider’s business page.

The resumption of student-loan payments on October 1 is quickly approaching as borrowers, lawmakers, and advocates continue to sound the alarm on the risks with restarting payments too early.

As it turns out, the companies that collect the payments aren’t ready, either.

Last month, Sens. Elizabeth Warren of Massachusetts, Ed Markey of Massachusetts, and Tina Smith of Minnesota sent a letter to the CEOs of all student-loan servicers, requesting information on how each of them were preparing to transition borrowers back into repayment.

On Tuesday, the senators released the responses from those servicers, and the overarching theme was that servicers, along with borrowers, have concerns with restarting student-debt payments in just three months.

“The responses to our inquiry indicate that neither student loan borrowers nor student loan servicers are prepared for payments to resume, and servicers will need significant time to ensure that staffing and procedures are ready to provide borrowers with a high level of support,” the senators wrote in a letter to President Joe Biden.

One servicer even noted in its response that attempting to move over 43 million borrowers back into repayment at once is “unprecedented.”

Other main findings from the responses include:

  • The payment pause has provided significant relief to borrowers, with 2.5 million borrowers having fully repaid their loans during the pandemic;
  • Most borrowers had very little contact with their servicers during the pandemic, suggesting they will not be adequately prepared to restart payments;
  • Servicers need more time to ensure staffing is sufficient to support borrowers;
  • And transitioning borrowers from FedLoan Servicing, which recently announced it is not extending its contract, will require additional time to ensure borrowers are not harmed in the process.

Last week, the Pennsylvania Higher Education Assistance Agency (PHEAA) notified the Education Department that it would not extend its 12-year-old contract for FedLoan Servicing – which handles the loans of 8.5 million borrowers – beyond December 14. The senators wrote in their letter that attempting to restart payments only weeks after transferring servicers would “overwhelm an already broken student loan system.”

The fight to extend the payment pause continues to grow. On June 21, 64 Democrats, led by Senate Majority Leader Chuck Schumer and Warren, urged Biden in a letter to extend the payment pause until March 31, 2022, or until the economy returns to pre-pandemic employment levels, whichever is longer.

A few days later, 128 organizations, including the American Civil Liberties Union (ACLU) and Service Employees International Union (SEIU), sent a letter to the president, urging him to extend the payment pause until the administration has followed through on its promises to fix the student-loan system and cancel federal student debt.

And on June 30, Patty Murray and Bobby Scott, chairs of the Senate and House Education Committees, respectively, sent a letter to Biden urging him to extend the payment pause until early 2022 to ensure borrowers have the information they need to restart payments.

Education Department officials have also reportedly urged Biden to extend the payment pause, and while Education Secretary Miguel Cardona has not confirmed or denied whether such an extension will happen, he has hinted at the possibility of doing so.

“As the economy recovers from this unprecedented crisis, borrowers should not be faced with an administrative and financial catastrophe just as they are beginning to regain their footing,” the senators wrote. “We strongly urge you to extend the pause on student loan interest and payments in order to allow time to begin to repair the broken student loan system.”

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Tackling student debt may have just gotten easier as 4 more advocates join Biden’s ranks

joe biden elizabeth warren
President Joe Biden and Sen. Elizabeth Warren.

  • Four former Consumer Financial Protection Bureau employees just joined the Federal Student Aid office.
  • The bureau, which Elizabeth Warren helped create, fights to protect student-loan borrowers.
  • These new hires could help Warren’s agenda in cancelling student debt for all borrowers.
  • See more stories on Insider’s business page.

President Joe Biden may not have yet canceled student debt for every borrower, but new hires to his administration suggest the crisis could be inching up on his agenda.

On Monday, the Education Department announced five new hires to the Federal Student Aid (FSA) office, four of which were former employees at the Consumer Financial Protection Bureau (CFPB). Sartaj Alag, Bonnie Latreille, Kristen Donoghue, and Stephanie Richo all previously served at the CFPB, which was founded by Massachusetts Sen. Elizabeth Warren, the leading lawmaker on cancelling student debt.

“We have important work ahead of us on behalf of students, parents, and borrowers, and we are pleased to have these experienced, dedicated public servants here at Federal Student Aid,” Richard Cordray, FSA director and former CFPB head, said in a statement.

Over the past months, Biden’s administration has continued to hire experts who have fought alongside Warren in protecting borrowers and holding student-loan servicers accountable. Cordray, for example, has been a longtime ally of Warren’s and has shared much of her agenda throughout his career.

Last week, Insider reported that Toby Merrill was hired as the Education Department’s Deputy General Counsel. Merrill, along with Eileen Connor and Deanne Loonin from the Project of Predatory Student Lending, wrote a letter to Warren in 2020 affirming her legal ability to cancel student debt using executive action – something Warren is now pushing Biden to do.

The new hires announced on Monday will likely help further Warren’s agenda. Alag, who will serve as Principal Deputy Chief Operating Officer at FSA, served as the CFPB’s chief operating officer in 2018, and upon stepping down, Warren told Morning Consult in an email that his “vision and leadership” helped CFPB establish its consumer hotline, which helped process millions of complaints.

“He helped build a strong consumer agency that stands up for millions of American families,” Warren said.

And Latreille, who was formerly CFPB’s student loans ombudsman and later joined the Student Borrower Protection Center, which was founded by CFPB members to protect student-loan borrowers, is now serving as the third ombudsman in FSA’s history.

After President Donald Trump selected Mick Mulvaney to lead the CFPB, Latreille joined a few others in leaving the agency to form the Student Borrower Protection Center because its director, Seth Frotman, said at the time that Education Secretary Betsy DeVos and Mulvaney had turned their backs on “millions of borrowers drowning in student-loan debt.”

Donoghue’s ties to the CFPB go all the way back to its founding in 2013 – she was one of the bureau’s original employees and worked alongside Warren during its creation.

Also included in Monday’s new hires is Colleen McGinnis, who has worked in public service for over 20 years and will serve as FSA’s chief of staff.

While the new hires have not commented on large-scale student-debt cancellation, Warren continues to push for Biden to cancel $50,000 in debt per borrower and extend the pandemic freeze on student-loan payments in the meantime.

“About 40% of people with student loan debt weren’t able to finish their degrees-so now they’re stuck trying to pay college-graduate-sized bills on high-school-diploma-sized salaries,” Warren wrote on Twitter. “We’re fighting to #CancelStudentDebt because people need relief.”

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Here’s how student debt could be redefined by the nation’s first debtors’ union. Democracy might just get rescued in the process.

Student loan debt
  • Astra Taylor, founder of the Debt Collective, told Insider student debt is threatening democracy.
  • She said that after the Civil War, debt was used to wield power over marginalized communities.
  • Biden is “playing with fire” not following through on his promise to cancel student debt, she said.
  • See more stories on Insider’s business page.

Debt is all-American, Astra Taylor says. And she doesn’t mean that in a good way.

Taylor, who founded the Debt Collective, which calls for the cancellation of all forms of debt, namechecks Thomas Jefferson as a founding father of how we understand debt today.

In the early 1880s, he wrote in a letter that debt should be used as a tool to control Indigenous people “because we observe that when these debts get beyond what the individuals can pay, they become willing to lop them off by a cession of lands.” This idea has “carried over through the 20th century,” Taylor said, and she’s made it her mission to end in the 21st. Our relationship with debt can be all-American in a different – and better – way, she said in an interview with Insider.

Her organization is the country’s first membership-based union for debtors and allies, and she said it’s a necessary step for true democracy to finally emerge in the US. She’s offering her help to President Joe Biden, even drafting an executive order she wants President Joe Biden to sign to cancel student debt for all borrowers.

Even if he can cancel all student debt by simply signing a piece of paper, Taylor said it wouldn’t be enough – all debt in the country has to be erased so borrowers are no longer controlled by money they will never be able to pay off.

Astra Taylor.
Founder of the Debt Collective, Astra Taylor.

“I think it’s really important to understand that relationships of credit and debt are always political,” Taylor said. “It’s a power relationship masquerading as a relationship of equality,” adding that it’s time for Americans to move beyond that dynamic.

Many Americans who hold student debt fear they will never be able to pay it off before dying, as Insider previously reported, and given that multiple left-leaning studies have shown that debt cancellation would stimulate the economy by freeing up money for borrowers to spend elsewhere, Taylor said there’s no reason why Biden should not act on the opportunity.

The roots of debt and democracy

As Taylor explained in an opinion piece for The New York Times last week, the Reconstruction era that followed the Civil War had another name among formerly enslaved people: the Jubilee. But although slavery was abolished, debt quickly took its place in the form of “sharecropping,” which served as a tool to control marginalized communities and allow white landlords “generations of exploitable labor.”

This kind of coercion through debt mutated but never went away, Taylor said, citing predatory lending and redlining, or the practice of housing discrimination based on race which the Consumer Financial Protection Bureau (CFPB) found evidence of this year. Lawmakers like Sen. Elizabeth Warren argue that student-loan servicers are currently taking advantage of borrowers in a similar way.

Taylor said the economic recovery Biden touts does not reflect the disproportionate debt burden on minority communities. For example, upon graduation, Black student debt borrowers typically owe 50% more than white borrowers. Four years later, Black borrowers owe 100% more, according to 36 civil rights organizations.

The Debt Collective’s work to ensure debtor’s remain politically independent will help eliminate the disproportionate burden of debt, and, as Taylor put it, “revive the Jubilee.” Taylor’s ideas are intersecting more and more with the mainstream. For example, this week Bloomberg’s Odd Lots podcast interviewed “independent renegade economist” Steve Keen, who called for a “modern Jubilee.”

Biden is ‘playing with fire’ on debt cancellation

During his campaign, Biden promised to immediately cancel $10,000 in student debt for all borrowers, but he has not yet fulfilled that promise and has not commented on if, or when, he will follow through. Taylor told Insider that there are “tremendous risks” accompanied with not delivering on debt cancellation.

“They’re playing with fire,” Taylor said. “To break this promise they fully have the ability legally to do is just so dangerous.”

Taylor argues that instead of investing in debt collection, Biden should invest in free education. Plus, she says, eliminating debt would allow people to invest in other things, like housing.

The Education Department has so far cancelled some debt for certain groups of people, but Americans continue to hold $1.7 billion in student debt.

Biden promised he would cancel student debt, Taylor said. “Why would you risk all of the disappointment and bad faith that will result from not meeting the moment?”

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Biden’s administration just canceled $55.6 million in student debt for people who went to 3 for-profit colleges

college graduation
  • Biden canceled $55.6 million in student debt for borrowers who went to 3 for-profit schools.
  • 1,800 borrowers who went to Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute will receive relief.
  • This brings Biden’s total debt cancellation for defrauded borrowers to $1.5 billion for 92,000 people.
  • See more stories on Insider’s business page.

President Joe Biden’s Education Department on Friday made progress in its promise to reform the student-debt system by canceling student debt for three more groups of defrauded borrowers.

The Education Department announced on Friday that it had approved borrower defense claims from 1,800 borrowers who attended the for-profits Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute, resulting in approximately $55.6 million in relief.

“Today’s announcement continues the U.S. Department of Education’s commitment to standing up for students whose colleges took advantage of them,” Education Secretary Miguel Cardona said in a statement. “The Department will continue doing its part to review and approve borrower defense claims quickly and fairly so that borrowers receive the relief that they need and deserve.”

According to the press release, this is the first time the department has announced approved borrower defense claims for students who attended for-profit institutions other than ITT Technical Institutes, Corinthian Colleges, and American Career Institute since 2017.

The debt-cancellation methodology created under Education Secretary Betsy DeVos, known as the “borrower defense to repayment, compares the median earnings of graduates with debt-relief claims to the median earnings of graduates in comparable programs. The bigger the difference, the more relief the applicant would receive.

While President Barack Obama’s Administration approved 99.2% of claims by defrauded borrowers, President Trump’s Education Secretary Betsy DeVos denied 99.4% of those filed during her tenure. DeVos’ method ran up a huge backlog of claims from eligible defrauded borrowers seeking student debt forgiveness; Cardona said that process did not result in appropriate relief determination and needed to be reversed.

With regards to Westwood College, the department found that from 2002 to the college’s closure in 2015, the school misrepresented students’ abilities to transfer credits and misled students in finding appropriate career choices, leaving students “worse off” after attending the school. 1,600 of those students are receiving $53 million in debt relief.

The department also found that Marinello Schools of Beauty “made widespread, substantial misrepresentations” on the type of education they offered, and 200 of those students will receive $2.2 million debt relief, and it found that the Court Reporting Institute misrepresented how long it would take students to complete the program, resulting in 18 of those students receiving $340,000 in debt relief.

This brings total loan cancellation based on borrower defense under Biden to over $1.5 billion for nearly 92,000 borrowers.

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Biden’s Education Dept. just hired Elizabeth Warren’s student-loans expert, who studied predatory lending at Harvard

elizabeth warren
Sen. Elizabeth Warren.

  • The Education Dept. just hired Toby Merrill, founder of the Predatory Student Loan Project.
  • Elizabeth Warren cited Merrill’s research saying the president can legally cancel $50,000 in student debt.
  • She was hired as deputy general counsel under Education Sec. Miguel Cardona.
  • See more stories on Insider’s business page.

A new hire at the Education Department is another in the growing number of experts who have fought alongside Massachusetts Sen. Elizabeth Warren to reform the student-loan debt system.

Toby Merrill, founder of the Project of Predatory Student Lending at the Legal Services Center of Harvard Law School, was hired as the Education Department’s Deputy General Counsel in the Office of the General Counsel on Tuesday, according to a press release.

The Project represents low-income student-loan borrowers in predatory lending cases against for-profit schools, and according to its website, Merrill has represented borrowers in cases that resulted in almost $1 billion in student-debt cancellation. Notably, her work has caught the eye of Warren, a prominent Democrat pushing for President Joe Biden to cancel more student debt.

Another Warren ally – Richard Cordray – joined in May as the head of the Federal Student Aid office, and while he has not publicly commented on cancelling student debt, he has, like Merrill, shared much of Warren’s agenda throughout his career.

During her presidential campaign, Warren proposed to direct the Secretary of Education to cancel $50,000 in student debt per person, and Merrill, along with Eileen Connor and Deanne Loonin from the Project, wrote a letter to Warren in 2020 affirming her legal ability to cancel student debt using executive action.

“In assessing your proposal, we have consulted the statutory and regulatory framework governing federal student loan programs administered by the Department of Education, as well as the framework and controlling interpretations of the budgetary structure of these programs,” Merrill, Connor and Loonin write. “We conclude that your proposal calls for a lawful and permissible exercise of the Secretary’s authority under existing law.”

They added that “the power to create debt is generally understood to include the power to cancel it.”

Under the Higher Education Act, as Merrill, Connor, and Loonin explained, Congress gave the Education Secretary the unrestricted authority to create and cancel or modify federal student debt, and although Warren did not win the presidency, she has been urging Biden to follow through on her proposal and provide borrowers with $50,000 of student debt relief.

Whether Biden will use the authority Warren and Merrill believe he has is unclear. Although he campaigned on cancelling $10,000 in student debt, he has said he does not think he has the authority to cancel $50,000 of it, but he has asked the Education and Justice Departments to review his ability to do so.

“It’s time for President Biden to #CancelStudentDebt,” Warren wrote on Twitter. “People need this. Our country needs this. And one of the best ways to create a 21st-century economy is by investing in people who have invested in their own education.”

Do you have a story about trying to cancel student debt? Reach out to Ayelet Sheffey at asheffey@insider.com.

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The Education Dept. insists you repay all your student loans but isn’t collecting about $1 billion owed by colleges, report finds

college graduates
  • The National Student Legal Defense Network found 1,300 colleges owe $1.2 billion to the Education Dept.
  • Most of it is held for-profit colleges that shut down in past years over allegations of fraud.
  • Meanwhile, the department is preparing to resume student loan collections in October.
  • See more stories on Insider’s business page.

Once the payment pause on student loans lifts in October, the Education Department will resume efforts to collect student debt from 43 million borrowers across the country. But according to a new report, collection of debt held by higher education institutions – and owed to taxpayers – doesn’t appear to get similar treatment.

The nonprofit National Student Legal Defense Network released a report last week that found as of February 2021, nearly 1,300 higher education institutions owed approximately $1.2 billion to the Education Department. Most of the debt is held by for-profit schools, with the largest outstanding debt of over $244 billion owed by the defunct Vatterott College.

“While the Department aggressively attempts to collect from borrowers, institutions and their owners and executives walked away from more than a billion dollars owed to taxpayers,” the report said.

The report noted that even thought the department has a “wide array” of methods to require institutions to repay their debt, it has failed to make use of those tools, allowing debt to go uncollected.

Department of Education Press Secretary Kelly Leon told Insider in a statement that the department “is committed to improving our policies and practices to better hold institutions accountable for their actions and to provide borrowers with fair and streamlined access to the benefits to which they are entitled.”

Here are the other main findings from the report, obtained by the group through Freedom of Information Act requests:

  • About 200 of the 1,300 institutions with debt still received Title IV funding from the government;
  • The department has recertified institutions owing debt for participation in student aid programs;
  • And the department’s failure to collect has cost at least $218 million because the statue of limitations on collections had expired.

The report added that the department has not collected relatively small debt amounts. For example, the for-profit University of the Rockies owed $883,613 in 2019 that the department had not collected as of the data collected in the report.

President Joe Biden’s Education Department has begun to act on fraudulent behavior of for-profit schools through cancelling student debt for some defrauded borrowers. Most recently, Education Secretary Miguel Cardona cancelled student debt for 18,000 borrowers defrauded by now-defunct ITT Technical Institutes, totaling to about $500 million in debt relief.

But even as institutions still owe taxpayers billions in debt, the Education Department is preparing to transition borrowers back into repayment in October – something lawmakers have advocates are strongly urging against.

“When we organize together, fight together, and persist together, we win together,” Massachusetts Sen. Elizabeth Warren wrote on Twitter on Sunday. “We’ve all got to raise our voices and call on the Biden administration to extend the pause on student loan payments and #CancelStudentDebt.”

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Biden campaigned on cancelling and reforming student debt. Here’s where those promises stand.

Joe Biden
President Joe Biden.

  • Biden campaigned on cancelling $10,000 in student debt per person and reforming loan programs.
  • He has yet to deliver on those promises, but the government has begun work on reforming student debt.
  • Advocates and lawmakers say borrowers need more certainty from the Education Department.
  • See more stories on Insider’s business page.

President Joe Biden promised to lessen the $1.7 trillion student-debt crisis during his campaign, promising debt cancellation and reforms of key student-loan programs.

While it’s admittedly early, Biden hasn’t fulfilled any of those promises yet. The most that can be said is that his is starting to consider working on them, and it’s going to take a while to see progress.

One of the president’s first actions in office was an extension of the student-loan payment pause during the pandemic, providing relief to the 43 million borrowers. But the pause is lifting come October, and borrowers, experts, and lawmakers worry the Biden administration is not doing enough to protect borrowers when that happens.

On Thursday, the Student Borrower Protection Center (SBPC), which advocates for borrowers’ rights, led 128 organizations in calling for the pause to be extended until Biden follows through on reforming loan forgiveness programs and cancelling student debt.

“There is a very long way to go to deliver on the promises for student loan borrowers, between what was promised and where we are,” Seth Frotman, executive director of the SBPC, told Insider. “A lot of that is obviously because of how broken the system is and how many of the problems we’re facing are decades in the making.”

Here’s what Biden promised on student debt during his campaign, and where those promises currently stand:

Cancelling $10,000 in student debt per borrower

Biden promised to cancel $10,000 in student debt per person. In a speech on November 16, he said student loans are holding borrowers up, and forgiving $10,000 “should be done immediately.”

His campaign website said he’d work with Democrats to “authorize up to $10,000 in student debt relief per borrower” as part of COVID-19 relief, but the $1.9 trillion stimulus package he signed in March didn’t include that.

Once he took office, he said at a CNN town hall in February that he was “prepared to write off the $10,000 debt but not $50 [thousand], because I don’t think I have the authority to do it.”

The Justice and Education Departments are reviewing Biden’s executive authority to cancel $50,000 in debt, but he has yet to cancel even $10,000.

Cancelling debt for students at public colleges and HBCUs

Biden also campaigned on forgiving all undergraduate tuition-related federal student loan debt for borrowers from public colleges and universities earning up to $125,000 per year, and from private Historically Black Colleges and Universities (HBCUs) and minority-serving institutions.

Biden dedicated funding to HBCUs in both his stimulus and infrastructure proposals, but not the wider forgiveness.

Some HBCUs have used Biden’s stimulus money to cancel debt for their own students. But given student debt’s disproportionate burden on Black borrowers, organizations continue to call for the president to cancel their debt.

Reforming student-loan programs

The Public Service Loan Forgiveness (PSLF) program is supposed to forgive student debt for public service workers after 120 qualifying monthly payments, but it is notoriously flawed, continuing to reject 98% of applications. Biden promised to fix the program, and those fixes are currently in the works.

Biden’s regulatory agenda, released earlier this month, included plans to reform PSLF, along with amending the “borrower defense to repayment,” which forgives loans for students who were defrauded by for-profit schools.

The process for implementing these improvements could be lengthy, though, with the department planning to finalize the new rules by April 2022. It held public hearings this week to gather feedback on the loan system, and it will soon determine a path forward for rulemaking.

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