Warren, Pressley, Schumer, Sanders Lead Lawmakers in Push to Cancel Student Debt for Borrowers Facing Financial Hardship

Letter

Dear Secretary Cardona:
We are writing regarding the Department of Education's ("ED" or "the Department") ongoing
efforts to pursue student loan relief for millions of Americans through the negotiated rulemaking
("neg-reg") process.While we appreciate the efforts of the Department and the negotiating
committee, we are concerned that, without full consideration of cancellation targeted toward
borrowers facing financial hardship, the rule will not provide adequate debt relief for the most
vulnerable borrowers. We urge ED to hold a fourth session to consider student debt relief for
borrowers experiencing financial "hardship that is not otherwise addressed by the existing
student loan system"and deliver cancellation as soon as possible.

In the months since President Biden's announcement that he would pursue an alternative path for
student debt relief after the Supreme Court struck down his initial plan, ED and the negotiating
committee have completed three sessions of the student debt neg-reg.In the most recent session,
negotiators came to consensus on a few provisions that would provide relief for borrowers,
including borrowers who were eligible for cancellation but were not enrolled in the right
income-driven-repayment plan and borrowers who attended poor performing or predatory
colleges.However, the negotiators were unable to vote on a final category, "those experiencing
hardship that is not otherwise addressed by the existing student loan system,"because ED did not propose regulatory language.Much of the work to prepare such language had been done:
following the second session, ED released an issue paper proposing that the rule address this
category and presenting examples of forms of hardship that the rule could capture.But the
negotiators only had a limited time to discuss hardship in the third neg-reg session, and several
asked if another session would be scheduled to consider hardship.

We join the calls of those negotiators. The Department should announce a fourth session of the
neg-reg to allow the appropriate time for negotiators to discuss and vote upon a relief proposal
for borrowers experiencing financial hardship.

In an earlier letter to ED, some of us proposed what a hardship category could look like. Hardship could be measured using factors such as debt-to-income ratio and student-debt-toincome ratio. A University of California study revealed that middle-income borrowers with a student-debt-to-income ratio of over 30 percent are likely to face serious financial hardship and that low-income households making below $71,000 typically face hardship repaying their student loans regardless of their debt-to-income ratio. Other indications of hardship could include whether a borrower has filed for bankruptcy, did not complete their degree, owns Parent PLUS loans while still repaying their own loans, has chronically been in default, or is over a certain age and has limited income. Besides income itself, income-based indicators could include whether a borrower was a Pell Grant recipient or had an Expected Family Contribution of $0 when applying for loans, given evidence that a borrower's need when entering school is correlated with their degree of hardship in paying off debt. We also believe that regulatory text should provide the Secretary with the flexibility to waive debt based on other unanticipated forms of financial hardship.

We appreciate the Department's efforts to provide student debt relief through negotiated
rulemaking, but we believe that in order for any final rule to meet President Biden's objective of
"provid[ing] student debt relief to as many borrowers as possible as quickly as possible," it must
include relief for a broader set of borrowers experiencing financial hardship. The Biden
Administration must continue to use its authority to deliver on the promises made to student loan
borrowers and hold a fourth negotiated rulemaking session, as quickly as possible, to complete
discussion of hardship-based relief--and once complete, swiftly propose and implement debt
relief for millions of hard-working Americans.

Source