Menendez, Booker join Senate and House colleagues in urging President Biden to swiftly deliver student loan debt cancellation for 43 million Americans

NEW JERSEY – U.S. Senators Bob Menendez and Cory Booker (both D-N.J.) joined 84 Senate and House colleagues in a letter to President Joe Biden, urging him to swiftly deliver on his promise to deliver student debt cancellation to working- and middle-class families by early 2024.

Last year, President Biden’s historic decision to cancel up to $20,000 in student debt for working Americans would have provided targeted relief to families, with an estimated 90 percent of relief dollars going to borrowers earning less than $75,000 a year. An estimated 20 million people would have seen their student debt balances eliminated entirely. However, this May, the right-wing Supreme Court issued a misguided decision blocking this plan.

“We are extremely disappointed and concerned that the Supreme Court substituted politics for the rule of law to deny as many as 43 million hard working Americans life-changing relief from crushing student loan debt. In the wake of this outrageous decision, we appreciate your announcement initiating a rulemaking under the Higher Education Act of 1965 to deliver on debt relief and write to urge you to swiftly carry out your commitment to working- and middle-class families, and cancel student debt by early 2024,” wrote the lawmakers to President Biden.

This relief would help families start a business, buy a home, or save for retirement, and would also contribute towards narrowing the racial wealth gap. Black families are more likely to borrow to go to school, take on higher levels of debt, and disproportionately struggle with repayment compared to their white peers. Further, Black and Latino borrowers are also more likely than their white peers to default on their loans. If enacted, almost half of Latino borrowers and one of four Black borrowers would have had their entire debt balance forgiven under President Biden’s student debt cancellation plan.

Additionally, a resumption of student loan payments will reduce the spending power of the average American and place added pressures on them and their families, and will also hurt small businesses and other industries. Retailers such as Target and Walmart were among the retailers who recently raised concern on their earnings calls about how the resumption of student loan payments would impact their sales. The phrase “student loan” was mentioned more last quarter in earnings calls by companies in the S&P 500 than at any time since the term first appeared in the early 2000s.

“We are facing a student loan crisis that impacts generations of borrowers who collectively hold more than $1.6 trillion in student loan debt. The burden of student debt is ever-present among vulnerable communities. Nearly one-third of Americans who hold student debt have no degree or credential. Roughly 16 percent of borrowers – including almost one third of senior citizens holding student debt – are in default, with disastrous consequences for their credit and financial health, including the garnishment of wages and government benefits. In fact, nearly three million people over the age of 62 owed more than $110 billion in federal student loans, putting seniors at risk of having their Social Security benefits garnished. More than a third of borrowers eligible for student debt cancellation under your plan are age 40 or older,” added the lawmakers.

The lawmakers commended President Biden’s efforts in providing a 12-month “on-ramp” for resuming student loan payments starting in October 2023, but expressed concerns that these repayments will place significant financial burdens on borrowers. They are urging the Department of Education to ensure the implementation of the final rule to provide debt relief happens before the 12-month on-ramp ends to help reduce the risk of further delinquency and default.

“Although the Supreme Court has chosen to stand in the way of your initial student debt relief plan, we recognize that as President of the United States, you have additional tools to provide relief. Working- and middle-class families need this relief to come as soon as possible. We urge you to continually find ways to use your authority to bring down student debt, address the rising cost of college, and make postsecondary education affordable for all students who choose that path. Borrowers have already waited nearly a year for the relief you announced in August 2022, and critics of your plan to help 43 million Americans are likely to renew their attacks with regard to your rulemaking announcement. We urge you to reject their bad-faith, partisan attempts to delay relief and carry out your efforts to help borrowers as quickly as possible,” the lawmakers said.

Sen. Menendez has long advocated for meaningful student debt cancellation, and, in February, stood in solidarity with student borrowers, parents, students, and advocates for the historic People’s Rally for Student Debt Cancellation before the start of oral arguments at the Supreme Court on the Biden Administration’s student debt relief plan.

Last August, Sen. Menendez applauded the Biden Administration when it took the historic step to cancel student debt for millions of student borrowers. Since this relief was first announced, Republican states have attempted to callously block the Administration’s student loan forgiveness efforts from moving forward.

In addition to pushing for student debt cancellation, last September Sen. Menendez penned an op-ed urging the Biden Administration to keep the pause on student debt payments in place until it developed and implemented a unified plan to tackle the broken student loan system, including improvements to the Public Service Loan Forgiveness (PSLF) program and lower payments under existing Income-Driven Repayment (IDR) programs. Since then, the Administration has taken significant steps modeled after the recommendations the Senator outlined in his op-ed, as well as PSLF legislation he introduced last summer.

In 2022, Sen. Menendez and several of his colleagues also called on the Departments of Education and Justice to follow through on their pledge to improve the handling of student debt bankruptcy claims. In 2021, Sen. Menendez authored the Student Loan Tax Relief Act, along with Sen. Warren, which exempts forgiven student loan debt from tax liability through 2026. The lawmakers had this provision successfully included in the American Rescue Plan.