Senator Chuck Schumer announced a plan on Thursday to immediately cancel upwards of $50,000 in student loan debt per student, as the financial fallout of the Coronavirus Pandemic continues to mount.
Nearly 2.4 million New Yorkers owe approximately $89.5 billion in federal student loans. Senator Schumer says that President Donald Trump has existing executive authority to cancel student loan debt, which is what he wants to see happen.
He says canceling student loan debt will relieve a major burden on New York’s young people and families during the COVID-19 pandemic, and better prepare the economy to boom when the pandemic is over.
The resolution outlines how the next president should use existing executive authority under the Higher Education Act to substantially cancel student loan debt for students in New York and across the country, and ensure there is no tax liability for federal student loan borrowers resulting from administrative debt collection.
Schumer said addressing the student loan crisis will be one of the first legislative actions he will prioritize in the new 117th Congress in January.
“The bottom line is that the cost of college is out of control and paying for it forces millions of students and families to take on crippling debt, which greatly impedes students’ ability to get started and succeed after graduation. It is like starting a long walk with a back pack stuffed with bricks. This plan to cancel student debt on federal loans will substantially lighten that load and give recent graduates a huge boost that will launch them into a much brighter future – that will energize the economy and substantially expand our dwindling middle class,” Schumer said in a press release.
The plan will provide complete forgiveness of student loans for more than 75% of borrowers across the U.S. and at least some debt forgiveness to 95% of people with student loans.
Here’s how it would work:
- Recognize the Secretary of Education’s broad administrative authority to cancel Federal student loan debt under the existing authorities of section 432(a) of the Higher Education Act of 1965 (20 U.S.C. 1082(a));
- Call on the President of the United States to take executive action to administratively cancel up to $50,000 in Federal student loan debt for Federal student loan borrowers using existing legal authorities under such section 432(a), and any other authorities available under the law;
- Encourage the President of the United States, in taking such executive action, to use the executive’s authority under the Internal Revenue Code of 1986 to ensure no tax liability for Federal student loan borrowers resulting from administrative debt cancellation;
- Encourage the President of the United States, in taking such executive action, to ensure that administrative debt cancellation helps close racial wealth gaps and avoids the bulk of Federal student debt cancellation benefits accruing to the wealthiest borrowers; and
- Encourage the President of the United States to continue to pause student loan payments and interest accumulation for Federal student loan borrowers for the entire duration of the COVID-19 pandemic.
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