December 11, 2023

Warren, Pressley, Schumer, Sanders Urge Dept. of Education to Use Full Authority, Expand Student Debt Cancellation by Strengthening Proposed Rules for Relief

"This regulation has the potential to improve the financial security of tens of millions of hard-working Americans who are currently trapped by crushing student debt. However, we are concerned that the latest draft of the rule would fall short of providing the full scale of debt relief that low and middle-income Americans urgently need."

Text of Letter (PDF)

Washington, D.C. — Today, U.S. Senator Elizabeth Warren (D-Mass.), Majority Leader Chuck Schumer (D-N.Y.), Bernie Sanders (I-Vt.), Alex Padilla (D-CA), and Representatives Ayanna Pressley (D-Mass.), Ilhan Omar (D-Minn.), Frederica Wilson (D-Fla.) sent a letter to U.S. Secretary of Education Miguel Cardona, urging him to leverage his existing and full authority under the Higher Education Act to provide expanded student debt relief to working and middle-class borrowers. 

The letter comes in response to an initial draft of the proposed rule – and ahead of the final session of the negotiated rulemaking (“neg-reg”) process – that would limit student debt relief to four specific subsets of borrowers: (1) borrowers with outstanding federal student loan balances that exceeds their original principal balance (2) borrowers who have paid their loans for over 20 or 25 years; (3) borrowers who are eligible for forgiveness but have not enrolled; and (4) borrowers who took on loans to attend unaccredited or predatory programs.  

Following the Supreme Court’s June 2023 ruling that struck down President Biden’s initial student debt relief plan, President Biden swiftly implemented two measures to expedite debt relief for a wide range of borrowers, while simultaneously supporting them during the repayment process. The first was the Saving on a Valuable Education (SAVE) Plan, an income-driven repayment (IDR) plan that prevents balances from growing because of unpaid interest and lowers borrower monthly payments. The second was the initiation of a negotiated rulemaking procedure to establish an alternative debt forgiveness pathway for a number of working and middle-class borrowers, leveraging the authority granted under the Higher Education Act. 

“This rulemaking process presents a significant opportunity to address pervasive problems within the student loan system by fortifying the authority to waive debt, in order to ensure that postsecondary education becomes accessible to all students,” wrote the lawmakers. “We urge you to leverage this authority to its fullest extent, maximizing relief for the greatest number of borrowers facing financial hardship.”

The Department of Education (the Department or ED) is currently in the midst of three sessions of this student debt neg-reg process. In advance of the second session, the Department issued an initial draft of the rule that would make four subsets of borrowers eligible for student debt relief: (1) borrowers with outstanding federal student loan balances that exceed their original principal balance, due to interest; (2) borrowers with loans that have been in repayment for 25 years or more; (3) borrowers who are eligible for forgiveness under an enumerated repayment plan or loan program but have not enrolled; and (4) certain borrowers who took on loans to attend programs that provide insufficient financial value (including career-training programs with unreasonably high debt or low earnings for graduates, and programs at institutions with high loan default rates).  

“While we commend the Biden Administration for taking key steps forward to fix the broken student loan system through the regulatory process, we believe that the regulatory text could be improved to better take advantage of the Department’s full authority under the HEA to protect vulnerable borrowers. As we lend our support to your diligent efforts to provide debt relief through regulatory procedures, we urge you to consider several recommendations to strengthen the Department’s debt relief rule,” continued the lawmakers. 

Senator Warren proposed the following actions to strengthen the proposed student debt relief rule and provide more relief to vulnerable borrowers: 

  • Eliminate all debt that exceeds the original principal balance of the loan. Under the current rule, the “Secretary may waive all or a portion of the amount by which a borrower’s total outstanding balance exceeds the original principal balance of the loan.” The proposed rule should eliminate all debt that exceeds the initial principal due to runaway interest.
  • Provide full cancellation, not just a waiver of excess interest, for borrowers who have repaid enough to cover their original principal. The current draft rule does not extend relief to borrowers who have diligently repaid enough to cover their original principal. The Department should provide full cancellation, not just a waiver of excess interest, for borrowers who have repaid enough to cover their original principal. 
  • Eliminate the sudden cliff that would give full relief to borrowers whose loans first entered repayment at least 25 years ago and no relief to similarly situated borrowers. As written, the proposed rule would only extend relief to borrowers who entered repayment 25 years ago or more by July 1, 2025, would qualify for relief.  However, a borrower who hits the 25-year mark on July 2, 2025 would be ineligible for relief. ED should remove the cutoff date for relief for borrowers who have been in repayment for decades, and instead permit borrowers to become eligible for this relief on a rolling basis. 
  • Extend relief to additional categories of borrowers with financial hardship and create a catch-all category for unforeseen forms of hardship. In addition to the categories of hardship listed in ED’s issue paper, ED should consider other income-based indicators of financial hardship, such as receipt of Earned Income Tax Credits, Supplemental Nutrition Assistance Program, or Supplemental Security Income — as well as other non-income-based indicators such as incarceration status or eviction history. The rule should also include a catch-all provision to capture other forms of hardship in the interest of justice and historically restrictive criteria for relief eligibility. 
  • Extend relief to borrowers who have been victims of student loan servicer misconduct or error. The Department should extend relief to borrowers who have been victims of student loan servicer misconduct or error, but the current draft text does not include protections for borrowers who have faced predatory loan servicer practices, such as forbearance steering, overcharging, or failing to enroll borrowers in IDR plans for which they were eligible, upon their request. 
  • Eliminate the need for borrowers to submit burdensome applications by basing eligibility for relief on information that ED already has or that it can acquire from other agencies. The rule should extend relief to borrowers automatically, without requiring them to submit applications. ED can largely base relief on information already in its possession through payment history databases, Free Application for Federal Student Aid (FAFSA) applications, and on information from other federal agencies. 

“We are encouraged by the Department’s critical efforts to provide student debt relief through negotiated rulemaking. However, we believe more must be done to improve the draft regulatory text to meet President Biden’s objective of ‘provid student debt relief to as many borrowers as possible as quickly as possible.’ The Biden Administration should take every opportunity to use the authority Congress has already given it to deliver on the promises made to student loan borrowers,” concluded the lawmakers. 

Senator Warren has led the push on student debt relief:

  • On December 5, 2023, Senator Warren and Representative Ayanna Pressley (D-Mass.) published an op-ed on MassLive about the crisis America is facing with the cost of college and how this crisis is impacting communities across Massachusetts. They highlighted what they are doing at the federal level to fix the way that higher education is funded and made the case for the CHERISH Act, a bill introduced in the Massachusetts Legislature, as a creative blueprint for what states can do to tackle this crisis. 
  • On December 4, 2023, Senator Warren (D-Mass.), Bernie Sanders (I-Vt.), Richard Blumenthal (D-Conn.), and Chris Van Hollen (D-MD), sent a letter to Secretary Cardona outlining concerns about its management of the return to student debt repayment. With the resumption of student loan payments underway since October 2023, the lawmakers are requesting information on the Department’s efforts to minimize student loan servicers’ errors and protect borrowers.
  • In August 2023, Senator Warren, Congresswoman Ayanna Pressley (D-Mass.), Senate Majority Leader Chuck Schumer (D-N.Y.), Senators Alex Padilla, (D-Calif.), and Raphael Warnock (D-Ga.) and U.S. Representatives Ilhan Omar (D-Minn.), Jim Clyburn (D-S.C.), and Frederica Wilson (D-Fla.) led 79 other lawmakers 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.
  • In April 2023, Senator Warren led 16 senators in sending a letter to the Chair and Ranking Member of the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies requesting the committee provide $2.7 billion in Fiscal Year (FY) 2024 to fund the Office of Federal Student Aid.
  • In February 2023, Senator Warren released a new report based on her investigation into how efforts by Republican officials and special interests to block the President’s plan to cancel up to $20,000 in federal student loan debt would affect Americans.
  • In October 2022, Senator Warren and Representative Ayanna Pressley (D-Mass.) visited communities across Massachusetts to celebrate the Biden administration’s student debt cancellation plan and help residents sign up for student loan relief. 
  • In October 2022, Senator Warren called on the Department of Education to hold for-profit colleges executives accountable for scamming students out of a quality education and loading them up with student debt.
  • In September 2022, Senator Warren and Representative Pressley sent a letter to federal student loan servicers to inquire about the steps they are taking to ensure borrowers are receiving timely information about President Biden’s debt cancellation plan. 
  • In September 2022, Senator Warren sent a letter to the Department of Justice (DOJ) urging DOJ to issue and implement updated student debt bankruptcy guidance without delay following the Biden-Harris administration’s historic decision to cancel up to $20,000 in student debt for up to 43 million borrowers and overhaul the student loan system.
  • In August 2022, Senator Warren recognized the Department of Education for protecting students and taxpayers by taking action to revoke ACICS status as an accreditor.
  • Senator Warren, along with Senate Democratic Whip Dick Durbin (D-Ill.), Senator Brown and Representatives Pramila Jayapal (D-Wash.) and Mark Takano (D-Calif.), urged Secretary of Education Miguel Cardona to swiftly discharge the loans of borrowers defrauded by predatory for-profit colleges and universities, including those operated by Corinthian College. 
  • Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representatives Jayapal, Pressley, Ilhan Omar (D-Minn.), and Katie Porter (D-Calif.) led more than 80 colleagues in a bicameral letter to the Department of Education calling for it to release the memo outlining the Biden administration’s legal authority to cancel federal student loan debt and immediately cancel up to $50,000 of debt for Federal student loan borrowers.
  • Senator Warren, along with Senate Majority Leader Schumer and Representative Pressley released new analysis showing that resuming student loan payments would strip $85 billion every year from the economy.
  • Senator Warren, along with Senators Van Hollen, Blumenthal, and Smith sent letters to four federal loan servicers, requesting information on their plans to support borrowers when student loan payments resume. 
  • Senator Warren, along with Senators Brown, Blumenthal, Smith, and Van Hollen sent a letter to Maximus, the company that is assuming Navient’s federal student loans servicing contract, questioning its troubling history and seeking assurances that borrowers will receive appropriate services and protections during the transition. 
  • Senator Warren, along with Senators Brown, Blumenthal, Smith, Van Hollen, Booker, Sanders, Tammy Baldwin (D-Wis.), and Markey sent a letter to the Department of Education urging Secretary Cardona to use his authority to automatically remove all student loan borrowers in default.
  • Senator Warren, along with Senators Van Hollen, Blumenthal, Brown, Smith, Markey, and Robert Menendez (D-N.J.) sent letters to the heads of Pennsylvania Higher Education Assistance Agency, Granite State, and Navient calling on them to correct past errors with borrowers’ accounts and address growing concerns over their preparedness to transfer millions of borrowers to new servicers. 
  • Senator Warren, along with Senator Markey and Representative Pressley, released a report that detailed the ongoing failures of the Public Service Loan Forgiveness program for public servants in Massachusetts. 
  • At a hearing in July 2021, Senator Warren pushed for borrower protections after a major student loan servicing shakeup.
  • In July 2021, Senator Warren released a statement regarding the end of the Pennsylvania Higher Education Assistance Agency's (PHEAA) contract servicing student loans with the Department of Education.
  • In June 24, 2021, Senators Warren and John Kennedy (R-La.) called on PHEAA CEO to address concerns about false and misleading statements made during a subcommittee hearing on student loans, which was chaired by Senator Warren. 
  • In May 2021, Senator Warren led her colleagues in sending a letter requesting information about the steps the Department of Education and the Office of Federal Student Aid (FSA) was taking to help transition millions of federal student loan borrowers back into repayment ahead of the scheduled end to the pause on student loan payments and interest in September 2021.
  • In April 2021, Senators Warren and Raphael Warnock (D-Ga.) led a group of colleagues in a letter to Education Secretary Miguel Cardona urging the Department of Education to take swift action to automatically remove all federally-held student loan borrowers from default.
  • In April 2021, at her first hearing as chair of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren called out PHEAA for its mismanagement of the Public Student Loan Forgiveness Program.
  • In April 2021, Senator Warren also questioned Jack Remondi, CEO of Navient, on the company's long history of abusive and misleading behavior towards borrowers and their profiting off the broken student loan system.
  • In March 2021, Senators Warren and Menendez applauded the passage of their Student Loan Tax Relief Act as part of the American Rescue Plan. 
  • In December 2020, Senator Warren introduced the Consumer Bankruptcy Reform Act and in 2019, co-led the Student Borrower Bankruptcy Relief Act with Senator Durbin to make student loans dischargeable through bankruptcy.