February 27, 2023

New Report from Senator Warren: Millions of Americans at Risk of Financial Distress if Supreme Court Blocks Student Debt Cancellation

Report Finds Student Loan Burden Disproportionately Impacts Black, Latino, and Low-Income Borrowers.

“If the Supreme Court upholds the spurious challenges to President Biden’s cancellation plan, millions of Americans will remain crushed by student debt.”

Text of Report (PDF)

Washington, D.C. – United States Senator Elizabeth Warren (D-Mass.) released a new report today: Hanging in the Balance: Millions at Risk if the Court Denies Student Debt Cancellation. In January, Senator Warren opened an investigation seeking information about how the 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. The new 21-page report is based on information from leading higher education, consumer advocacy, and economic justice groups. The report centers the stories of those most impacted by cancellation and emphasizes the fact that working families and borrowers of color would be disproportionately harmed if the Supreme Court upholds challenges to the President’s student debt relief plan, and emphasizes the significant uncertainty that legal challenges to the debt cancellation plan are causing for vulnerable borrowers. 

The key findings of the report include:

  • The President has clear authority to cancel student debt under the HEROES Act of 2003, which, “by its plain language, authorizes the Administration “to waive or modify” any federal student loan obligations.”
  • President Biden’s student debt cancellation plan will provide targeted relief to low- and middle-income borrowers and offer financial freedom from crushing student loan burdens. Cancellation is particularly helpful for borrowers who struggle the most with repaying, including Black borrowers, borrowers who didn’t get a degree, and those who have defaulted on their student loans.
  • Spurious legal challenges to President Biden’s student debt cancellation plan are causing financial anxiety and uncertainty among vulnerable borrowers, as borrowers are left in a “perilous limbo,” not knowing if or when to expect the relief they deserve.
  • Denying student debt cancellation would cause financial disaster for millions of Americans, and monthly costs will rise significantly for millions of Americans when student loan repayments resume.  Reducing debt burdens through cancellation will help avoid defaults and delinquencies payments resume and ensure borrowers do not face financial ruin as the economy continues its recovery from the COVID-19 pandemic.
  • Student loan cancellation is the necessary first step to repair the broken higher education system. By eliminating student debt for tens of millions of families, cancellation will make the student loan portfolio more manageable as the Biden Administration works to  reform the higher education system and ensure that no family is trapped in a broken student loan system. .

Senator Warren’s report is the culmination of an in-depth investigation into the benefits of student debt cancellation for borrowers and its role in advancing racial and economic justice. Its release comes as the Supreme Court prepares to hear arguments from Republican officials and special interests that are attempting to permanently block President Biden’s plan to cancel student loan debt for millions of Americans. 

“Over 40 million borrowers have their financial futures at stake as the Supreme Court hears the debt relief case, and the ones carrying the heaviest burden are those from low-income backgrounds, Black and Latino borrowers, and public service workers like teachers and nurses,” concluded the report. “If the Supreme Court upholds the spurious challenges to President Biden’s cancellation plan, millions of Americans will remain crushed by student debt.”

“Lifting this burden would help our communities build generational wealth, bolster the economic strength of our country, and live a life of dignity,” said UNIDOS, the nation’s largest Hispanic civil rights organization. “It would help put food on the table, pay rent, buy a home. It would keep parents in the workforce by helping pay for childcare or elder care. It would allow us to have a stake in the communities we call home.”

Senator Warren is an outspoken advocate on student debt relief, and is leading the fight to hold loan servicers and for-profit colleges accountable to fix the broken student loan system:  

  • In October 2022, Senator Warren and U.S. 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 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.
  • Senator Warren, along with Senate Democratic Whip Dick Durbin (D-Ill.), Senator Sherrod Brown (D-Ohio), and U.S. Representatives Pramila Jaypal (D-Wash.) and Mark Takano (D-Calif.), urged Secretary of Education Miguel Cardona, urging the Department of Education (ED) 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 Chris Van Hollen (D-Md.), Blumenthal (D-Conn.), and Smith (D-Minn.), 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, Cory A. Booker (D-N.J.), Bernard Sanders (I-Vt.), Tammy Baldwin (D-Wis.), and Edward J. Markey (D-Mass.) 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) are 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.
  • 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.
  • That same month 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.
  • 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. 
  • Last Congress, Senator Warren introduced the Consumer Bankruptcy Reform Act and in 2019, co-led the Student Borrower Bankruptcy Relief Act with Senator Durbin (D-Ill.) to make student loans dischargeable through bankruptcy.