Warren and Schumer Call for Student Debt Cancellation of Up to $ 50,000 for All Federal Borrowers

Senate Democrats Chuck Schumer and Elizabeth Warren are calling on President Trump to write off $ 50,000 in federal student loan debt next year.

Senators unveiled a resolution that called on the president from 2021, whether former Vice President Joe Biden or current President Trump, to “take executive action to broadly write off federal debt student loans “as the country faces a pandemic and both a historic” public health and economic crisis.

Senators asserted that the Education Secretary had “broad administrative power” granted by Congress to write off federal student loan debt under Section 432 (a) of the Higher Education Act 1965 and that the President should “take executive action to globally write off up to $ 50,000 in federal student loan debt” using that authority.

The resolution uses “the existing authority under the law” to cancel the debt, Warren said on a call Thursday with reporters. “Right now our economy is in a deep hole because of this pandemic, she added. “Student debt is just another self-inflicted injury. “

U.S. Senator Elizabeth Warren (D-MA) speaks to reporters with Senate Majority Leader Chuck Schumer (D-NY) at a press conference on Democrats’ demand for extended protections against evictions in the upcoming Coronavirus Disease Aid (COVID-19) Bill on Capitol Hill in Washington, United States, July 22, 2020. REUTERS / Jonathan Ernst

“Democrats are ready to act in 2021”

The text of the resolution noted that “even before the COVID-19 pandemic, the United States also faced a historic student loan crisis, which is currently holding back our struggling economy and restricting opportunity and prosperity for millions of people. American families ”.

With 43 million Americans holding more than $ 1.6 trillion in federal student loan debt, the resolution adds, the pandemic is making it “nearly impossible for many Americans to repay their student loans in full.”

Schumer noted that they are also pushing this plan for the next President of the United States because Republicans in the Senate and the Trump administration are against canceling any student loan debt.

“President Trump has failed the student debt cancellation test,” Schumer said. “This is for our new president, who will be Joseph Biden … We think he would take our proposal very seriously.”

Warren added, “Democrats are ready to act in 2021.”

(Graphic: David Foster)

(Graphic: David Foster)

More than 100 organizations, from civil rights groups to consumer groups, have advocated for debt cancellation.

“We join Senators Schumer and Warren in calling on President Trump to immediately write off up to $ 50,000 in federal student loan debt for 43 million borrowers,” said Persis Yu, National Consumer Law Center attorney and director of the NCLC Student Loan Assistance Project, in a statement. .

Yu added that the debt cancellation is “urgent now, as American families are struggling to stay afloat financially” and “the government can no longer afford to wait.”

The resolution highlighted how borrowers of color face one of the “worst effects” of student debt – from black and Latin borrowers accumulating more debt than their white peers to defaulting at higher rates – and argued that the cancellation helps “bridge the racial wealth gap.” “

Various cancellation proposals

The Trump administration previously extended the interest-free payment break for federal student loan borrowers until December 31, 2020.

The cancellation of up to $ 50,000 in student debt held by the federal government comes after House Democrats unveiled a bill proposing $ 30,000 in debt cancellation, then a proposed cancellation of 10 $ 000. Senate Democrats also echoed the call for the cancellation of $ 10,000, and Biden also asked for $ 10,000 to write off student loan debt.

WILMINGTON, DE - SEPTEMBER 16: Democratic presidential candidate and former Vice President Joe Biden greet each other as he leaves the Dupont Hotel after holding internal campaign meetings on September 16, 2020 in Wilmington, Delaware.  Earlier today, Biden participated in a briefing with medical professionals on the coronavirus vaccine.  (Photo by Drew Angerer / Getty Images)

Democratic presidential candidate and former Vice President Joe Biden waves as he leaves the Dupont Hotel after holding internal campaign meetings on September 16, 2020 in Wilmington, Delaware. (Photo by Drew Angerer / Getty Images)

Some experts have argued that canceling student debt could boost the economy. Other groups disagreed with the idea, arguing that the cancellation primarily benefits those with the ability to repay.

Mark Kantrowitz, student loans expert, editor and vice president of research at Savingforcollege.com, noted that $ 10,000 might be a more realistic goal because at the end of the day, “forgiveness is unlikely to happen, but if so, the most likely amount is $ 10,000 because the cost is low relative to the number of borrowers.

Aarthi is a reporter for Yahoo Finance. She can be contacted at [email protected] Follow her on Twitter @aarthiswami.

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