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the debt collective
'Long-Delayed Justice': Judge Rejects Right-Wing Effort to Block Student Debt Relief for 800,000+
"The Biden administration needs to actually discharge this debt immediately before more lawsuits or judicial bullsh*t happens," said the Debt Collective.
Aug 15, 2023
A federal judge in Michigan has rejected an effort by a pair of right-wing think tanks to stop the Biden administration from canceling the student debt of roughly 804,000 borrowers who have been making payments on their loans for more than two decades.
In an 18-page decision on Monday, U.S. District Judge Thomas L. Ludington of the Eastern District of Michigan—a George W. Bush appointee—ruled that the Cato Institute and the Mackinac Center for Public Policy lacked standing to challenge the Biden administration's move, which is expected to automatically wipe out close to $40 billion in federal student loan debt—a small fraction of the $1.6 trillion in outstanding federal student loan debt in the U.S.
Mike Pierce, executive director of the Student Borrower Protection Center, wrote in response to the ruling that the lawsuit "was the last barrier to debt relief for more than 800,000 people who had been in debt for decades."
"These borrowers were cheated by predatory companies like Navient and failed by gross mismanagement by [the U.S. Department of Education]," Pierce added. "This is long-delayed justice."
As I'm reading this, I'm struck by just how thorough & devastating this opinion is for @CatoInstitute and @MackinacCenter.
This is an opinion by a Republican-appointed judge hand-picked by the plaintiffs.
He can barely hide his disdain for Cato and Mackinac wasting his time. pic.twitter.com/lAEfRai0S0
— Mike Pierce (@millennial_debt) August 14, 2023
The lawsuit by Cato and the Mackinac Center targeted the Biden administration's recently announced changes to the income-driven repayment (IDR) program, which bases monthly student loan payments on borrowers' income and makes borrowers eligible for debt cancellation after around 20 years of qualifying payments.
The program has long been plagued with issues, failing to deliver promised relief for borrowers. A report published last year by the Government Accountability Office (GAO) found that a tiny percentage of eligible borrowers actually had their debt canceled under the program.
On Monday, President Joe Biden announced that his administration has begun the process of discharging the student loan debt of 804,000 borrowers who have been in repayment for more than 20 years.
"Because of errors and administrative failures of the student loan system that started long before I took office, over 804,000 borrowers never got the credit they earned, and never saw the forgiveness they were promised—even after making payments for decades," Biden said.
The Debt Collective, a group that has implored the Biden administration to use its legal authority to cancel all outstanding federal student loan debt immediately, welcomed the Michigan judge's ruling.
"This is good—but we've seen this playbook before," the debtors' union wrote. "The Biden administration needs to actually discharge this debt immediately before more lawsuits or judicial bullsh*t happens."
The decision comes weeks before federal student loan repayments, which were paused during the Covid-19 pandemic, are set to resume for the first time in over three years.
On September 1, student loan interest will restart, followed by the resumption of payments in October. The Consumer Financial Protection Bureau has warned that millions of borrowers could struggle to make their payments once the pause is lifted.
The debt ceiling deal that the Biden White House reached with House Republicans in May cemented the end of the student loan payment freeze. Shortly after Biden signed the deal into law, the U.S. Supreme Court's right-wing majority struck down the administration's plan to cancel up to $20,000 in federal student loan debt for tens of millions of borrowers.
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'They Can Cancel All of It' Today, Advocates Say as Biden Admin Wipes Out Student Debt for 800,000
"This is only the tip of the iceberg," said one campaigner. "Now, our leaders need to finish the job."
Jul 14, 2023
The Biden Education Department announced Friday that it will soon begin eliminating the federal student loan debt of more than 800,000 borrowers after implementing fixes to income-driven repayment plans, a move that advocates welcomed while urging the administration to use its authority to provide relief to all borrowers.
In a press release, the Education Department said its changes will cancel $39 billion in federal student loan debt—a tiny fraction of the $1.6 trillion in outstanding federal student loan debt in the United States.
"The forthcoming discharges are a result of fixes implemented by the Biden-Harris administration to ensure all borrowers have an accurate count of the number of monthly payments that qualify toward forgiveness under income-driven repayment (IDR) plans," the agency said. "These fixes are part of the department's commitment to address historical failures in the administration of the federal student loan program in which qualifying payments made under IDR plans that should have moved borrowers closer to forgiveness were not accounted for. Borrowers are eligible for forgiveness if they have accumulated the equivalent of either 20 or 25 years of qualifying months."
"Make no mistake—over 804,000 people are receiving relief with this action because of 804,000 failures."
Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center, applauded the change as "a huge victory" for the roughly 804,000 borrowers who "have been trapped in decades of never-ending payments."
"But make no mistake—over 804,000 people are receiving relief with this action because of 804,000 failures—and this is only the tip of the iceberg," said Yu. "Now, our leaders need to finish the job. We look forward to the administration's ongoing efforts to enact further relief efforts and ensure they include defaulted borrowers—those who have truly fallen between the cracks and who have been continually left behind."
After the U.S. Supreme Court struck down its student debt cancellation plan last month, the Biden administration announced what's expected to be a lengthy rulemaking process aimed at wiping out student debt via the Higher Education Act (HEA) of 1965—a broader authority than the 2003 law the Education Department cited for its original plan.
The Debt Collective warned at the time that the administration's slow-walked approach will give right-wing opponents ample time to prepare a legal assault on the new program. Instead, the debtors' union argued, the administration should use its HEA authority to cancel student debt immediately.
The group echoed that message in response to the Education Department's announcement on Friday, which came months before student loan repayments are set to resume.
"The Supreme Court ruled against HEROES authority power—but there are other tools in their toolbox," the group tweeted. "They can cancel all of it. Today."
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'A Promise Is a Promise': Biden Urged to Use Different Authority to Wipe Out Student Debt
One campaigner said Biden must "use the full might of the federal government" to cancel student debt "in the face of this lawless and shamefully political ruling."
Jun 30, 2023
Progressive lawmakers and campaigners said Friday that President Joe Biden must immediately pursue alternative paths to student debt cancellation after the Supreme Court's right-wing supermajority struck down his program, denying relief to more than 40 million borrowers just months before the scheduled end of the loan repayment pause.
Rep. Ayanna Pressley (D-Mass.), one of the most outspoken supporters of student debt cancellation in Congress, said Biden and Education Secretary Miguel Cardona must "use other tools available to them to swiftly cancel student debt."
"The people demand and deserve this long overdue economic relief and a promise is a promise," said Pressley, a member of the Congressional Progressive Caucus (CPC). "The Biden administration should act immediately. I won't let up."
CPC Chair Rep. Pramila Jayapal (D-Wash.) similarly urged Biden to "utilize other ways to cancel student debt," warning that "inaction is not an option."
"It cannot be overstated how devastating this ruling is," Jayapal continued. "Before the pandemic, more than 25% of borrowers were behind on payments and 9 million borrowers were in default, with one borrower defaulting every 26 seconds. The Department of Education estimates those statistics will only get worse for millions without cancellation, and new research shows 1 in 5 borrowers will struggle financially when payments resume."
"Time to keep Biden's feet to the fire to actually fight to cancel student debt."
Invoking the previously fringe "major questions doctrine"—which holds that federal agencies must have highly specific authority to act on matters of "vast economic and political significance"—the Supreme Court's conservative justices ruled that Congress did not clearly grant the Education Department the power to cancel student debt when it passed the HEROES Act of 2003.
In her dissent, liberal Justice Elena Kagan excoriated the major questions doctrine as "made-up" and said the court's conservatives only invoked it because "the majority's 'normal' statutory interpretation cannot sustain its decision."
Debt relief campaigners and Democratic members of Congress have argued for years that Biden should use the Higher Education Act (HEA) of 1965—which legal experts say clearly gives the secretary of education the power to wipe out student debt—to eliminate loan balances for tens of millions of Americans.
Under the HEA, the education secretary has the power "to enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand" related to federal student loans.
"It is very important to note this SCOTUS ruling does NOT remove Biden's ability to pursue student loan forgiveness," Rep. Alexandria Ocasio-Cortez (D-N.Y.) tweeted Friday. "The Biden admin can use the HEA (Higher Ed Act)—our position from the start—to continue loan forgiveness before payments resume. They should do so ASAP."
Echoing that message, Sen. Elizabeth Warren (D-Mass.) wrote that "the president has more tools to cancel student debt—and he must use them."
Sen. Bernie Sanders (I-Vt.), the chair of the Senate Health, Education, Labor, and Pensions Committee, declared that "if Republicans could provide trillions of dollars in tax breaks to the top 1% and profitable corporations, if they could cancel hundreds of billions in loans for wealthy business owners during the pandemic when Trump was president, and if they could vote to spend $886 billion on the Pentagon, please don't tell me that we cannot afford to cancel student debt for working families."
"I am urging the Biden administration to implement a Plan B immediately to cancel student debt for tens of millions of Americans who are struggling to pay the rent, put food on the table, and pay for the basic necessities of life," Sanders said. "Despite this legally unsound Supreme Court decision, the president has the clear authority under the Higher Education Act of 1965 to cancel student debt. He must use this authority immediately."
Following the high court's ruling, which sparked protests outside the Supreme Court building, Biden said in a statement that he "will stop at nothing to find other ways to deliver relief to hard-working middle-class families."
The president said he will announce later Friday afternoon "the next steps" his administration intends to take to provide long-overdue relief to federal student loan borrowers, who collectively hold around $1.7 trillion in student debt.
The Debt Collective, a debtors' union fighting for total cancellation, said Biden's actions in response to the Supreme Court's ruling should be held to a high standard.
"No application. No notice and comment. No return to repayment," the group wrote on Twitter, arguing that such requirements "give the GOP a chance to kill cancellation."
"Time to keep Biden's feet to the fire to actually fight to cancel student debt," the group added.
Survey results released Friday by the Student Borrower Protection Center (SBPC) and Data for Progress show that a majority of U.S. voters would support the Biden administration using legal authority other than the HEROES Act of 2003 to cancel student debt.
Mike Pierce, SBPC's executive director, said in a statement that Biden must "stand with student loan borrowers and use the full might of the federal government to answer their demand for justice and relief in the face of this lawless and shamefully political ruling."
"Borrowers cannot afford to wait any longer," said Pierce.
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