University groups ask Congress to postpone debt cancellation
Associations representing colleges and universities across the country told congressional leaders on Monday that they would have to defer consideration of student debt cancellation.
Instead, the American Council on Education and other associations representing four-year institutions as well as community colleges, in a letter said Congress should focus on providing short-term help to borrowers now, as it is at least considering one more stimulus package. The groups have proposed, for example, extending the moratorium on loan repayments that Congress approved in its latest stimulus package, until the country recovers from the recession caused by the pandemic.
But on broader proposals such as the cancellation of student debt, the associations wrote, “we believe this should happen more appropriately as part of the re-authorization of the higher education law.”
However, many of those who signed the letter are skeptical that Congress will succeed in updating the country’s main higher education law this year.
Kyle Southern, director of higher education and workforce policy and advocacy for the Young Invincibles, a millennial-focused advocacy group, responded, “Young people can’t wait for Congress to act on HEA. to deal with the crisis they faced even before. COVID-19[FEMALE”[FEMININE”
The position of college leaders, along with other higher education groups like the National Association of Student Financial Aid Administrators, follows calls from Congressional Democrats to write off student debt as part of plans stimulus.
Democrats in the House and Senate offers during negotiations on the latest package, the $ 2.2 trillion CARES law, the federal government makes monthly loan repayments on behalf of borrowers and guarantees that at least $ 10,000 will be paid into each borrower’s balance.
Progressive Democrats, including Senator Elizabeth Warren of Massachusetts, have also called for the cancellation of student debt as part of any stimulus package.
And last week, Young Invincibles and 65 other progressive groups wrote to leaders in Congress, calling for some form of debt cancellation – like the Democrats’ proposals in the CARES Act – to be included as part of the stimulus.
Not including the cancellation in a stimulus package “sets up millions of federal student loan borrowers to face the daunting prospect of trying to find ways to pay off their student loans amid economic devastation” , the groups said.
The new letter from higher education groups, including the Association of Public and Land-Grant Universities, the Association of American Universities and the American Association of State Colleges and Universities, comes at a time when educational institutions higher arguing over federal dollars. in one of the next packages that Congress is expected to consider.
Higher education organizations also wrote to congressional leaders two weeks ago asking for an additional $ 46.6 billion in assistance for colleges, claiming that the $ 14 billion Congress put into the CARES law for the ‘higher education “is not about to fill the void.” Instead, the associations wrote that they expected to lose $ 23 billion following an expected 15% drop in registrations this fall.
Focus on immediate relief
In an interview, however, Terry Hartle, the American Council on Education’s senior vice president for government relations and public affairs (and opinion contributor at Inside higher education), denied that institutions fear debt cancellation will siphon off the money colleges are desperate for.
Instead, Hartle said the position mirrored what he said congressional staff working on stimulus packages told advocates – to focus on immediate relief to help people get through public health. and the economic crisis.
In the letter, the associations recognize that student borrowers need help. “The pandemic will significantly hamper the ability of many of these people to repay their loans, which in turn will strain the economy unless Congress acts swiftly to provide targeted and needed assistance to student borrowers.” , they wrote.
But, in part, the call for debt cancellation seemed to reflect later division even among progressives on the idea.
“Any large-scale debt relief initiative would be very expensive and could benefit high-income borrowers and other borrowers who do not need help meeting their obligations,” says the letter. If Congress undertakes debt cancellation, the associations write, “any debt relief program should be targeted at borrowers who are in financial difficulty and have the greatest difficulty in repaying their loans.”
Justin Draeger, president and CEO of NASFAA, feared the idea of debt cancellation could lead to a political stalemate and delay aid to borrowers now.
“How to expand and fairly distribute loan forgiveness, let alone implement something so complicated, is a much larger conversation that threatens to derail the tangible steps Congress could and should take now,” he said. he declared.
And indeed, a Republican assistant on the Senate Education Committee Told Inside higher education last week, at least among Republicans, “I don’t think there is an appetite for forgiveness or debt cancellation because it has nothing to do with COVID.”
A higher priority, association representatives said, is for Congress to take immediate action, such as exempting borrowers from having to make loan payments until the economy recovers – at least until June 30. 2021, or until the unemployment rate falls below 8%. for three consecutive months. This would extend the 60-day moratorium included in the CARES Act.
The associations also proposed extending the grace period from six to nine months for federal loan repayments after graduation by one year. “Students who complete their programs in the near future will graduate in the worst job market since the inception of federal student loan programs,” the letter said. “Extending the post-graduation grace period for students who leave school by one year will help them build a financial footing after graduation.”
In addition, the letter recommended borrowers on federal student loans pay only an interest rate of 1.5%, instead of the current rates ranging from 4.53% for Stafford loans to 7.08% for Grad PLUS and Parent PLUS loans.
The associations have also proposed to make it easier for borrowers to escape student debt when they file for bankruptcy.
“With the growing economic insecurity that the United States faces, more citizens will declare bankruptcy,” the letter said. “When they do, all debts, including student loans, should be eliminated. This will help those whose investment in higher education has been drastically reduced by the current crisis and would be an important step in their own economic recovery. . “
Southern replied, “Nor should they have to depend on bankruptcy to escape debt levels caused by soaring costs of higher education and declining public financial support. Large-scale student debt cancellation would now offer direct relief to millions of borrowers when they need it most. “