The Justice Movement calls for the immediate refinancing of student debt to the lowest level of interest paid on current U.S. Treasury Bonds. Further, the Justice Movement advocates for (1) the repeal of the 2005 legislation depriving those with student loans of the protections of bankruptcy; (2) according to a needs-based formula, the repayment to student loan debtors of one-half the amounts they have paid in interest and penalties on their loans since 2005; (3) a cap on tuition costs at all colleges and universities receiving federal funds; (4) major reforms of for-profit colleges; and (5) a time limit for future student debt, with forgiveness of the debt to occur within ten years of the debtor paying 7% of his or her annual income (or 3 ½% of annual income if the debtor is employed by a designated public service entity) toward repayment of the loan.
The Record of Republicans and Democrats
When someone has debts he or she cannot pay off, bankruptcy is a solution provided for by law, giving the debtor a fresh start. There are exceptions. Someone who owes another money as a result of fraud cannot discharge that debt in bankruptcy. No one who owes alimony or child support can discharge that debt either.
Incredibly, in 2005, Congress voted to add another exception by denying those with student debt bankruptcy protection. The airlines could file for bankruptcy, which several have done, and wipe out hundreds of millions of debt. Investment banking firm Lehman Brothers filed for bankruptcy in 2008, with almost $700 billion in debt. General Motors obtained bankruptcy protection in 2009, with over $82 billion in debt. Enron obtained bankruptcy protection, with $65.5 billion in debt. Even Texaco obtained bankruptcy protection in 1987, with almost $35 billion in debt. But a student with $150,000 in student debt, undertaken to obtain a higher education, may have the debt, with interest and penalties, hanging over his or her head for many years, perhaps an entire lifetime, without the protection of bankruptcy.
This is what the Republicans and many Democrats have done to students and their families, only to enrich financial institutions by making student loans non-dischargeable in bankruptcy, tripling the amount of student debt over a decade and condemning millions of people in the U.S. to many years—perhaps lifetimes—of crushing debt. The burden of student debt has destroyed the dreams of millions who hoped one day to own their own homes, to help their children with college tuition, and to gain financial freedom from unprecedented debts.
The United States was once the world leader for producing college graduates with four-year degrees. Now, the U.S. is 12th in the world, lower even than Russia.[45] Tuitions have skyrocketed in the U.S., while student debt has reached record levels. Other nations that value equality of educational opportunities provide for free or subsidized education, cap the amount of tuition, or forgive loans after a relatively short time. In Canada, student loan debt for college graduates is forgiven after 15 years. England places caps on how much universities can charge per year. Education is free in Sweden. In France, students pay a very low tuition, as U.S. students did at state universities a few decades ago. There is little to no student debt among German college graduates, where the university system is entirely government-funded.
Until 2005, those who had private student loans could seek bankruptcy protections. However, that all changed dramatically. The 2005 bill to disallow the protections of bankruptcy for student debt in the U.S. was pushed by Republicans, but passed with the support of 18 Democratic senators, including Joe Biden.
Senator Ted Kennedy, who opposed the bill, stated that “This legislation breaks the bond that unites America, it sacrifices Americans to the rampant greed of the credit card industry.” Elizabeth Warren, then a professor at Harvard Law School, wrote a scathing paper about Biden’s enthusiastic support for the 2005 bill, stating: “Senator Biden supports legislation that will fall hardest on women. Why? The answer will have to come from him . . . . He is a zealous advocate on behalf of one of his biggest contributors—the financial services industry.”[46]
While on the campaign trail in April 2020, Biden promised to “immediately cancel a minimum of $10,000 of student debt per person.”[47] Yet, as of the writing of this document, Biden has not acted to follow through with that promise. His administration has been oblique about its intentions, or even its understanding of President Biden’s authority to forgive student debt, notwithstanding a provision of the Higher Education Act which provides the Secretary of Education the authority to “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand.”
The run-around by the Biden administration on the question of student loan forgiveness has been dizzying. His Chief of Staff said on April 1, 2021, that the Department of Education was preparing “a memo on the president’s legal authority.” After several months, the president’s press secretary repeatedly responded to questions about student loan forgiveness by saying, “I don’t have an update on that.”
Meanwhile, about 42 million—one in eight—people in the U.S. owe oftentimes-crushing, unpayable student debt, totaling over $1.5 trillion. In the case of default, “graduates can get trapped in a vicious cycle of collection fees, long-term damaged credit, and even suspension of professional licenses that can threaten employment.”[48] “The effect student loan debt has on the economy is similar to that of a recession, reducing business growth and suppressing consumer spending. From 2019 to 2020, the average student loan debt grew 3.5%; meanwhile, the national economy shrank 3.5%.”[49]
Incredibly, in 2005, Congress voted to add another exception by denying those with student debt bankruptcy protection. The airlines could file for bankruptcy, which several have done, and wipe out hundreds of millions of debt. Investment banking firm Lehman Brothers filed for bankruptcy in 2008, with almost $700 billion in debt. General Motors obtained bankruptcy protection in 2009, with over $82 billion in debt. Enron obtained bankruptcy protection, with $65.5 billion in debt. Even Texaco obtained bankruptcy protection in 1987, with almost $35 billion in debt. But a student with $150,000 in student debt, undertaken to obtain a higher education, may have the debt, with interest and penalties, hanging over his or her head for many years, perhaps an entire lifetime, without the protection of bankruptcy.
This is what the Republicans and many Democrats have done to students and their families, only to enrich financial institutions by making student loans non-dischargeable in bankruptcy, tripling the amount of student debt over a decade and condemning millions of people in the U.S. to many years—perhaps lifetimes—of crushing debt. The burden of student debt has destroyed the dreams of millions who hoped one day to own their own homes, to help their children with college tuition, and to gain financial freedom from unprecedented debts.
The United States was once the world leader for producing college graduates with four-year degrees. Now, the U.S. is 12th in the world, lower even than Russia.[45] Tuitions have skyrocketed in the U.S., while student debt has reached record levels. Other nations that value equality of educational opportunities provide for free or subsidized education, cap the amount of tuition, or forgive loans after a relatively short time. In Canada, student loan debt for college graduates is forgiven after 15 years. England places caps on how much universities can charge per year. Education is free in Sweden. In France, students pay a very low tuition, as U.S. students did at state universities a few decades ago. There is little to no student debt among German college graduates, where the university system is entirely government-funded.
Until 2005, those who had private student loans could seek bankruptcy protections. However, that all changed dramatically. The 2005 bill to disallow the protections of bankruptcy for student debt in the U.S. was pushed by Republicans, but passed with the support of 18 Democratic senators, including Joe Biden.
Senator Ted Kennedy, who opposed the bill, stated that “This legislation breaks the bond that unites America, it sacrifices Americans to the rampant greed of the credit card industry.” Elizabeth Warren, then a professor at Harvard Law School, wrote a scathing paper about Biden’s enthusiastic support for the 2005 bill, stating: “Senator Biden supports legislation that will fall hardest on women. Why? The answer will have to come from him . . . . He is a zealous advocate on behalf of one of his biggest contributors—the financial services industry.”[46]
While on the campaign trail in April 2020, Biden promised to “immediately cancel a minimum of $10,000 of student debt per person.”[47] Yet, as of the writing of this document, Biden has not acted to follow through with that promise. His administration has been oblique about its intentions, or even its understanding of President Biden’s authority to forgive student debt, notwithstanding a provision of the Higher Education Act which provides the Secretary of Education the authority to “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand.”
The run-around by the Biden administration on the question of student loan forgiveness has been dizzying. His Chief of Staff said on April 1, 2021, that the Department of Education was preparing “a memo on the president’s legal authority.” After several months, the president’s press secretary repeatedly responded to questions about student loan forgiveness by saying, “I don’t have an update on that.”
Meanwhile, about 42 million—one in eight—people in the U.S. owe oftentimes-crushing, unpayable student debt, totaling over $1.5 trillion. In the case of default, “graduates can get trapped in a vicious cycle of collection fees, long-term damaged credit, and even suspension of professional licenses that can threaten employment.”[48] “The effect student loan debt has on the economy is similar to that of a recession, reducing business growth and suppressing consumer spending. From 2019 to 2020, the average student loan debt grew 3.5%; meanwhile, the national economy shrank 3.5%.”[49]
Majority Support for Refinancing and at Least Partial or Conditional Forgiveness of Student Debt,
and For Repeal of Law Prohibiting the Discharge of Student Debt in Bankruptcy
and For Repeal of Law Prohibiting the Discharge of Student Debt in Bankruptcy
According to a recent Grinnell College National Poll, conducted by Selzer & Co., the vast majority of people in the United States—66%—support cancelling student loan debt under certain circumstances. Twenty-seven percent favor forgiveness of loans for everyone with student debt; 39% favor forgiving loans for those in need. There is no difference in support for loan forgiveness by educational attainment and majorities of people at every income level support some loan forgiveness.[50]
A December 2021 Morning Consult poll, only 3 in 10 respondents said no student debt should be forgiven.
Ninety-four percent of Democratic voters and 85% of Republican voters support federal student debt relief in the form of refinancing federal loans to current rates,[52] yet even that minimal relief has not been provided by the President or Congress to those with student debt.
A bipartisan majority (65% of Democrats and 58% of Republicans) support the allowance of the same bankruptcy protections for student loan debtors as most other debtors, permitting the discharge of student debts in bankruptcy.[53]
Seventy percent of poll respondents believed students should be able to go to college debt-free and 64% were in favor of providing free tuition for students whose household incomes are less than $125,000.[54]
A December 2021 Morning Consult poll, only 3 in 10 respondents said no student debt should be forgiven.
- 62% (85% of Democrats, 57% of Independents, and 43% of Republicans) support some level of forgiveness of student loans.
- 28% (8% of Democrats, 29% of Independents, and 48% of Republicans) believe that there should be no forgiveness of student loans.[51]
Ninety-four percent of Democratic voters and 85% of Republican voters support federal student debt relief in the form of refinancing federal loans to current rates,[52] yet even that minimal relief has not been provided by the President or Congress to those with student debt.
A bipartisan majority (65% of Democrats and 58% of Republicans) support the allowance of the same bankruptcy protections for student loan debtors as most other debtors, permitting the discharge of student debts in bankruptcy.[53]
Seventy percent of poll respondents believed students should be able to go to college debt-free and 64% were in favor of providing free tuition for students whose household incomes are less than $125,000.[54]
[45] “What Does Student Debt Look Like in Other Major Countries?” Student Debt USA, available at https://studentdebtusa.com/what-does-student-debt-look-like-in-other-major-countries/.
[46] Ed Pilkington, “How Biden helped create the student debt problem he now promises to fix,” The Guardian (December 2, 2019), available at https://www.the guardian.com/us-news/2019/dec/02/joe-biden-student-loan-debt-2005-act-2020.
[47] Andrew Marantz, “What Biden Can’t Do on Student Debt––and What He Won’t Do,” New Yorker (October 29, 2021), available at https://www.newyorker.com/ news/news-desk/what-biden-cant-do-on-student-debt-and-what-he-wont-do.
[48] Georgia Rawhouser-Mylet, et al., “New Poll Data Puts Biden At Odds with Most Americans on Student Loan Forgiveness,” Diverse Issues in Higher Education (May 17, 2021), available at https://www.diverseeducation.com/students/article/ 15109247/new-poll-data-puts-biden-at-odds-with-most-americans-on-student-loan-forgiveness.
[49] Melanie Hanson, “Economic Effects of Student Loan Debt,” Education Data Initiative (October 18, 2021), available at https://educationdata.org/student-loan-debt-economic-impact (“Hanson”).
[50] Georgia Rawhouser-Mylet, et al., “New Poll Data Puts Biden At Odds with Most Americans on Student Loan Forgiveness,” Diverse Issues in Higher Education (May 17, 2021), available at https://www.diverseeducation.com/students/article/ 15109247/new-poll-data-puts-biden-at-odds-with-most-americans-on-student-loan-forgiveness.
[51] Carmen Reinicke, “More than 60% of voters support some student loan debt forgiveness,” CNBC (Dec. 22, 2021), available at https://www.cnbc.com/ 2021/12/22/more-than-60percent-of-voters-support-some-student-loan-debt-forgiveness.html; “1 in 5 Voters Support Complete Student Debt Forgiveness; 3 in 10 Say None Should Be Forgiven,” available at https://assets.morningconsult.com/ wp-uploads/2021/12/21171345/211221_student-loans_fullwidth.png.
[52] Hanson.
[53] “New Poll: Americans Overwhelmingly Support Reinstating the Gainful Employment Rule, Easing Student Debt Discharge in Bankruptcy” (July 27, 2021), available at https://www.defendstudents.org/news/data-for-progress-july-2021-poll.
[54] Van Nguyen, “Poll shows Americans want affordable tuition,” The Daily Texan (October 29, 2016), available at https://thedailytexan.com/2016/10/19/poll-shows-americans-want-affordable-tuition/.
[46] Ed Pilkington, “How Biden helped create the student debt problem he now promises to fix,” The Guardian (December 2, 2019), available at https://www.the guardian.com/us-news/2019/dec/02/joe-biden-student-loan-debt-2005-act-2020.
[47] Andrew Marantz, “What Biden Can’t Do on Student Debt––and What He Won’t Do,” New Yorker (October 29, 2021), available at https://www.newyorker.com/ news/news-desk/what-biden-cant-do-on-student-debt-and-what-he-wont-do.
[48] Georgia Rawhouser-Mylet, et al., “New Poll Data Puts Biden At Odds with Most Americans on Student Loan Forgiveness,” Diverse Issues in Higher Education (May 17, 2021), available at https://www.diverseeducation.com/students/article/ 15109247/new-poll-data-puts-biden-at-odds-with-most-americans-on-student-loan-forgiveness.
[49] Melanie Hanson, “Economic Effects of Student Loan Debt,” Education Data Initiative (October 18, 2021), available at https://educationdata.org/student-loan-debt-economic-impact (“Hanson”).
[50] Georgia Rawhouser-Mylet, et al., “New Poll Data Puts Biden At Odds with Most Americans on Student Loan Forgiveness,” Diverse Issues in Higher Education (May 17, 2021), available at https://www.diverseeducation.com/students/article/ 15109247/new-poll-data-puts-biden-at-odds-with-most-americans-on-student-loan-forgiveness.
[51] Carmen Reinicke, “More than 60% of voters support some student loan debt forgiveness,” CNBC (Dec. 22, 2021), available at https://www.cnbc.com/ 2021/12/22/more-than-60percent-of-voters-support-some-student-loan-debt-forgiveness.html; “1 in 5 Voters Support Complete Student Debt Forgiveness; 3 in 10 Say None Should Be Forgiven,” available at https://assets.morningconsult.com/ wp-uploads/2021/12/21171345/211221_student-loans_fullwidth.png.
[52] Hanson.
[53] “New Poll: Americans Overwhelmingly Support Reinstating the Gainful Employment Rule, Easing Student Debt Discharge in Bankruptcy” (July 27, 2021), available at https://www.defendstudents.org/news/data-for-progress-july-2021-poll.
[54] Van Nguyen, “Poll shows Americans want affordable tuition,” The Daily Texan (October 29, 2016), available at https://thedailytexan.com/2016/10/19/poll-shows-americans-want-affordable-tuition/.
