Easing the Burden of Student Debt
We promise our nation’s children that higher education is the golden ticket to economic prosperity. What we don’t tell them is that many hardworking, fiscally-responsible graduates struggle with burdensome student loans, which are crushing generations of students and their families.
According to the Federal Reserve Bank of St. Louis, student loan borrowers owed a combined $1.75 trillion to the federal government and private lenders as of April 2022. The average U.S. household with outstanding student debt owes $57,520 in loans, according to NerdWallet’s 2020 household debt study. Student loan debt is shared among a large swath of American borrowers, with 48 million Americans — or one in eight — carrying student loan debt.
It’s also an issue that disproportionately harms communities of color. Two out of every three Latino students carry student loan debt, and Black borrowers hold almost twice the amount of student debt four years after graduation as White borrowers.
The student debt crisis is an anchor holding down our economy, forcing young adults to delay important milestones like starting a family or purchasing their first home. It also drags down older Americans who delay retirement to pay off loans taken for their children while coping with the rising costs of living and medical expenses.
Thanks to President Biden and his administration, many more borrowers have been able to access loan forgiveness and benefited from the temporary payment pause and 0% interest rate. I’m encouraged by reports that the administration plans further action to help. But to achieve lasting and forward-looking reform, Congress must address a range of problems for borrowers. I’ve got a package that’s a good starting place.
I’ve heard from dozens of Rhode Islanders who have made student loan payments exceeding their loan principal, but struggle to pay off the accrued interest. The unrelenting interest buildup forces a borrower’s loan balance to grow, resulting in additional years of payments. My Zero-Percent Student Loan Refinancing Act eases that burden by allowing Americans to pay off their loan balances without accruing interest. Borrowers have benefitted from this policy during the ongoing loan moratorium. I’ve partnered with Congressman Joe Courtney (D-CT) on this straight-forward way to help borrowers escape a vicious debt cycle.
The Public Service Loan Forgiveness program offers another area ripe for congressional reform. On paper, graduates who have worked in public service for ten years and have made 120 qualifying student loan payments are eligible to have the balance of their federal student loans forgiven. Unfortunately, due to confusing rules and narrow specifications, over 97 percent of PSLF applicants are denied relief. The troubled program promised loan relief to Americans willing to pursue a career in public service, but instead left borrowers trapped in a bureaucratic nightmare with no forgiveness in sight.
I’ve been fighting to improve PSLF issues for years, and I was glad to see the Biden Administration announce a temporary PSLF waiver last October that allows more student borrowers to qualify for loan forgiveness. These fixes are not permanent, however, which is why I introduced the Simplifying and Strengthening PSLF Act with Sen. Jeff Merkley (D-OR). This bill extends and strengthens the Biden administration’s waiver. Helping our nation’s firefighters, teachers, police officers, servicemembers, Peace Corps volunteers, and other public servants achieve the financial security they’ve earned is the right thing to do.
It’s time to seize this moment. If we want to fulfill America’s promise to our children, we need to use every tool at our disposal to ease the student debt crisis. Passing this package would help Americans pay off their loans and get on with their lives — paving the way towards prosperity for millions.