July 23, 2019

Senator Warren, House Majority Whip Clyburn Introduce Legislation to Cancel Student Loan Debt for Millions of Americans

The Student Loan Debt Relief Act will end the student debt crisis and help tackle the racial wealth gap

Bill Text (PDF) | One-Pager (PDF) | Section-by-Section Summary (PDF)  

Washington, DC ­- United States Senator Elizabeth Warren (D-Mass.), member of the U.S. Senate Committee on Health, Education, Labor, and Pensions, and House Majority Whip James E. Clyburn (D-S.C.), today introduced bicameral legislation to eliminate up to $50,000 in student loan debt for 42 million Americans-providing debt relief to 95% of student borrowers, including cancelling student debt entirely for 75% of borrowers. The Student Loan Debt Relief Act would end the student debt crisis, help millions of struggling families obtain financial stability, and would also take meaningful steps to begin to close the racial wealth gap.

Experts estimate this legislation's ability to lessen the racial wealth gap for families with student loans would be "formidable". For those families, not only would the Black-White and Black-Latinx wealth gap close "considerably," but Black families with student loan debt would see their wealth grow by about $15,700 and Latinx families would see their wealth grow by over $27,000.

Outstanding student loans now total nearly $1.5 trillion in the U.S., more than triple the debt young people held thirty years ago. Almost 45 million Americans have student loan debt, and nearly 7.2 million are in default on those loans, as they face stagnant wages and rising costs of living. Black and Latinx Americans face the worst effects of the student debt crisis-with many Black borrowers still owing more than 100 percent of their loan balance 12 years after college, even with a degree in hand. The student debt crisis will only get worse unless Congress steps up to solve it.

"My very first bill when I got to the Senate was legislation to tackle the growing student debt crisis because I was sick of Washington allowing the wealthy to pay less, while burying tens of millions of Americans in mountains of student loan debt. Since then, Washington has only allowed this crisis to get worse-especially for people of color. Enough is enough." said Senator Warren. "Congressman Clyburn and I have a bill to cancel student debt for millions of Americans and finally end this crisis."

"Crushing student debt has reached crisis levels in America requiring big, bold solutions," said House Majority Whip James E. Clyburn.  "I'm proud to be working with Senator Warren to provide most student loan holders relief from this daunting burden and make amends for the failure to ensure that higher education is accessible and affordable to all. Post-secondary education should be the springboard to enable students to achieve their dreams not the impediment that prevents the realization of those goals."

First announced in June 2019, the Student Loan Debt Relief Act will:
  • Cancel up to $50,000 in student loan debt for every person with household gross income at $100,000 or less.
  • Provide automatic cancellation using data already available to the federal government about household gross income and outstanding student loan debt.
  • Allow private student borrowers to receive loan cancellation by converting their private student loans to federal student loans through student loan refinancing.
  • Not treat canceled debt as taxable income.
  • Provide a year-long freeze on loan payments made by borrowers, wage garnishment by the Department of Education on troubled loans, and interest accrual on student loans while the debt cancellation is being implemented.
  • Automatically refinance remaining federal student loans to the interest rates specified in theBank on Student Emergency Loan Refinancing Act(S. 768/H.R. 1707).
  • Allow borrowers to discharge their loans in bankruptcy, similar to theStudent Borrower Bankruptcy Relief Act of 2019(S. 1414/H.R. 2648).
The Student Loan Debt Relief Act has been endorsed by a number of organizations, including: AFL-CIO; the American Federation of State, County and Municipal Employees (AFSCME); American Federation of Teachers (AFT); Americans for Financial Reform; Asian Pacific American Labor Alliance, AFL-CIO; Association of Young Americans (AYA); Augustus F. Hawkins Foundation; Center for Law and Social Policy (CLASP); Council for Opportunity in Education; CREDO Action; Demos; The Education Trust;  HBCU Collective; the Leadership Conference on Civil and Human Rights; the NAACP; National Alliance for Partnerships in Equity (NAPE); National Association for Equal Opportunity in Higher Education; National Association of Consumer Bankruptcy Attorneys (NACBA); National Consumer Law Center (on behalf of its low-income clients); National Education Association; National Indian Education Association; People's Action; Progressive Change Campaign Committee; Public Citizen; Public Higher Education Network of Massachusetts (PHENOM); Service Employees International Union; Social Security Works; Southern Poverty Law Center; Student Debt Crisis; Thurgood Marshall College Fund; UnidosUS; and Young Invincibles.

"The cost of a college degree is pauperizing an entire generation, and the current debt relief programs in place are being sabotaged by a deeply flawed and broken system that protects loan company profits at the expense of borrowers," said American Federation of Teachers President Randi Weingarten. "The Student Loan Debt Relief Act is one welcome solution that would give the current generation a chance at financial health upon graduation, regardless of what professions they choose. This bill would release millions of borrowers from their 'debt sentence' so they can live their lives, care for their families and have a fair shot at the American dream."

“On behalf of the NAACP, our nation’s oldest, largest and most widely- recognized grassroots-based civil rights organization, I would like to thank you for your leadership in introducing S. 2235, the Student Loan Debt Relief Act … [T]he burden of student loan debt has a substantial impact in perpetuating, and even worsening, the ‘racial wealth gap.’ Families of color are more likely to need to borrow for higher education, will have less income with which to pay it, and have less of a cushion to withstand future financial shocks, thus contributing to a higher likelihood of delinquency and default on student loan debt. Experts estimate that by aggressively addressing outstanding student debt, your legislation will result in African American families with student loan debt seeing their wealth grow by about $15,700 and Latinx families would see their wealth grow by over $27,000,” wrote Hilary O. Shelton, Director NAACP Washington Bureau & Senior Vice President for Policy and Advocacy. Read the full letter here.

"Recognizing that the $1.5 trillion student debt burden is stifling the overall success of 45 million Americans, the Association of Young Americans (AYA) is grateful that Senator Warren and Congressman Clyburn have put forth strong legislation that if enacted, would provide full loan cancellation for 75% of borrowers and offer partial cancellation for those making $100,000 or more," said Ben Brown, founder of the Association of Young Americans. "AYA believes that The Student Loan Debt Relief Act would strategically provide cancellation for the borrowers who need it most, including those from traditionally underserved backgrounds, and would provide meaningful economic opportunities by closing the wealth gap. Additionally, we are pleased that this bill would offer refinancing opportunities and the ability to discharge student loans in bankruptcy, for any borrowers with remaining debt after cancellation. AYA strongly endorses The Student Loan Debt Relief Act and are excited for the opportunity for our members to champion its passage into law."

"We applaud Representative Clyburn and Senator Warren for introducing the Student Loan Debt Relief Act. Due to skyrocketing college costs and stagnant family incomes since the Great Recession, millions of students have had to incur debt to afford a postsecondary education. Families with low incomes, immigrant youth, and people of color have been particularly harmed by rising tuition and basic living expenses in their pursuit of postsecondary credentials. This bold legislation will help reduce the racial wealth gap and promote economic security by canceling the student loan debt of 42 million Americans," said Olivia Golden, executive director of the Center for Law and Social Policy. "As historically underrepresented students and immigrant youth continue to comprise a larger segment of postsecondary students, federal policy has a critical role to play in improving college access and affordability and reducing student loan debt."

"Student debt is an anvil around the necks of an entire generation, holding young people back from buying homes, starting new businesses, and even keeping seniors from retiring," said CREDO Action co-director Josh Nelson. "Canceling student debt would not only strike a blow against the Wall Street banks using students as ATMs, but it would be a huge boost for our economy and it would help lift people who've been deliberately targeted by for-profit college scams out of a cycle of economic insecurity."

"The HBCU Collective is elated to see this legislation introduced in the House and Senate. Students from Historically Black Colleges and Universities stormed Capitol Hill a few short months ago asking for this and Senator Warren and Rep. Clyburn heard our call," said HBCU Collective founder Robert Stephens. "If we can provide a $1.5 trillion dollar tax cut to Wall Street we should be able to help those who live on Main Street."

"The dramatic rise in student loan debt has placed unacceptable risk on working-class families and on people of color, who must take on more debt for the same degree as white students and often need to gain several levels of education just to maintain a foothold in the middle class. The Student Loan Debt Relief Act provides broad benefits while ensuring nearly all working- and middle-class borrowers are totally free of burdensome debt obligations. More importantly, it jump-starts a new conversation around what we owe this and future generations of students," said Mark Huelsman, Associate Director of Policy & Research, Demos.

"The National Association for Equal Opportunity in Higher Education (NAFEO), the membership and advocacy association for all of the 106 HBCUs and 50 PBIs, is grateful to Congressman Clyburn and Senator Warren for this bold, strategic approach to giving students who complete college, a chance to serve in alignment with their preparation and aspirations, knowing that if they choose service over securities, they will not be so heavily ladened with debt. Disproportionate percentages of HBCU and MSI students are low-income students, and disproportionate percentages of HBCUs and MSIs choose professions in public service. This bill will be a tremendous help to our alumni." -- National Association for Equal Opportunity in Higher Education

"We need big, bold structural change. This big idea is popular with Democratic, Independent, and Republican voters because liberating people from student debt means they can start a small business, start a family, or buy a first home," said Progressive Change Campaign Committee co-founder Adam Green.

"Americans should not be penalized with crushing student loans for the 'crime' of obtaining higher education. The Student Loan Debt Relief Act allows Americans to start their adult lives debt free, so that they are more able to pursue their dreams," said Nancy Altman, President of Social Security Works.

"We are greatly encouraged by the introduction of the Student Loan Debt Relief Act and we applaud Senator Elizabeth Warren and Representative Jim Clyburn for seriously addressing the urgent problem of student debt. Senator Warren has long been a champion for the 45 million Americans harmed by burdensome college costs, now she continues to lead the movement to end the student debt crisis once and for all. We will continue to echo the voices of one million SDC supporters who call for bold solutions, like this one," said Natalia Abrams, Student Debt Crisis Executive Director.

"We know that millions of young people across the country -- many of whom are students of color and low-income students -- are buried under the insurmountable debt from pursuing higher education that is all but required to establish economic stability these days. But as Congress has debated solutions to this crisis, the country's debt has grown out of hand, preventing young people from becoming financially secure so they can achieve their goals in life like home ownership, marriage, starting a family, or simply being debt-free," said Rachel Fleischer, Executive Director of Young Invincibles. "We need to act now to ensure every borrower -- regardless of income, race, ZIP code, or any other factor -- has an opportunity to flourish in an economy that is increasingly leaving them behind. We support bills like the Student Loan Debt Relief Act because it recognizes the enormity of the crisis facing today's borrowers."

Senator Warren has been a champion for students throughout her six years in the Senate, fighting to create more opportunities for young people and protect America's students from predatory for-profit colleges and greedy student loan companies.

  • She prioritized student debt relief and fought to lower student loan interest rates, introducing the Bank on Students Loan Fairness Act as her first bill in Congress;
  • She conducted rigorous oversight of the for-profit college industry and helped secure three-quarters of a billion dollars in debt relief for students who were cheated by predatory for-profit colleges, including 4,500 Massachusetts students and more than 28,000 students across the country;
  • She successfully advocated for stronger student loan protections for all students, including by passing a bipartisan law that prevented the Department of Education from eliminating competition among student loan servicers;
  • She worked to examine and address disproportionate student debt burden among borrowers of color; and
  • She successfully fought to create a $700 million student loan forgiveness fund for tens of thousands of Americans who work in public service but may be denied the public service loan forgiveness relief they were promised.

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