STATEMENT: Roosevelt Institute Supports Bicameral Letter from Sen. Warren, Sen. Schumer, and Rep. Pressley in Urging President Biden to Cancel Student Debt before Payments Resume in February
Washington, DC — After an almost two-year pause due to the COVID-19 crisis, the US Department of Education is expected to begin federal student loan payments in February 2022. The student loan payment pause allowed borrowers to retain their income when they needed it most, without any financial penalties such as accrued interest. In normal times, student loan payments deepen existing racial wealth disparities without any significant fiscal benefits; but after a severe recession, restarting student loan payments may also dampen our economic recovery.
In response to the impending student debt repayment deadline, a bicameral letter from Sen. Elizabeth Warren (D-MA), Senate Majority Leader Chuck Schumer (D-NY), and Rep. Ayanna Pressley (D-MA) calls for President Biden to immediately extend the pause on student loan payments, interest, and collections until the economy reaches pre-pandemic employment levels. Using recent research from the Roosevelt Institute, the letter makes clear that student debt cancellation can directly decrease the racial wealth gap by reducing the debt burdens of those who disproportionately carry the biggest loan balances—Black and Latinx borrowers. For example, canceling up to $50,000 of student loan debt per borrower would immediately increase the wealth of Black Americans by 40 percent.
In response to today’s news, Dr. Alí R. Bustamante—Deputy Director, Education, Jobs & Worker Power at the Roosevelt Institute—had the following reaction:
“Student debt has fueled the racial wealth gap and suppressed economic growth long enough. Cancellation isn’t a panacea, but it can direct our economy toward equitable and inclusive growth.
Now, more than ever, student loan cancellation is a good—and necessary—economic policy. The Biden administration should take the lessons learned from the student loan payment pause and implement a cancellation of student debt. Cancellation has the potential to add $173.83 billion (in 2020 dollars) to the nation’s gross domestic product (GDP) the first year after implementation—and billions more over time—from increases in consumer spending that drive greater demand for goods and services,” which is further elaborated in a blog post on the topic, released today.