Student loans: Borrower advocates press for Biden veto on ‘shameful’ student debt bill
Student loan borrower advocates called for the president to veto a bill that would reverse months of forbearance and potentially cancel debt forgiveness that some borrowers have already received.
The resolution — which passed the Senate this week with support from Sen. Kyrsten Simena (I-Ariz.) and two Democrats, Sens. Joe Manchin (D-W.Va.) and Jon Tester (D-Mont.) — would repeal President Joe Biden’s most recent extension of the student loan payment pause, which has suspended most federal student loan payments and interest through this summer.
It would also prevent the implementation of Biden’s up to $20,000 cancellation of student debt — regardless of how the Supreme Court rules on the legality of the program likely this month.
Borrower advocates worry that if the bill is not vetoed as Biden has promised, 40 million student loan borrowers could face backpay for those paused payments and have new interest charges added to their debt. They also are concerned that debt cancellation borrowers recently received would be reversed.
“It is shameful that legislators would endorse measures that harm the very heroes in our communities — veterans and nurses — who are still grappling with the aftermath of the pandemic and its profound economic impact," Natalia Abrams, executive director of the Student Debt Crisis Center, said in a statement. "We urge President Biden to fulfill his promise to veto this bill and put an end to these attacks against hardworking families ensnared in debt."
The bill’s passage, which shocked borrower advocates, comes after the White House this week agreed to not extend the forbearance and that paused student payments would restart in September — regardless of the Supreme Court outcome — in a debt ceiling deal with House Speaker Kevin McCarthy (R-Calif.).
“Today’s vote makes crystal clear exactly who stood up and fought to protect the economic livelihoods of millions of people with student loan debt — and who schemed to keep them drowning in the debt despair of our nation’s student loan crisis,” Mike Pierce, executive director of the Student Borrowers Protection Center, said in a statement.
Whether the bill would require borrowers to pay back payments remains an open question that Republicans who supported the bill have pushed back on.
"Nowhere in this resolution does it mandate backpay," Rep. Virginia Foxx (R-N.C.) said last week. "It is prospective, not retrospective. If anything, it will be [Education] Secretary Cardona’s decision to enact backpay.”
Borrower advocates also contend that the resolution would reinstate debt for borrowers who received debt cancellation under the public service loan forgiveness (PSLF) program. That's because each month of paused payments under forbearance counted toward debt forgiveness for these borrowers.
“The impact of this bill…would push hundreds of thousands of public service workers back into debt and require the government to charge tens of millions of borrowers for interest that has already been cancelled,” Pierce said.
Around 268,660 public service workers who received debt cancellation from September 2022 through March 2023 through the Public Service Loan Forgiveness (PSLF) program would have $19.5 billion in debt put back in place as a result of the bill, according to a AFT/SBPC report.
“If enacted, it will cause irreparable damage to an already severely broken student loan system,” Pierce said, “and undermine Americans’ trust in our government.”
Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government.
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