April 27th, 2021
A petition calling on the President to cancel student loans by executive order has reached 1 million signatures. Started in March of 2020, the petition created a groundswell of populist support that had already amassed 500,000 signatures by September, when Senators Elizabeth Warren (D-MA) and Charles Schumer (D-NY) introduced Senate legislation calling for the same.
“We are thrilled that leading lawmakers have embraced the concept of cancelling federally owned student loans by executive order”, said StudentLoanJustice.Org founder Alan Collinge. “However, the current proposal is wholly inadequate. The federal lending system is catastrophically failed, and must be ended. Instead of ‘up to $50,000’ loan reductions, the loans must be totally cancelled, the lending system replaced, and bankruptcy protections must be returned to all student loans- including those that cannot be cancelled by executive order.”
The President has executive authority to cancel federally owned student loans, which account for about 87% of all student debt, by executive order. According to Wayne Johnson, who ran the federal lending system under President Trump, 80% of all borrowers were either unable to make payments on their federal loans, or they were paying, but their loan balances were increasing before the Covid-19 pandemic. Defaults are expected to soar to over 75% for current borrowers. This is more than four times higher than the default rate for sub-prime home mortgages, which peaked at 18%.
Additionally, it was recently revealed that over a third of U.S. States owe more in student loan debt than their entire state budgets. Interestingly, most of the affected states are traditionally “red” states. Seven states, it was found, owe more than their budgets in federal debt alone.
“We urge both parties- especially the governors and legislatures of the most affected states- to jointly call on the President to cancel all federal loans by executive order, and return bankruptcy protections to the loans that cannot be cancelled administratively.”, said Collinge. This lending system must be ended, and a less-expensive, more state-friendly funding model for higher education put in its place.”
Contact: Alan Collinge