By Senator Elizabeth Warren
Schools all across America are closed. Workers are getting laid off. Businesses are struggling. More and more cases of coronavirus are being confirmed everywhere — and the Trump administration continues to badly mishandle the outbreak. The government’s priority right now must be to ensure that everyone who needs a test and treatment for coronavirus can get it for free and that there is robust paid leave so people can stay home without worrying about their next paycheck. We need to make sure that anyone who feels ill doesn't have to go into work. We also need to make sure anyone who needs to stay home to take care of a child or to take care of an elderly parent can do so. This will help us slow the spread of the virus.
But half a step behind this health crisis is a financial crisis. Our financial system is under more strain than at any point since the 2008 crisis — and economists and experts are projecting that a recession is likely. We need to immediately push for a stimulus package big enough to meet the moment and deliver quick relief directly and widely to millions of Americans. That is why Congress must include student debt cancellation in the next stimulus package it passes.
I’m working right now with Senate Democratic Leader Chuck Schumer, Ranking Member of the Senate Health, Education, Labor, and Pensions Committee Patty Murray, and Congresswoman Ayanna Pressley on a plan to cancel federal student loan payments for at least the duration of the public health emergency declaration for coronavirus. Every federal student loan borrower would get a minimum of $10,000 in loan cancellation, which would lift millions of student loan borrowers completely out of debt. Typical payments for student loan debt can be between $300 to $400 a month. Canceling student loan payments as soon as possible would mean substantial and immediate relief for tens of millions of Americans, many of whom have suddenly found themselves laid off or are worried that their jobs are next. And having the government pay off a chunk of your student debt will minimize the burden of the financial crisis in the long run.
A lot of you reading this know this already: Even before the coronavirus pandemic plunged our economy into chaos, student loan borrowers were already in crisis. 45 million Americans have student loan debt. The total amount of student loan debt is more than a whopping $1.6 trillion and it continues to grow. Student loans have much higher rates of delinquency than any other type of household debt. In part because of huge student debt burdens, young people are leaving rural communities for jobs in cities — hollowing out small towns. Young people aren’t able to start a small business or buy a home.
The burden of student debt is also not distributed equally across all Americans: it disproportionately burdens Black and Latinx students. Black students are on average nearly 20 percentage points more likely to take out federal student loans. Half of Black borrowers and a third of Latinx borrowers default on their loans within 20 years. Canceling student loan debt would increase wealth for Black and Latinx families and help them avoid default.
Economists agree that canceling student loan debt would help stimulate economic growth. Last year, I introduced legislation canceling up to $50,000 in student debt for 43 million Americans — and I will keep fighting to pass that legislation. But right now, as our economy slips into crisis, this stimulus cannot come soon enough. As workers face lost wages and even layoffs in the wake of the coronavirus pandemic, borrowers who were barely staying afloat will find themselves drowning in their student debt. With more people who can’t fully participate in our economy, we could see a ripple effect across our entire economy and a slow down in economic growth. This would affect all of us, including people who don’t have student loans or have already paid off their student debt.
Last week, the Trump administration announced that it was waiving interest on federal student loans “until further notice” in response to the coronavirus. But then they admitted that monthly payments won’t go down at all. That is not good enough. President Trump has existing authority to cancel student loan debt on his own right now. But if he won’t do it, I’m working with my colleagues to make sure student debt cancellation is included in the stimulus package. We need a stimulus package that supports our economy from the grassroots up and permanently improves the lives of families.
I need you in this fight with me. Call on your senators and representatives to support this and share this with your friends. We saw what happened in 2008. After the financial crisis, young people were pushed into a weak job market and plunged even deeper into student debt. We can right the generational wrong of 2008 while also taking serious steps to ward off the coming economic disaster. Student loan debt cancellation must be a part of the next emergency coronavirus package to deliver relief immediately to millions of families and help lift a weight that’s dragging down our young people, their families, and our economy.
Elizabeth Warren is the senior senator from Massachusetts.