Thank you for receiving our comments on the negotiated rulemaking process. Generation Progress is a youth advocacy organization, and we often work with and hear from student loan borrowers who are struggling due to many of the issues the Department has the ability to address. First and foremost, we urge you to ensure that students and borrowers have equally represented voices in this process. The student debt crisis is impacting young people more than any previous generation, and outscales even the 2008 mortgage crisis.
It’s crucial the Department intentionally seeks out, includes, and centers the voices of the borrowers who are struggling the most to make ends meet, most disproportionately harmed by the student debt crisis, and systemically and historically have received the fewest resources. These borrowers are most likely to be Black borrowers, in addition to borrowers with children, Pell Grant recipients, and veterans.
To underscore the need for strengthened oversight and regulation of for-profit colleges, improved borrower defense measures, repayment for cheated students, and gainful employment, here are the stories of two borrowers who have been preyed upon by for-profit institutions. The experiences of these two borrowers are shared by many others.
Joe is a first-generation student and veteran who graduated from the Art Institute of Pittsburgh. Joe has owed $48,000 in student loans since 2004, and has defaulted on their loans and cannot afford payments. The predatory behavior by the Art Institute has had a monumental impact on Joe and changed the course of their life. They say, “Without student debt, I could buy a used car before my existing 15 year old car dies. Or I could buy a modest home. Or avoid suicidal thoughts and actions.” Joe pursued higher education in the first place to transition from military service to civilian service. Instead, Joe says “I fell prey to predatory bad actors who set me up on a $100 per month payment plan to avoid student loans THEN they applied for and received over $40,000 in student financing using my identity without my knowledge or consent. I didn’t discover it until 2015. The Art Institutes are committing FRAUD.”
Another borrower, Oluwafemi Akinkugbe graduated from the University of Phoenix and has owed $137,000 in student loans since 2006. Oluwafemi pursued higher education to be able to earn more, but it’s been nearly 15 years since they graduated and because they were targeted by a low-quality, predatory program, they earned a useless degree. Their career prospects and income have not improved. Now, saddled with six figures of debt, Oluwafemi says “My entire life has been impacted by student debt. For example, I live from paycheck to paycheck having nothing to put away for retirement.”
Like Joe, there are currently millions of borrowers whose loans are in default, and if the President doesn’t extend the payment pause there will be millions more entering default in the fall and winter. These borrowers are being penalized for being unable to afford payments, while still surviving the COVID pandemic and its ensuing economic fallout. It is imperative that the Department take immediate action to drastically change this system. Borrowers should not be forced to choose between rent, utilities, medicine, or student loan payments, and should not be facing wage garnishment or other punitive measures when they ultimately need to pay for a basic necessity. Any system that intentionally punishes and fines people unable to afford their bills perpetuates America’s longstanding horrifying practice of criminalizing poverty. The practices of wage garnishment, social security garnishment, damaging credit scores, tax garnishment, collection fees, and prohibiting borrowers from receiving federal financial aid until they resolve the default (which effectively prevents students from re-enrolling in school) must be abolished.
Instead of the current punitive system that seizes money from the borrowers who are already struggling to make ends meet, the Department should prioritize instead implementing a humane system that actually helps borrowers get into good financial standing. This means ending wage garnishment, social security garnishment, tax garnishment, ending all collection charges, and creating a statute of limitations on collections. The goal of the Department should be to protect borrowers by ending default altogether, which would advance equity since default disproportionately impacts Black borrowers.
Some default could even easily be prevented by simplifying the endlessly confusing design of the many programs and applications, and improving oversight of administrators and servicers. For example, borrowers looking to have their loans forgiven for work in public service must meet four eligibility thresholds, and those who seek reduced monthly payments must weigh five different income-based repayment plans. Borrowers so often report being misled or receiving conflicting information about their loans or payments from their servicers or scam repayment programs. Even worse, thousands of borrowers have shared with us their experience of paying into certain programs for years before finding out that they’ve made some error, and none of their years of on-time payments count towards relief.
The Department must center the experiences and needs of borrowers in determining their priorities, in every policy they design, and every issue they aim to address. An augmented and alarming default crisis can be prevented through the combination of extending the payment pause and cancelling as much debt as possible. We urge you to take these preventative measures first and foremost to protect borrowers. Student loan borrowers are most capable of communicating their own needs, and their voices must be centered in any efforts to address America’s student debt crisis. We leave you with these stories from borrowers whose only way out from crushing debt is cancellation.
Traci from Tennessee says, “I borrowed $40,000 and now owe almost $50,000. I had a child with special needs and many medical issues so I spent many years taking care of him. Was never able to get back into my intended career as I spent too many years not working. Now I am struggling to make payments on a loan for an education I was never able to fully take advantage of. I cannot save for retirement until this burden is lifted.”
Pia, a Black borrower from Minnesota, shared: “I spent the last 29 years working as a public school teacher, but because of my student loans, I was unable to send my own kids to college. Cancelling student debt would allow me to retire without a huge burden.”
Milagros from Massachusetts said “Student loan debt has prevented me from purchasing a home, finding a good job, and affording healthcare. It doesn’t have to be this way. If we made college free and canceled student debt, the entire country would benefit from a stronger economy, equitable access to the American Dream and fewer barriers to racial equity.”
Lauren, a transgender, first-generation student loan borrower from New Jersey says: “I worry how I will be afford to provide for my children. I want to stay home with my young kids but my loan payment of $1,000 a month prevents that. Without that payment I could stay home until my kids went to school.”
Rachel from Minnesota is a Native American, first-generation borrower from a low-income household based on a reservation, pursued higher ed to “Break the family cycle of poverty and do better for myself, future kids and family someday, than what I grew up with.” and they support free college and debt cancellation because “It doesn’t just help me, it would help our country and our economy, and relieve the burden that other people my age feel when having to make the decision between important or essential things in life and paying back a loan that has accrued so much interest that it’s now the size of a mortgage payment.”
Kathryn from Pennsylvania, a first-generation student, pursued higher education to “Better myself and one day make a home where I could raise children who, unlike me, would not have to worry about going to bed hungry.” But “making [loan] payments made it difficult to pay for food, which caused me to turn to credit cards that ultimately landed me in even more debt that I struggle to pay.”
Sarah Funes, a disabled borrower who lives in the San Francisco Bay Area, owes over $16,500 in student loans. She earns $25,000 a year working two jobs to make ends meet; she got the second job in order to pay off her student loans faster. She says “The Total and Permanent Disability program is terrible with my blindness. Under the program I could only make [a maximum of] $17,000 [per year]. You can’t live off of $17,000 in the San Francisco Bay Area. I intend to pay off my loans but the process shouldn’t be so difficult. I did everything right. I survived a brain tumor. I worked in my family’s business. I went to college, graduated with three degrees and got a job. These loans are holding me back. I wish I could put that money towards investments so that one day I could own a house and leave something to my future children. I’ve been trying to do the right thing and I wasn’t given a clear or fair roadmap to do it.”