The House will vote today on private student loan relief initiatives.
This story has been updated.
The House is set to vote today on two significant initiatives to provide relief for private student loan borrowers.
Both initiatives are being offered as amendments to the National Defense Authorization Act (NDAA). The first would provide for a private student loan payment pause through the end of January 2022, similar to the payment pause provided for most federal student loan borrowers under President Biden’s extension of the CARES Act’s protections. The second amendment would provide for private student loan forgiveness on the basis of disability, similar to the Total and Permanent Disability (TPD) program for federal student loan borrowers, as well as a death discharge. A similar initiative was supported by House Democrats last year, although that initiative also included $10,000 in private student loan forgiveness for economically distressed borrowers, regardless of whether or not they were disabled. Broader private student loan forgiveness was excluded from this year’s proposed amendments.
The Consumer Bankers Association, a trade group representing financial institutions, criticized the proposed amendments in a tweet, arguing that private student loans “have no impact on our nation’s defense” and the amendments “have never even had a hearing in Congress.” The Association pointed to federal student loans as a more serious financial problem for borrowers.
The Biden administration has enacted several significant student loan relief initiatives during the last nine months including extending the payment pause and interest freeze for federal student loans, and establishing nearly $10 billion in new student loan forgiveness under existing federal programs such as the Total and Permanent Disability (TPD) program and Borrower Defense to Repayment.
But private student loans have been excluded from these relief initiatives. Most private student loan borrowers have still had to make their normal monthly payments, despite the global pandemic and economic downturn. Private student loan borrowers who have been unable to keep up with their payments and have gone into default have been subject to collections efforts, including lawsuits. Meanwhile, borrowers with defaulted federal student loans have been protected by the ongoing federal student loan collections moratorium.
Biden’s legal authority to act unilaterally is limited to programs established under federal law, and he must act under existing federal statutes and accompanying regulations. Federal student loan programs are governed by statutes such as the Higher Education Act and the HEROES Act of 2003, as well as the CARES Act that was enacted last year. But these statutes do not empower Biden to provide any relief for private student loan borrowers.
As a result, it is up to Congress to enact meaningful private student loan relief. So far, Congress has not been able to pass any such measures. Even a bipartisan initiative to make it easier to discharge student loan debt in bankruptcy, which has a chance to actually pass Congress given its bipartisan support, would limit bankruptcy reform to federal student loans.
The House is expected to take up the two amendments today, and both could potentially pass. Their fate in the evenly-divided Senate, however, is less certain.
Update: As of September 23, 2021, the House passed the amendment providing disability discharges for private student loans by a vote of 219-204. The House has not voted on the amendment providing the payment pause.
Further Reading
Key Biden Official Suggests Mass Student Loan Forgiveness Isn’t Going To Happen
Student Loan Borrowers: Expect These 4 Things By January
Biden Administration Starts Overhaul Of Student Loan Forgiveness, Income Based Repayment Programs
