Washington, D.C. – Senate Majority Leader Chuck Schumer (D-NY) today spoke on the Senate floor regarding the benefits in the American Rescue Plan for current and former students suffering from student loan debt. Below are Senator Schumer’s remarks, which can also be viewed here:
Late last week, President Biden signed the American Rescue Plan into law. The most significant federal recovery effort in decades is now underway.
$1,400 checks are heading out the door to 85% of American households. Relief for schools, businesses, families, and state and local governments is starting to arrive. Shots are going into the arms of Americans from coast to coast: more than 135 million doses of the vaccine have now been delivered, over 100 million doses have now been administered.
That’s almost one-third of the population, and much more quickly than had been previously projected.
And our economy is poised for its own shot in the arm. As the American Rescue Plan begins to take effect, economists are projecting that American economic growth could more than double as a result of this bold, strong legislation.
Already, Americans are more optimistic about businesses being able to re-open, jobs coming back, and the national economy taking off.
As one headline read over the weekend: “Americans see better days ahead in pandemic and economy.”
After the American Rescue Plan passed through the Senate a little over a week ago, I’ve been highlighting parts of the bill that may have escaped notice. And there are so many. We all know about the $1400 checks. We all know about the shots in the arms.
Today, I want to spend some time explaining how it helps our nation’s students.
First of all, the American Rescue Plan provides substantial emergency relief to colleges and universities, weighted towards those colleges and universities without million-dollar endowments. Fully half of that funding must be used for emergency financial aid grants to students – at least $20 billion dollars nationwide.
And of course, many students will benefit from the $1,400 checks. Any student with a young family will benefit from the historic expansion of the Child Tax Credit. But these emergency financial aid grants are another way that students with exceptional need can access relief.
That’s not all. The American Rescue Plan also sets the stage for President Biden to deliver incredibly meaningful student loan forgiveness by making all types of student loan forgiveness tax-free through December of 2025.
At the moment, debt cancellation is usually treated as taxable income, so without this provision, forgiving a student’s debt would stick them with a tax bill, giving with one hand and taking away with the other.
This would apply to more than 100,000 students who are already in repayment programs that offer some student loan forgiveness.
Crucially, this tax provision would apply to future efforts to forgive student loans as well.
I believe the current administration has the legal authority to forgive up to $50,000 in federal student loan debt—a life-changing policy decision that would boost our economy and help close the racial wealth gap.
20 years after starting college, the median white borrower will owe 6% of their student debt, while the median Black borrower owes 95% of their debt. Canceling up to $50,000 in student debt would close the racial wealth gap by 28 percentage points among those households.
That’s just one of the many reasons that Senator Warren and I have been advocating this policy to cancel $50,000 of student debt. And as I mentioned, it’s become an issue of racial justice as well.
President Biden, to his credit, has already proposed some student loan forgiveness, up to around $10,000. But now, one of the objections that some in the administration have had—that the student, when we forgive debt, will have to pay taxes—is gone, gone, gone because of the ARP. And I particularly want to thank Senators Menendez and Warren for their work on these provisions.
For much of American history, education has been a ladder up. For too many these days, student debt has become the anchor weighting them down—making it harder to start a family, buy a home, plan a career, and so much more. The pandemic has stressed student finances even closer to the breaking point.
Thankfully, the American Rescue Plan not only delivers short-term relief, but clears the way for long-term relief for America’s students by saying: when we forgive your debt, you don’t have to pay taxes on it. And American students collectively bear more than $1.7 trillion in student debt.
When you think of young people, and they’re starting out their lives, and there’s so much excitement and enthusiasm—but then they have $1.7 trillion of debt on their shoulders weighting them down?
That’s not the American way of sunny optimism and can-do. This system has sprung out of control, in many ways. Going after the for-profit colleges—making sure they don’t take advantage—is one way we’re trying to curtail it, but for the students who have this debt, future actions won’t do any good in terms of changing the way we finance colleges and how we deal with the for-profits.
The best way is cancelling $50,000 in student debt, and the good news: the ARP makes sure no taxes are owed on any of that cancellation.
No matter how their team performs during March Madness this weekend, the American Rescue Plan gives every student something to cheer about. Go Syracuse.