ON HEELS OF HISTORIC STUDENT LOAN REFORM CHAMPIONED BY SCHUMER, SENATOR PUBLICLY CALLS ON LOAN SERVICERS TO ‘STAFF UP’ AHEAD OF FALL WHEN $16.3 BILLION IN DEBT WILL BE CANCELED IN NY ALONE; SENATOR SAYS SERVICERS NEED TO BE READY NOW TO ANSWER QUESTIONS OF OVER 2.25 MILLION NY-ERS; FROM RELIEF, TO NEW FLEXIBILITY, RELAXED PAYMENT PROGRAMS & MORE
Schumer Reveals NEW New York Numbers—NY Has Ranked 4th In Pell Grants Across U.S., Meaning NY Will See MORE $20K Student Loan Forgiveness Compared To Other States; At Least $16.3 Billion Dollars Will Be Canceled In NY; Over 1.09 Million Borrowers Will Have Their Debt Totally Wiped & 2.25 Million NY-ers Will See Some Relief
New York’s Total Fed Loan Debt Will Shrink From Its Current $93.9 Billion; But Schumer Says Loan Providers, Who With Feds, MUST Be At The Ready For The Surge In Calls Set To Come
Schumer: Fed Loan Servicers Must Be Ready For Wave Of Calls Set To Come Their Way So Borrowers Can Be Helped Fast
Standing with New Yorkers who will benefit from President Biden’s and the Schumer-championed historic student loan reform announced last week, U.S. Senator Charles Schumer revealed full New York numbers on who will benefit and publicly called on student loan service providers who are already paid by the federal Department of Education to staff up, and be at-the-ready ahead of the Fall, when calls and questions on this historic reform will hit their peak. Schumer said that $16.3 billion dollars in debt will be canceled in New York alone, and that he expects over 2.25 million New Yorkers to have some questions for their federal loan service provider. Schumer said the money is already there for these providers to staff up—via federal appropriations—to meet this demand and that questions on relief, new flexibility relaxed payment programs and more must be answered swiftly to ensure everyone who is eligible for relief receives it as soon as they are eligible.
“Last week, we saw how, with the flick of a pen, President Biden took a giant step forward in addressing the student debt crisis by cancelling significant amounts of student debt for millions of borrowers. The positive impacts of this move will be felt by families across New York and the nation, particularly in minority communities, and is the single most effective action that the President can take on his own to help working families and the economy, and today, we have an even sharper view at the numbers,” said U.S. Senator Charles Schumer.
- In 2021, 455,599 New Yorkers received Pell Grants at an average of $4,385 per person. New York ranked fourth among states with the most amount of Pell recipients in the country. Those who received Pell grants and have federal loans will greatly benefit from the $20,000 of federal student loan cancellation.
- $16.53 billion in federal student loans will be cancelled in New York, with 1.09 million borrowers having their debts totally wiped out and 2.25 million borrowers getting at least some relief.
- Because of a provision Schumer installed into the American Rescue Plan in 2021, all New York student loan forgiveness is tax free.
- New Yorkers in public service will now have a streamlined path to forgiveness, where past payments that did not qualify in the past now will towards the 10-year service mark.
“New York has ranked 4th in Pell Grants Across the U.S,” said Schumer. “This means New York will see more of the $20,000 student loan forgiveness compared to other states and at least $16.3 billion dollars will be canceled in the state, with over 1 million New York borrowers having their debt totally wiped away. Even more, over 2 million New Yorkers will see some relief, and it could not come soon enough, because this student debt burden has been exacerbated by a boondoggle system, unfair interest compounding and so much more.”
“That’s why we need the service providers to be ready to answer questions from the millions of New Yorkers who are eligible for this debt cancellation,” Schumer added.
Snapshot of student debt in New York:
- Number of New Yorkers with federal student loan debt: 2.4 million borrowers
- Total balance of federal loan debt in New York is $93.9 billion
- Average student debt for a New York borrower is: $38,400
(Source: https://studentaid.gov/data-center/student/portfolio // March 31, 2022)
“This action, along with the pause on federal student loan payments, interest, and collections will improve borrowers’ economic security, allowing them to invest in their families, save for emergencies, and pay down other debt. In addition, I am pleased to see the President’s proposed work towards greatly simplifying and expanding access to student loan relief programs, including the Public Service Loan Forgiveness program, and look forward to additional improvements to other programs like Income Driven Repayment, which will also allow millions more student loan borrowers to better access existing programs to reduce their student loan debts,” Schumer added.
“No president or Congress has done more to relieve the burden of student debt and help millions of Americans make ends meet. Make no mistake, the work will continue as we pursue every available path to address the student debt crisis, help close the racial wealth gap for borrowers, and keep our economy growing,” he said.
According to Politico, “Schumer started in on his campaign for student debt forgiveness prior to Biden’s inauguration, at a Nov. 20, 2020, meeting in Wilmington at Biden’s then-transition headquarters where he privately pitched the president-elect. The goal over the next two-plus years was to elevate the issue’s profile to something more than a millennial pipedream with events, roundtables, and press conferences in New York and D.C.”
The 2021 American Rescue Plan also included a provision authored by Schumer that makes all types of student loan forgiveness tax-free through December 2025. It ensures that cancellation would not be treated as taxable income.
According to NYC Consumer Affairs, student loan debt is currently the second largest source of consumer debt in the United States, climbing to over $1.5 trillion. Increases in tuition resulting from cuts in public spending on higher education have driven up the average amount borrowed for a bachelor’s degree to $30,000, nearly double what it was 20 years ago. Increased borrowing, stagnating wages, and the expansion of higher education to more financially vulnerable communities without bolstering the requisite support systems have all led to the present-day student loan debt crisis. The White House said that since 1980, the total cost of both four-year public and four-year private college has nearly tripled, even after accounting for inflation. Federal support has not kept up: Pell Grants once covered nearly 80 percent of the cost of a four-year public college degree for students from working families, but now only cover a third. That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree.
“I've always felt that the debt on students and young people is an anchor. Whereas college should be a ladder up, this is an anchor around their ankles, and they can't make decisions in life. They wake up in the middle of the night, worried how they're going to make that $400 payment,” Schumer said. “Now, we have action.”
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