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Associations representing the nation’s colleges and universities told congressional leaders on Monday they should put off considering canceling student debt until later.

Instead, the American Council on Education, and other associations representing four-year institutions as well as community colleges, in a letter said Congress should focus right now on providing short-term help for borrowers as it considers at least one additional stimulus package. The groups proposed, for example, extending the moratorium on making loan repayments that Congress approved in its last stimulus package, until the nation recovers from the recession being caused by the pandemic.

But on broader proposals such as canceling student debt, the associations wrote, “we believe that should more appropriately occur as part of reauthorization of the Higher Education Act.”

However, many who signed the letter are skeptical that Congress will get to the update of the nation’s main higher education law this year.

Kyle Southern, policy and advocacy director for higher education and workforce for the Young Invincibles, an advocacy group focused on millenials, responded, “Young people can't wait for Congress to act on HEA to deal with the crisis that they were facing even before COVID-19.”

The stance by college leaders, as well as other higher education groups like the National Association of Student Financial Aid Administrators, comes after calls by congressional Democrats to cancel student debt in stimulus packages.

Democrats in both the House and Senate proposed during the negotiations over the last package, the $2.2 trillion CARES Act, that the federal government make monthly loan repayments on behalf of borrowers and guarantee that at least $10,000 be paid toward balances of each borrower.

Progressive Democrats, including Senator Elizabeth Warren of Massachusetts, also have called for student debt cancellation as part of any stimulus package.

And just last week, Young Invincibles and 65 other progressive groups wrote congressional leaders, calling for some form of debt cancellation -- like the Democrats’ proposals in the CARES Act -- to be included as part of the stimulus.

Not including cancellation in a stimulus package “sets up millions of federal student loan borrowers to face the daunting prospect of trying to find the means to pay their student loans in the middle of economic devastation,” the groups said.

The new letter by the higher ed groups, including the Association of Public and Land-grant Universities, the Association of American Universities, and the American Association of State Colleges and Universities, comes at a time when higher education institutions are vying for more federal dollars in one of the upcoming packages Congress is expected to consider.

Higher ed organizations also wrote congressional leaders two weeks ago to seek an additional $46.6 billion in aid for colleges, saying the $14 billion Congress put in the CARES Act for higher education “does not come close to filling the gap.” Instead, the associations wrote that they expect to lose $23 billion from a 15 percent projected decline in enrollment this fall.

Focus on Immediate Relief

In an interview, however, Terry Hartle, the American Council on Education’s senior vice president for government relations and public affairs (and an occasional opinion contributor to Inside Higher Ed), denied that institutions were worried debt cancellation would siphon away money the colleges are desperate to get.

Instead, Hartle said the stance reflected what he said congressional staff working on stimulus packages have been telling advocates -- to focus on immediate relief to get people through the public health and economic crisis.

In the letter, the associations acknowledged that student loan borrowers need help. “The pandemic will greatly hamper the ability of many of these individuals to repay their loans, and this in turn will strain the economy unless Congress moves quickly to provide needed, targeted relief to student loan borrowers,” they wrote.

But, in part, the call to take up debt cancellation later appeared to reflect the division even among progressives about the idea.

“Any large-scale debt relief initiative would prove very expensive, and may benefit high-income and other borrowers who do not require assistance in meeting their obligations,” the letter said. If Congress does take up debt cancellation, the associations wrote, “any debt relief program should be targeted to borrowers who are financially distressed and face the greatest difficulty repaying their loans.”

Justin Draeger, president and CEO of NASFAA, worried bringing up the debt cancellation idea would lead to political gridlock and hold up help for borrowers now.

“How to expand and equitably distribute loan forgiveness, not to mention implementing something so complicated, is a much larger conversation that threatens to derail tangible steps Congress could and should take now,” he said.

And indeed, a Republican aide on the Senate education committee told Inside Higher Ed last week that at least among Republicans, “I don’t think there’s any appetite for debt forgiveness or cancellation because it has nothing to do with COVID.”

A higher priority, representatives of the associations said, is for Congress to take immediate steps, like excusing borrowers from having to make loan payments until the economy recovers -- at least through June 30, 2021, or until the unemployment rate falls below 8 percent for three consecutive months. That would extend the 60-day moratorium included in the CARES Act.

The associations also proposed extending for a year the six- to nine-month grace period for making federal loan payments after graduation. “Students who complete their programs in the near future will be graduating into the worst employment market since the federal student loan programs were created,” the letter said. “Extending the post-graduation grace period for one year for students leaving school will help them gain their post-graduation financial footing.”

In addition, the letter recommended borrowers taking out federal student loans only be charged a 1.5 percent interest rate, instead of the current rates of between 4.53 percent for Stafford loans and 7.08 percent for Grad PLUS and Parent PLUS loans.

The associations also proposed making it easier for borrowers to escape student debt when filing for bankruptcy.

“With the increased economic insecurity America faces, more citizens will declare bankruptcy,” the letter said. "When they do, all debts, including student loans, should be eliminated. This will help those whose investment in higher education was significantly curtailed by the current crisis and would be an important step in their own economic recovery.”

Southern responded, “They also should not have to depend on bankruptcy as an escape valve from the debt levels caused by skyrocketing higher education costs and declining public financial support. Broad cancellation of student debt now would provide direct relief to millions of borrowers at a time they need it most.”

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