For Immediate Release

In light of Supreme Court's ruling, Student Loan Justice urges Congress, the President to return bankruptcy rights to student loans.

We strongly disagree with the Supreme Court's decision today to strike down President Biden's order to cancel federal student loans.  Given that President Trump first broadly cancelled student loans by executive order before the pandemic, and then again cancelled debt by enacting the student loan repayment pause in early 2020- all without objection (much less lawsuits)- it is clear that politics overrode precedent in this case.

Most importantly:   This case only considered whether the 2003 HEROES Act- a very ill-fitting law- legally justified the cancellation proposal.  The 1965 Higher Education Act- which gives the Secretary of Education full, broad, unambiguous authority to waive, compromise, and release the federal interest in federally owned student loans- was never ruled on.  That the President chose to use the HEROES Act rather than the HEA to justify cancellation is, in itself, proof that he was never serious about actually cancelling loans by executive order.

Regardless of what future loan cancellations the President might undertake (probably to be drawn out through the next Presidential election), this case only brings into sharp relief the urgent need to return standard, constitutional bankruptcy rights to student loans. 

In the absence of the same bankruptcy rights that all other loans for all other borrowers enjoy, student loans have become predatory instruments of the state, the universities, and the lending industry to abuse the borrowers, hyper-inflate loans, and extract vast sums of unearned wealth from the citizenry.  This predatory, abusive lending system is precisely what the Founders wished to avoid when they called for uniform bankruptcy laws (and thus, rights) in the Constitution, ahead of the power to raise an army and declare war.  These weaponized loans are unconstitutional, unconscionable, and illegitimate until this fundamental right is restored.

Repayment on these loans will resume at the end of Summer.  To leave 38 million distressed federal student loan borrowers at the mercy of the student loan industry without at least the same bankruptcy rights that all other borrowers enjoy would be catastrophic for these individuals and the national economy. These borrowers- who represent the largest, politically untethered voting bloc in modern US History-  have been extremely patient and tolerant to this point, but that patience is now ended.
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• We urge Senator Dick Durbin and Congressman Jim Jordan to pass legislation through their respective Judiciary Committees that return standard bankruptcy rights to student loans, preferably with a requirement that the colleges take some financial responsibility for discharges.
• We further urge President Biden, Secretary Cardona, Undersecretary James Kvaal, and Federal Student Aid Chief Operations Officer Richard Cordray to stop opposing all student loan borrower undue hardship claims in bankruptcy court, as they have promised to do since 2020.
• We urge our 1.4 million members- and student loan borrowers everywhere- to help us fight to get standard bankruptcy rights reinstated to these loans, and to do everything possible in the meantime to defer, forbear, or otherwise withhold payment until this constitutional right is restored.

Contact: Alan Collinge
(202) 594-1120
​[email protected]

StudentLoanJustice.Org is the first, oldest, and largest grassroots group of citizens in the nation fighting for student loan borrowers.