From precarious to dire: The financial state of student-loan borrowers following the COVID-19 pandemic

This article is part of a symposium on the upcoming arguments in Biden v. Nebraska and Department of Education v. Brown. A preview of the cases is here.

Randi Weingarten is president of the American Federation of Teachers, AFL-CIO.

At the heart of the Supreme Court’s cases addressing federal student-loan forgiveness lies one key question: Have lower- and middle-income Americans with student-loan debt been made financially worse off by the pandemic? The answer, as set forth in an amicus brief by the American Federation of Teachers and other unions representing millions of Americans, is an unequivocal yes.

Take Bonnie Weiler-Sagraves, a high school teacher and AFT member. Despite working diligently to pay off her loans for more than 30 years, Bonnie retains a student loan balance of over $60,000, which is nearly double her net income after deductions. The COVID-19 pandemic added to Bonnie’s already substantial financial burden, limiting her opportunities to supplement her meager teacher’s salary. When student-loan repayments restart, Bonnie simply doesn’t know where she’ll find the money — she already sold her home in order to help with repayments. 

Nicole Brun-Cottan, another AFT member, works as a critical-care physical therapist. Nicole loves her work, despite the substantial mental toll accompanying the treatment of severely ill patients in intensive care units. Saddled with over $105,000 in student-loan debt that leaves her unable to afford a home, and exhausted from the massive influx of COVID-19 patients, Nicole has been forced to consider leaving her nonprofit health care system.

Bonnie and Nicole are not alone. In fact, around half of all student-loan borrowers face an increased risk of delinquency when pandemic-related student-loan deferments end.

The AFT represents more than 1.7 million members — teachers and paraprofessionals, health care workers, higher education staff and faculty, and government workers. And while the exact details of their situations may differ, every day we hear heartbreaking stories from members with student debt who are struggling more than ever to stay afloat following the effects of a yearslong pandemic. That’s why the AFT submitted its amicus brief explaining that the Biden administration has the authority to forgive federal student-loan debt under the HEROES Act, which allows the secretary of education to ensure borrowers are not “placed in a worse position financially” as to their student loans because of a national emergency.

And this is not our first rodeo. Our members’ experiences are also why we have worked for more than a decade to solve the issue of the pauperization of young people due to student-loan debt. The AFT has been a longtime champion of public service workers with student debt, fighting to increase the accessibility and accountability of the Public Service Loan Forgiveness program, including by suing and successfully settling with the Department of Education over PSLF management and with student-loan servicer Navient for allegedly misleading borrowers about their PSLF eligibility. So, the AFT knows PSLF alone is insufficient to keep public service workers afloat following the financial damage caused by the pandemic.

As the amicus brief points out, borrowers exiting mandatory forbearance periods caused by emergencies default at substantially higher than average rates. And all signs point to this exact same pattern repeating itselfas soon as the current loan deferment ends.

The respondents fighting against federal student-loan forgiveness brand COVID-19 a “temporary” emergency that requires a temporary solution, such as continued loan deferment. But the reality for millions of Americans belies this naive claim. Recovering from the financial hits of the still-ongoing pandemic, including business closures, job losses, pay and benefit cuts, and inflated consumer costs, is a long and arduous process: More than 1 in 10 people economically affected by the pandemic believe their finances will never recover. And the nearly 1.22 million Americans who have lost a close relation to COVID-19 know all too well just how permanent that loss is — a loss that engenders not only deep grief but also, often, heightened financial strain. 

While COVID-19 negatively affected American workers across all sectors, the AFT and the amicus brief’s co-signers — the American Association of University Professors and the American Federation of State, County and Municipal Employees — share unique insight into how the pandemic harmed public service workers.

There are large swaths of public service workers who are not eligible for PSLF. Adjunct faculty, who experienced severe financial harm during the pandemic, are largely unable to qualify for PSLF if they spent less than an annual average of 30 hours per week teaching in the classroom — no matter how many hours they spent developing lesson plans or holding office hours. These workers already faced significant economic strain: Nearly a quarter have an annual salary below the federal poverty line, fewer than half currently have health insurance through their employer, and only a fifth are able to comfortably cover basic expenses. Many carry severe student-loan debt from the higher education degrees required for their work. But the pandemic pushed many of these workers over the edge and shifted their financial situations from precarious to dire: Adjunct faculty experienced “a staggering 8.7 percent decrease in part-time appointments” from fall 2019 to fall 2020, with a disproportionate impact on women and people of color. And those lucky enough to keep their positions often faced salary freezes or suspended benefits. Student-debt cancellation is critical to help alleviate the financial burden that the pandemic has wrought for adjuncts, paraprofessionals and other public service workers who don’t qualify for PSLF.

While the Supreme Court often deals with complex and abstract legal issues, this is a rare instance when the court’s decision can — and should — be based primarily on a straightforward assessment: whether the student-debt cancellation action was necessary to ensure the pandemic did not place borrowers “in a worse position financially in relation to” their federal loans. The answer is clearly yes. We respectfully urge the court to hear the voices of the millions of American workers who are worse off as to their student loans because of COVID-19 and to uphold the administration’s debt-cancellation action.