Dear President Biden,

Thank you for taking these first steps to implement student debt relief. Like many, we were surprised by the recent wrangling about how your debt forgiveness program could be implemented. We are writing to remind you that the federal government already has all of the tools, processes, and employees that it needs to implement your student debt forgiveness plan, by Tuesday if desired: you can model your student debt forgiveness on the success of your Paycheck Protection Program (PPP).

In the PPP, eligible borrowers borrowed federal funds at an interest rate of 1%, to finance specific eligible expenses. Borrowers borrowed billions from the comfort of their own homes, with little more than a personal signature across seven pages of forms. After receiving the PPP loan and using the funds for the specified reasons, the borrower would apply to have the entire PPP loan forgiven, again with a short semi-automated application. If the PPP loan funds were used for the intended purposes and the borrower was indeed eligible, the PPP loan would be forgiven in its entirety. Alternatively, if the funds were not used for allowable purposes or the borrower was not eligible, it would remain a PPP loan to be repaid at 1% interest.

This loan/grant program has proven itself an efficient way to deliver funds quickly. To date, 95% of the total PPP loan value has been forgiven, in the amount of $750,352,641,806 – more than twice the amount that you have offered in your Student Debt Forgiveness Program.

Your Student Debt Forgiveness Program could work in the same way.

Like the businesses that chose to benefit from the PPP loan program, student borrowers who are interested in having the eligible amount of their student debt forgiven could borrow the offered $10,000 – $20,000, as a new loan at 1% interest. If the student borrower meets your announced eligibility requirements (based on income and prior receipt of a Pell Grant) and uses the entire amount to pay down their student debt, that newly borrowed $10,000 – $20,000 with interest would be forgiven, just like the PPP loan.

Using this method would ensure that 100% of the student borrowers who wish to have part of their student loans forgiven can participate. Likewise, it enables other student borrowers to exercise their voice by refraining from participation. This method – creating new loans to pay off the old, and then forgiving the new – also avoids potentially difficult legal questions related to student lender rights.

While we would have preferred to see a higher amount forgiven, we take comfort in the fact that the PPP enjoyed such success and easy implementation that your Government was able to offer it twice. We hope that your newly announced program will likewise be the start of more broad student debt forgiveness.

Sincerely,

Dr. Anthony Marcum

Dr. Katherine Simpson

Dr. Anthony Marcum is a Lecturer with the Program in International and Comparative Studies at the University of Michigan. His research interests broadly focus on post-conflict reconstruction and democratization. His current work addresses how victorious states engage in military occupations to settle political disputes and ensure their preferred peace. 

Dr. Katherine Simpson, FCIArb. is an arbitrator with offices in the US (Simpson Dispute Resolution) and London (33 Bedford Row Chambers). She is a licensed attorney (Maryland, New Jersey) and newly the Co-Chair of the Women in Dispute Resolution (WIDR) Committee of the ABA Dispute Resolution Section.