Limit graduate loans, end targeted forgiveness
- GOP Representatives Foxx, Stefanik and Banks introduced a bill to counter Biden’s student loan cancellation plans.
- This includes limiting borrowing for graduate students and ending targeted loan forgiveness programs.
- It comes as Biden is expected to announce broad debt relief in August.
Three Republican lawmakers think President Joe Biden is approaching the $1.7 trillion student debt crisis the wrong way — and they have some ideas for what he can do instead.
On Thursday, Representatives Virginia Foxx, Elise Stefanik and Jim Banks introduced the Responsible Education Assistance through Lending (REAL) Reforms Act, which aims to act as an “alternative” to the department’s proposals of Education to reform student loans. programs.
The bill proposes a series of actions to help “neediest” borrowers, according to a fact sheet, by preventing skyrocketing interest on income-driven repayment plans, capping borrowing for graduate students and ending the Public Service Loan Waiver (PSLF) program for new borrowers, which the fact sheet says is expensive for taxpayers and favors high-income earners.
“The Biden administration has engaged in massive student loan cancellation behind the backs of Americans without congressional authorization,” the three lawmakers said in a statement. “In total, to date, the President has already forgiven, waived, or canceled at least $217 billion in student loans by unlawfully misusing his leadership pen. Instead of placing the burden of this broken student loan system on the shoulders of American taxpayers, we are introducing this bill to fix the system.”
Biden has extended the pause on student loan payments four times. It also erased student debt from targeted groups of borrowers, such as those defrauded by for-profit schools and people with disabilities. And he is now deciding on another extension, as well as a broad student loan forgiveness – $10,000 relief for those earning less than $150,000 a year. With those announcements expected this month, Republican lawmakers have stepped up criticism of the proposals, with this bill being the latest of those efforts.
Concretely, the Republicans propose to:
- Ensure that “responsible existing borrowers” enrolled in income-driven repayment plans only have to repay the original amount they borrowed and ten years of interest, and provide borrowers with a way to repay their principal if their payments only covered interest
- End student loan payment pause, streamline income-driven repayment plans into one plan, and stop Biden from issuing another plan
- Eliminate the PSLF for new borrowers and streamline income-based repayment plans into one plan, block Biden from issuing another plan, and end loan forgiveness under income-based repayment plans, that lawmakers say benefit both high earners and graduate students
- Limit the amount of debt graduate students can borrow by ending the Grad PLUS program
- And allow Pell Grants to be used for short-term programs while prohibiting tuition and fees from exceeding a certain program’s expected revenue.
They also want to end interest capitalization, which is when accrued interest is added to the original loan balance and future interest increases by that higher amount. Biden’s education department recently offered to end that as part of its rulemaking process as well — a process Republican lawmakers want to ban in their bill if it continues without the Congressional approval.
Some of the proposals in the bill are not new. Republican lawmakers have already introduced legislation barring the president from canceling student debt and continuing to extend the payments pause, and Foxx criticized the confusion with income-driven repayment plans after an NPR investigation was published. highlighting their mismanagement.
Biden’s education department, however, plans to release a new income-based repayment plan in the coming weeks, and it’s also rolling out last year’s PSLF reforms, including one included a waiver that extends through October 31. 2022 which allows all previous payments made by a borrower – even those previously deemed ineligible – to be counted towards forgiveness progression. The waiver has so far provided $8.1 billion in relief to 145,000 borrowers.
The Republicans’ proposals are emblematic of the criticisms they have leveled at the student loan program in recent months, particularly regarding its cost. A Government Accountability Office report last week found the Department for Education’s cost estimate for the federal student loans program was $311 billion, with the program expected to generate lost revenue rather than profit. But while the GOP has seen the solution to those costs as ending Democrats’ sweeping relief efforts, House Education Committee Chairman Bobby Scott said the focus should be on that student loans work for everyone.
“Rather than blaming previous administrations — two of which were Republicans and two Democrats — we should be focusing on solutions,” Scott said in a statement. “The solution to this problem is not to eliminate the student loan program, but rather to work together to address the rising cost of a college education, restore the value of the Pell Scholarship, and make meaningful reforms to the program. student loans.”