Jamiesfeast – A new bill proposed by Republicans seeks to repeal President Joe Biden’s plans for student loan forgiveness.
Introduced earlier this month, the legislation, which is yet to be approved, aims to terminate the administration’s debt forgiveness programs. These programs were implemented in response to the Supreme Court’s ruling last year, which invalidated the president’s initial plan for providing relief to borrowers.
“The baccalaureate degree has become a cause for concern as the postsecondary education system continues to spiral out of control,” expressed Representative Virginia Foxx, chair of the House’s Education and the Workforce Committee, in an interview with Newsweek. Foxx added, “The escalating student loan debt and declining completion rates have led Americans to question the true value of pursuing higher education.”
According to the North Carolina Republican, it is widely agreed upon by both parties that the federal student loan program is in need of lasting reforms to enhance its effectiveness.
According to Foxx, the College Cost Reduction Act provides a responsible alternative to the free college agenda proposed by the Biden administration. She believes that the administration’s plan places a significant burden on both students and taxpayers. Foxx argues that the bill offers reforms to the Higher Education Act that will effectively lower college costs, address executive overreach, and prevent colleges from continually increasing tuition expenses.
What the Bill Says
This Article Includes
The federal student loan system would undergo an update through the College Cost Reduction Act, also known as H.R. 6951. This update would result in borrowers no longer being eligible for loan forgiveness.
According to Republicans, the bill specifically seeks to revoke the “new regulations issued by the Education Department” concerning various aspects such as closed school discharges, borrowers defense to repayment, pre-dispute arbitration, false certification, administrative capability, certification procedures, and ability to benefit. This information was provided in a fact sheet on the bill.
The Education Department regulations would be prohibited from going into effect in the future unless explicitly approved by Congress, according to the proposed law.
Instead, borrowers of student loans will have the option to choose between a standard 10-year repayment plan or a new plan that is based on their income level.
Under this plan, borrowers would be required to pay 10 percent of their annual income that exceeds 150 percent of the federal poverty rate. It is important to note that this repayment option is not as advantageous as Biden’s SAVE plan, which means that many individuals with debt will experience an increase in their monthly payments.
Under the Republicans’ new proposal, borrowers will have the opportunity to witness half of their payments being allocated to the principal amount of the loan, provided they make their monthly payments on time. This rule will apply even to payments that do not cover the interest, and any remaining unpaid interest will be waived.
The current plans on offer present a noticeable contrast to the proposals put forth by Republican leaders. Notably, individuals seeking a “discharge” through their repayment plans will only be eligible if they have fully repaid the principal and interest amount owed under the standard 10-year plan.
Loan forgiveness is available under the current plan after 10, 20, or 25 years of repayment, regardless of the amount you have already paid.
The GOP’s proposed legislation would strip the president of the authority to implement new laws aimed at creating more affordable repayment plans and offering student debt forgiveness. Additionally, the secretary of education would be required to ensure that any new regulations or executive actions pertaining to the student loan program do not result in increased costs for the federal government.
The bill states that any regulations that are unable to meet the threshold would be prohibited.
If the bill passes, student loan borrowers may still reap some benefits, despite the unlikelihood of student loan forgiveness.
“The bill is aimed at facilitating students and parents in making more informed decisions about college,” stated Athena Kan, CEO of Dreambound, a career training platform, in an interview with Newsweek. She emphasized that the bill mandates schools to disclose the cost and student outcomes per program, rather than just providing information at the school level.
Moreover, undergraduate students will now have a maximum limit of $50,000 for their aggregate student loans, a significant increase from the current limit of $23,000. This new cap will also apply to graduate students, as the federal PLUS programs offered to them will be eliminated. Additionally, borrowers who are in default on their student loans will have the opportunity to rehabilitate their loans and regain good standing.
Critics of the Republican bill have voiced their concerns about it since its initial release.
Michael Lux, the founder of the Student Loan Sherpa, finds the discontinuation of the PLUS programs especially worrisome.
Lux expressed concern about the approach to reducing college costs. In an interview with Newsweek, they highlighted the potential consequences of getting rid of the Parent PLUS and Graduate PLUS programs. Lux asserted that this move would make college unaffordable for many students, exacerbating the existing divide between the privileged and the less privileged. They emphasized that college should not be a privilege reserved solely for the wealthy.
According to Lux, simplifying federal repayment is a “good idea.” However, he mentioned that the proposed plan would result in increased monthly payments for the majority of borrowers.
Lux expressed concern about how student loan borrowers have been caught up in political debates. The constant shifting of political opinions and policies can have a significant impact on the financial situations of borrowers. It creates uncertainty and makes it challenging for them to make informed decisions and manage their debt responsibly.
Borrowers are expressing concerns about the implications of the bill on their remaining unpaid debt.
“It doesn’t sound great,” said Jack Epner, a 42-year-old Colorado resident burdened with thousands of dollars in student loan debt. In an interview with Newsweek, he expressed his concerns about the proposed changes, stating, “Having payments tied to income makes sense, but I think the rest just sounds a bit harsh.”
The overall issues with a bill like this may be connected to the broader higher education system.
Epner emphasized that the underlying issue that needs attention is the exorbitant cost of education, a concern that seems to be overlooked by many. He pointed out that in several other countries, individuals can obtain a degree for as little as $2,000 per year.
“I believe the entire situation is quite absurd until American citizens are treated with dignity and respect, rather than being seen as mere sources of profit,” he expressed.
Where Does Student Loan Forgiveness Stand?
Last year, the Supreme Court struck down a crucial part of Biden’s debt forgiveness efforts. The plan aimed to eliminate student debt for loans up to $10,000 for borrowers earning less than $125,000 per year.
Following that decision, the Education Department has given its approval for over $130 million in student loan forgiveness. Additionally, they have introduced a repayment plan known as SAVE, which considers income and provides more manageable payments and a smoother path towards loan forgiveness. This is in contrast to the repayment plan proposed by the Republicans.
Biden has proposed a plan worth $5 billion, aiming to provide debt forgiveness to individuals who have worked in public service for 10 years or more. Additionally, this plan would benefit those who have made loan repayments for at least 20 years and have not received assistance through income-based plans.
According to a recent survey conducted by Intelligent.com, it has been found that since the resumption of federal student loan payments in October last year, many borrowers have been facing difficulties in making their payments. In fact, the survey revealed that one in ten borrowers has even expressed their intention to not pay off their loans as a form of defiance against the system. The survey, which included 1,000 federal borrowers, sheds light on the challenges faced by individuals in managing their student loan debt.
Is the GOP Bill’s Passage Likely?
The passage of the new Republican bill is facing numerous obstacles. In order to obtain approval, the College Cost Reduction Act must first go through the House and then the Senate. Although Republicans have a slight majority in the House, the Democrats’ majority in the Senate makes it unlikely for a partisan bill like this to be passed by Congress.
If the bill were to be approved by the House and Senate, it is likely that Biden would veto it, as it would effectively put an end to his plans for student debt forgiveness.
Signs of what may lie ahead for student loan forgiveness are emerging, particularly if the Republicans secure control of the Senate and presidency in the upcoming November election. Despite the bill’s slim chances of being passed, these indications offer a glimpse into the potential future landscape of student loan forgiveness.