Here’s what’s new with President Joe Biden’s student loan agenda according to various news outlets.
According to the Associated Press, “it would be all but obliterated by the U.S. debt legislation passed by House Republicans, dooming his mass cancellations, scrapping a more generous loan repayment option and permanently barring future regulation around student debt.”
What’s It All About
Republicans believe it will help taxpayers, while Democrats say it would hurt the economy and block college students who need financial aid.
The GOP bill would cancel out Biden’s student debt proposals: a one-time cancellation of up to $20,000 for more than 40 million Americans, and an updated loan repayment plan that could cut monthly payments for millions.
It would also pause federal student loan payments, pushing borrowers into repayment sooner than planned.
On the House floor Wednesday, Republican Rep. Virginia Foxx, chairwoman of the House Committee on Education and the Workforce, said Biden’s plan for student debt was an obvious target as the government reins in spending.
With an estimated cost of more than $500 billion, Biden’s student debt plan is a “backdoor” attempt to provide free college on “the backs of blue-collar Americans,” said Foxx, of North Carolina.
Veto Power
Biden has threatened to veto the legislation, and his student debt cancellation plan is seen as untouchable by some Senate Democrats who may well kill the bill. Some of the strongest champions of cancellation have included Senate Majority Leader Chuck Schumer and Sen. Bernie Sanders, I-Vt., chairman of the Senate Health, Education, Labor and Pensions Committee, according to the AP.
Biden’s payment option would mostly replace four existing “income-driven repayment” plans with much more generous terms.
Capping the Costs
It would cap monthly payments at 5% of a borrower’s income, for example, down from 10% now. And it would charge nothing for those with yearly incomes of less than $30,000 ($24,000 now). No interest would be charged as long as payments were made on time.
The plan was proposed in January but has yet to be finalized. Under the Republican bill, it would be revoked.
The Republican plan would permanently bar the Education Department from issuing any future regulation that raises costs for the federal student aid program; a dramatic shift in how the agency works now.
Administrators from both parties have used their regulatory power to update the loan program without going through Congress. The Trump administration used that authority to erase debt for disabled military veterans in 2019, and Biden used it to overhaul a debt forgiveness program for public servants.
Blocking the new repayment plan would “make permanent the debt trap for any borrower who does not earn enough money to afford their monthly loan bills,” said Mike Pierce, executive director of the Student Borrower Protection Center, the AP reported.
Sources: Various news outlets
