WASHINGTON (AP) — President Joe Biden’s student loan agenda could be gutted by the American Debt Act passed by House Republicans, dooming his mass repeal. s, eliminating the more generous loan repayment option Permanently blocks future regulation around student loans.
Republicans see it as a win for taxpayers. Democrats say it would hurt the economy and deter college students who need financial aid.
The GOP would repeal both of Bill Biden’s marquee student loan proposals: a one-time cancellation of up to $20,000 for more than 40 million Americans and a revamped loan repayment plan that could lower monthly payments for millions more.
It would lift the freeze on federal student loan paymentsIt forces the borrowers to repay the loan earlier 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 loans is a clear target for government spending restraint.
At a cost of more than $500 billion, Biden’s student loan plan is a “backdoor” effort to provide free college “on the backs of blue-collar Americans,” said Foxx, of North Carolina.
Biden has threatened to veto the legislation, and his student loan cancellation plan is considered untouchable by some Senate Democrats, who could kill the bill. They include Senate Majority Leader Chuck Schumer, I-Vt., and Sen. Bernie Sanders, chairman of the Senate Health, Education, Labor and Pensions Committee.
Lawmakers on both sides of the aisle generally agree that the student loan system is broken, but they have different approaches to fixing it. The issue has become a lightning rod in recent years amid rising college costs and national student debt totaling more than $1.6 trillion.
For Republicans, the fight presents a new opportunity to attack Biden’s student loan policies, which they see as overreaching. Conservative opponents have already temporarily blocked his repeal in court, and it is now being reviewed by the conservative-leaning Supreme Court..
However, unlike the GOP lawsuits, the new legislation targets Biden’s full suite of student loan plans, including a proposed repayment plan that avoids the type of massive cancellation inspections.
Biden’s payment option would replace four existing “income-based repayment” programs with more generous terms.
It would cap monthly payments at 5% of the borrower’s income, for example, down from 10% now. And it charges nothing to those with annual incomes below $30,000 (now $24,000). No interest will be charged until the payment is made on time.
The plan was formally proposed in January but is yet to be finalized. Under the Republican bill, that would be repealed.
Going a step further, the Republican plan would permanently bar the Department of Education from issuing any future regulations that would increase spending on the federal student aid program. This will dramatically change the way agencies do business.
Administrations of both parties have used their regulatory authority to renew the debt program without going to Congress. The Trump administration used that authority in 2019 to wipe out debt for disabled military veterans, and Biden used it to overhaul a loan forgiveness program for public employees.
Borrowers attacked the GOP bill, saying it would worsen the student loan crisis.
Blocking the new repayment plan would “perpetuate the debt trap for any borrower who doesn’t make enough money to pay their monthly loan bills,” said Mike Pearce, executive director of the Center for Student Borrower Protection.
The bill’s impact could go beyond student loans. The Department of Education estimates that some of its largest programs would require a 22% budget cut.
The department estimates that federal Pell Grants for 80,000 college students — students with significant financial need — will have to reduce grants, and the maximum grant amount for all other borrowers will be reduced by $1,000. It would cut $4 billion in federal money for the nation’s poorest schools, and other money for student mental health.
The Pell cut “destroys the educational dreams of millions of Americans,” said Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators.
Foxx disputed the department’s account of the cuts, however, saying the bill “doesn’t mention a single word about Pell Grants.”
“If Democrats spent half as much time working with Republicans as they fear, we wouldn’t be in this situation in the first place,” Fox said in a statement.
Education Secretary Miguel Cardona slammed Republicans for “shocking irresponsibility,” saying the bill would “take us backwards” and undermine efforts to help students recover from the pandemic.
Representative. Bobby Scott, the top Democrat on the House Education Committee, dismissed the bill as “a terrible deal for the American people.”
“I’m tired of being lectured by Republicans when it comes to fiscal responsibility, because we know that every Republican presidential administration since Nixon has left office with a worse deficit situation than they inherited,” Scott said on the House floor Wednesday.
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