- Senate Republicans introduced a legislative proposal Wednesday that would dramatically reshape the student loan system and impose new accountability measures on colleges.
- Comprised of five separate bills, the Lowering Education Costs and Debt Act would standardize financial aid offers so students could more easily compare colleges, require students applying for loans to participate annually in borrower counseling, and cut down the number of repayment plans for federal student loans.
- The proposal would also put limits on graduate borrowing, in an effort to pressure graduate programs to lower their costs. And it would ban students from taking out loans for postsecondary programs that have not been shown to increase graduates’ earning potential.
The Lowering Education Costs and Debt Act comes just as the U.S. Supreme Court is expected to rule on President Joe Biden’s student loan forgiveness program.
Biden’s proposal would forgive up to $20,000 in student loan debt for individuals who earn up to $125,000 annually. One nonpartisan government agency projected in September the program would cost about $400 billion over the next three decades.
South Carolina Sen. Tim Scott, co-sponsor of the Republican proposal, decried Biden’s plan as an “illegal and unconstitutional student loan scheme” in a news release Wednesday.
Scott and four other Republican legislators, led by Louisiana Sen. Bill Cassidy, released their legislative package as an alternative to Biden’s plan for addressing student loan debt.
“Colleges and universities using the availability of federal loans to increase their tuitions have left too many students drowning in debt without a path for success,” Cassidy said in a statement. “Unlike President Biden’s student loan schemes, this plan addresses the root causes of the student debt crisis.”
The Republican package would also prevent the U.S. Department of Education from implementing planned changes to income-driven repayment plans.
A proposal from the Biden administration in January would cut in half the discretionary income borrowers must put toward their loans each month, from 10% to 5%. In addition, it would raise the income threshold borrowers must meet before they’re required to make payments.
The Republicans’ plan, meanwhile, would also pare down loan repayment options offered by the Education Department, from nine to two, to simplify the process.
It is unclear how the Republicans’ plan will fare in the Senate. Democrats maintain legislative power in that chamber and can rely on Vice President Kamala Harris as a tie-breaking vote. But their control relies on slim margins.
Some proposals meant to improve transparency around college costs and student outcomes, such as the College Transparency Act, have received bipartisan support.
And this month, two centrist Democrats — West Virginia Sen. Joe Manchin and Montana Sen. Jon Tester — joined Republican lawmakers in a vote to end Biden’s loan forgiveness plan. Arizona Sen. Kyrsten Sinema, who last year switched parties from Democrat to Independent, also voted against the plan.
The president vetoed the bill shortly thereafter.
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