MADISON — President Joe Biden isn’t proposing student loan forgiveness. He’s pushing redistribution of debt.
Congressional Republicans want to check the president before he saddles U.S. taxpayers with the bill for hundreds of billions of dollars in cancelled student loans. First and foremost, they want to end his endless loan payment freezes.
The Stop Reckless Student Loan Actions Act would stop Biden’s un-targeted suspension of repayments on qualifying federal loans. While the bill would still give the president temporary authority to suspend repayment for low- and middle-income borrowers in future national emergencies, it would prohibit the president from cancelling federal student loan obligations because of a national emergency.
“The idea that the President can wave a wand and cancel student debt is constitutional craziness,” said Rep. Gallagher (R-Allouez). “To do so would exacerbate the price of higher education, disproportionately benefit the most affluent Americans, and unfairly punish each parent who sacrificed and saved for their kids’ education, not to mention those who’ve already paid off their loans.”
On April 6, Biden announced his fourth extension of the suspension of qualifying federal student loan repayments through August 31. He said when repayments resume, all borrowers whose federal student loans are delinquent or in default would be made current.
Repayments originally were scheduled to resume this month.
The bill’s sponsors – Sens. John Thune, R-S.D., Richard Burr, R-N.C., Mike Braun, R-Ind., Bill Cassidy, R-La., and Roger Marshall, R-Kansas, say taxpayers have been battered enough under this administration.
“As Americans continue to return to the workforce more than two years since the pandemic began, it is time for borrowers to resume repayment of student debt obligations,” Thune said in a statement. “Taxpayers and working families should not be responsible for continuing to bear the costs associated with this suspension of repayment. This common-sense legislation would protect taxpayers and prevent President Biden from suspending federal student loan repayments in perpetuity.”
Biden has protected borrowers, holding a combined $1.7 trillion debt, from about $5 billion in interest a month, according to the Federal Reserve. Liberal publication Salon insists “those savings have been a lifeline for over 40 million student debtholders, 11.1% of whose loans prior to the pandemic were in default or delinquent by at least 90 days.”
But nothing in the bill would prohibit the U.S. Department of Education from continuing to work with individuals who may be struggling to make timely payments, like helping borrowers enter into income-driven repayment plans.
The current suspension of federal student loan repayments disproportionally benefits higher-earning borrowers and has cost American taxpayers billions of dollars.
- For example, medical doctors with student debt, on average, have received the equivalent of approximately $50,000 in forgiveness as of May 1, 2022, according to the Committee for a Responsible Federal Budget.
- According to the Federal Reserve, the net worth of households led by college graduates soared during the pandemic by $23.4 trillion. Meanwhile, the approximate two-thirds of households that are not led by a college degree holder only saw a net worth increase of $3.5 trillion.
- Each repayment extension has cost taxpayers $5 billion per month, which is in addition to the more than $100 billion Americans have already spent on this repayment moratorium, according to the Department of Education.
- Prior to the pandemic suspension, upper-income borrowers made three-quarters of the student loan payments, according to the Brookings Institution.
- According to the Committee for a Responsible Federal Budget, individuals who are bachelor’s degree holders or higher hold 70 percent of education debt – a population with an unemployment rate of only 2.2 percent.
“Congress can take action to prevent this enormous abuse of executive power, and should do so by passing the Stop Reckless Student Loan Actions Act,” Gallagher said.