Republicans eye federal student loan restructuring

WASHINGTON — House Republicans have introduced new legislation to dramatically reform the federal student loan programs and Pell grants, offering what they say is an alternative to the expansive student loan forgiveness championed by progressives.

The Responsible Education Assistance through Loan Reforms Act, or REAL Reforms Act, lays out a system that would end the student loan repayment pause, phase out the Public Service Loan Forgiveness program, cap interest accumulation to 10 years for borrowers in good standing, and prohibit the Department of Education from enacting regulations that increase the costs of the federal student loan program without congressional approval.

The legislation would reshape the repayment plans offered by federal lenders, offering only two — a 10-year repayment plan or an income-based plan.

Higher education institutions that take federal loan payments would also be able to lower student borrowing limits on their own, to prevent students from taking too much loaned money.

The REAL Reforms Act would also end the Graduate PLUS loan, which allows graduate students to borrow the entire cost of attendance, including housing and food, and limit graduate students to $25,000 in loans annually and $100,000 for their entire degree program.

It would allow federal Pell grants to be used for short-term professional education programs and technical education, and end interest capitalization, in which unpaid interest is added to the principal amount of the loan which dramatically increases debts and complicates forgiveness efforts.

Finally, the legislation makes an effort at restricting college tuition and fees, so students aren’t paying more for their education than they’re expected to make working in the field for which they’re training.

Introduced by Reps. Elise M. Stefanik, R-Schuylerville, Virginia A. Foxx, R-N.C., and Jim D. Jordan, R-In., the legislation has been billed as the conservative answer to the liberal call to forgive federal student loans for millions of Americans. Figures from April estimate that U.S. borrowers owe nearly $1.75 trillion in both federal and private student loan debt, with federal loans making up the bulk of that sum.

Most student borrowers have not been required to make payments on their loans in over two years, after the Department of Education and then-President Donald J. Trump instituted a repayment pause when the COVID-19 pandemic first struck in March 2020. That payment pause has been extended again and again as the economy has struggled to right itself, and calls to completely forgive those loans have only gotten more frequent in the interim.

Most recently, President Joseph R. Biden has reportedly considered using executive action to cancel $10,000 in debt for borrowers who make less than $125,000 per year.

The moratorium on repayments is set to expire at the end of August, and President Biden has said he will make a decision on forgiveness programs and when repayments will restart by the end of the month.

In a joint statement, the lawmakers behind the REAL Reforms Act said their plan is a “fiscally responsible, practical solution” to address the high costs of higher education and the immense debt owed by American graduates.

“This will allow individuals to gain quickly the skills needed to fill in-demand jobs,” they said. “It rejects broad student loan forgiveness for those earning six-figure salaries and curtails the Department of Education’s ability to unilaterally forgive debts.”

“Unlike Democrats’ mass student loan forgiveness scheme, these reforms provide targeted relief to borrowers who need it the most and recognize that not every career path requires a baccalaureate degree,” they continued.


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