(NEXSTAR) – Whereas President Biden has mentioned he’s getting ready to decide on pupil loans any day now, a brand new invoice proposed by Republican lawmakers might upend any strikes Biden might make.
Calling it a “accountable various to Biden’s blanket pupil mortgage scheme,” three Representatives – Home Republican Convention Chair Elise Stefanik (R-N.Y.), Training and Labor Committee Republican Chief Virginia Foxx (R-N.C.), and Republican Research Committee Chairman Jim Banks (R-Ind.) – launched a invoice final week to reform the nation’s federal pupil mortgage system.
“America’s pupil mortgage system is damaged,” lawmakers mentioned in a joint launch. “This invoice addresses crucial flaws in that system, so establishments of upper schooling now not have an incentive to saddle college students with extreme debt for levels that don’t repay.”
The Accountable Training Help by Mortgage (REAL) Reforms Act, or REAL Reforms Act, has 5 most important focuses.
Amongst notable features is the proposed finish of the Public Service Mortgage Forgiveness program for brand spanking new debtors. Generally generally known as PSLF, this system is meant to erase pupil mortgage debt of sure public service employees that meet a number of necessities.
The lawmakers are additionally calling for the safety of scholars, debtors, and taxpayers. They advocate ending the coed mortgage reimbursement pause, which was initially began by former President Donald Trump initially of the COVID pandemic and has since been prolonged a number of instances.
The invoice would overhaul the income-driven reimbursement (IDR) plan and the elimination of curiosity capitalization that causes a borrower’s mortgage stability to “balloon.” Mortgage limits for borrowing and an finish to uncapped borrowing for graduate college students by the Grad PLUS program are additionally proposed.
The laws does embrace focused pupil debt aid “for the debtors most in want.” This consists of debtors who’ve made funds for a number of years however “noticed their balances explode attributable to Demcrats’ poorly designed reimbursement insurance policies.”
Moreover, it goals at altering how Pell Grants can be utilized, particularly for “short-term, career-focused applications that present worthwhile credentials for in-demand jobs.” The brand new Workforce Pell Grant must be used for applications that enable graduates to advance “up the financial ladder rapidly and at a fraction of the fee” of a standard school bachelor’s diploma. Applications deemed much less worthwhile could be restricted from having tuition and charges exceed the earnings improve college students get from attending.
Justin Draeger, president and CEO of the Nationwide Affiliation of Scholar Monetary Assist Directors, mentioned in a launch that the group was “happy to see considerate proposals in [the House Republicans’] laws” however was “alarmed” to see PSLF on the chopping block.
In accordance with the NASFAA, this invoice takes some features from the PROSPER Act, which Foxx launched in 2017.
The Biden administration has proposed modifications to the federal pupil mortgage system that embrace measures to discharge loans for sure debtors, restrict curiosity capitalization charges, and assist debtors working as public service workers to earn forgiveness on their loans.
Different Democratic lawmakers have lately launched payments tackling pupil loans, particularly the PSLF program.
Rep. Joe Courtney (D-Conn.) proposed laws that may minimize the period of time it takes to get aid by the PSLF program in half. Later, a pair of Democratic lawmakers from New Jersey launched a proposal that may make it simpler for some beforehand ineligible public employees to qualify for mortgage aid beneath the identical program.
Whereas there are some indicators the coed mortgage fee pause could possibly be prolonged once more, and that some might see debt aid, the Biden administration’s plan stays principally a thriller. Biden is anticipated to decide earlier than the top of the month.
The Hill’s Brad Gown contributed to this report.
