WASHINGTON (AP) 鈥� President Joe Biden鈥檚 student loan agenda would be all but obliterated by the U.S. debt legislation passed by House Republicans, dooming his mass cancellation s, scrapping a more generous loan repayment option and permanently barring future regulation around student debt.
Republicans see it as a victory for taxpayers. Democrats say it would hurt the economy and block college students who need financial aid.
The GOP bill would cancel both of Biden鈥檚 marquee student debt proposals: a one-time cancellation of up to $20,000 for more than 40 million Americans, and an updated loan repayment plan that could slash monthly payments for millions.
It would also lift a , forcing borrowers into repayment sooner than planned.
On the House floor Wednesday, Republican Rep. Virginia Foxx, chairwoman of the House Committee on Education and the Workforce, said Biden鈥檚 plan for student debt was an obvious target as the government reins in spending.
With an estimated cost of more than $500 billion, Biden鈥檚 student debt plan is a 鈥渂ackdoor鈥� attempt to provide free college on 鈥渢he backs of blue-collar Americans,鈥� said Foxx, of North Carolina.
Biden has threatened to veto the legislation, and his student debt cancellation plan is seen as untouchable by some Senate Democrats who may well kill the bill. Some of the strongest champions of cancellation have included Senate Majority Leader Chuck Schumer and Sen. Bernie Sanders, I-Vt., 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 differing approaches to fixing it. The issue has become a lightning rod in recent years amid rising college costs and a national student debt total that now surpasses $1.6 trillion.
For Republicans, the fight offers a fresh opportunity to strike at Biden鈥檚 student debt policies, which they view as an overreach. Conservative opponents have already gotten his cancellation temporarily halted in court, and it鈥檚 now being reviewed by a .
Unlike the GOP lawsuits, however, the new legislation takes aim at the full suite of Biden鈥檚 student debt plans, including a proposed repayment plan that has mostly avoided the type of scrutiny that mass cancellation has seen.
Biden's payment option would mostly replace four existing 鈥渋ncome-driven repayment鈥� plans with much more generous terms.
It would cap monthly payments at 5% of a borrower鈥檚 income, for example, down from 10% now. And it would charge nothing for those with yearly incomes of less than $30,000 ($24,000 now). No interest would be charged as long as payments were made on time.
The plan was formally proposed in January but has yet to be finalized. Under the Republican bill, it would be revoked.
Going a step further, the Republican plan would permanently bar the Education Department from issuing any future regulation that raises costs for the federal student aid program. That would amount to a dramatic shift in the way the agency does business.
Administrations from both parties have used their regulatory power to update the loan program without going through Congress. The Trump administration used that authority to erase debt for disabled military veterans in 2019, and Biden used it to overhaul a debt forgiveness program for public servants.
Borrower advocates assail the GOP bill, saying it would worsen the student debt crisis.
Blocking the new repayment plan would 鈥渕ake permanent the debt trap for any borrower who does not earn enough money to afford their monthly loan bills,鈥� said Mike Pierce, executive director of the Student Borrower Protection Center.
The impact of the bill could go far beyond student debt. The Education Department estimates it would require a 22% budget cut across some of its biggest programs.
The department estimates it would need to cut federal Pell Grants 鈥� grants to students with significant financial need 鈥� for 80,000 college students, and the maximum grant amount would be reduced by $1,000 for all other borrowers. It would also bring a $4 billion reduction in federal money for the nation's poorest schools, and cut other money for student mental health.
The Pell reduction 鈥渁nnihilates the educational dreams of millions of Americans,鈥� said Justin Draeger, president and CEO of the 好色tv Association of Student Financial Aid Administrators.
Foxx disputed the department's accounting of reductions, however, saying the bill 鈥渄oesn't mention a single word about Pell Grants.鈥�
鈥淚f Democrats spent half the amount of time working with Republicans as they do fearmongering, we wouldn't be in this situation in the first place,鈥� Foxx said in a statement.
Education Secretary Miguel Cardona slammed Republicans for 鈥渟taggering recklessness,鈥� saying the bill would be 鈥渢aking us backward鈥� and undercut efforts to help students recover from the pandemic.
Rep. Bobby Scott, the top Democrat on the House education panel, rejected the bill as 鈥渁 terrible deal for the American people.鈥�
鈥淚 get tired of being lectured by the 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,鈥� Scott said on the House floor Wednesday.
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