After Biden's student-loan forgiveness, Democrats move to 'improve the lives' of borrowers with a bill to make debt easier to pay off in the future

• Democrats introduced a bill to make student loans easier to pay off after Biden's debt relief.
• The bill would improve PSLF while lowering interest rates on new student loans.

President Joe Biden may have enacted broad student-loan forgiveness — but Democrats aren't stopping there.

On Thursday, Chair of the House education committee Bobby Scott and Subcommittee Chair Frederica Wilson introduced the Lowering Obstacles to Achievement Now (LOAN) Act, intended to make student loans easier to pay off once the pandemic pause on debt payments expires in January 2023. According to the press release, this legislation builds on Biden's August announcement of up to $20,000 in student-loan forgiveness for federal borrowers, and it will further "address the root causes of the student debt crisis, including the declining value of the Pell Grant and our flawed student loan system."

"The LOAN Act is the next step we must take to confront the student debt crisis," Scott said in a statement.

"Building off President Biden's actions, this legislation would lower the cost of college for students and families by doubling the Pell Grant, improving the Public Service Loan Forgiveness program, lowering interest rates, and making other critical reforms to streamline our student loan system," he added. "Simply put, by making loans cheaper to take out and easier to pay off, the LOAN Act will help improve the lives of student loan borrowers—both now and in the future."

Specifically, according to a fact sheet, the Democrats' bill would:

• Double the Pell Grant by raising the maximum award over five years to $13,000
• Improve the Public Service Loan Forgiveness (PSLF) program by shortening the timeframe to receive forgiveness (currently set at ten years) and codifying the current waiver expiring on October 31, which would allow past payments to count toward forgiveness progress
• Make loans cheaper by eliminating interest capitalization on loans, including after periods of deferment and forbearance, and creating a safety net for "vulnerable" borrowers
• And lower interest rates by tying the rates for all new federal loans to the 10-year Treasury note while ensuring no new loan will have an interest rate above 5%, and allow both federal and private borrowers to access the lower rates.

Insider has previously reported on the debilitating nature high interest rates can have on borrowers' abilities to pay off their loans, often forcing them to pay off an amount of debt much larger than what they originally borrowed. The bill would likely be significant in addressing that issue, along with delivering on other Democratic lawmakers' push to make the benefits of the PSLF waiver permanent and deliver relief to government and nonprofit workers in the program.

While this legislation will likely receive support from other Democrats, Republican pushback can be expected. Before Biden's announcement, three GOP lawmakers introduced the Responsible Education Assistance Through Loan, or REAL, Reforms Act, which would block broad student-loan forgiveness while preventing interest capitalization and capping borrowing for graduate school.

During a recent event hosted by conservative think tank American Enterprise Institute, Rep. Virginia Foxx — one of the cosponsors of that bill — said the REAL Reforms Act is a viable solution to counter Biden's debt relief, which is "a slap in the face to every hardworking taxpayer in this country, including every one of us in this room who is deeply concerned about the direction of postsecondary education and are willing to work across the aisle to fix it."

But Democrats are continuing to laud the loan forgiveness, and Speaker of the House Nancy Pelosi is on board with taking the relief further.

"Building on President Biden's historic student debt relief, this legislation will help widen the path to prosperity: giving graduates more room to breathe and empowering future students to pursue their dreams," Pelosi said in a statement on Scott's bill. "As we continue our fight to put People Over Politics, House Democrats will never relent in ensuring that every American can thrive in the 21st Century."