Biden's latest proposals to fix student-loan forgiveness programs 'fail' to solve 'endless borrowing and ballooning college costs,' top Republican lawmaker says

• The Education Department released a list of proposed changes to the student-loan industry.
• Rep. Virginia Foxx criticized the proposals, saying it doesn't solve issues of "endless borrowing."

President Joe Biden's Education Department just released a long list of proposed fixes to the student-loan industry. A top Republican lawmaker says it will only make things worse.

Wednesday's plan includes attempts to improve targeted student-loan forgiveness programs, like the Public Service Loan Forgiveness (PSLF) program and borrower defense to repayment, which provides relief to those defrauded by for-profit schools. These rules are part of the rulemaking process, which can take years, and the next step the department will take is entering a 30-day period in which the public can submit comments on the rules the department put forth.

Top Republican on the House education committee Virginia Foxx isn't pleased with the rules — or the timeline for implementation.

"The Biden administration's proposed regulations on student loans are yet another example of why we need a complete overhaul of the Higher Education Act," Foxx said in a statement. "Allotting lawmakers and stakeholders only 30 days to review 750 pages of regulations with massive significance for students and taxpayers is shameful."

"These proposals not only fail to fix the structural problems in our higher education system that have led to endless borrowing and ballooning college costs, but will make them exponentially worse," Foxx added.

While it's unclear what implementation will look like, it appears the Education Department is planning to tackle surging costs by working to prevent interest capitalization, which is when accrued interest is added to the original loan balance and future interest will grow on a higher amount. Other proposed reforms included increasing access to targeted student-loan forgiveness programs by expanding eligibility and decreasing paperwork, which has blocked people from relief in the past.

The department aims to finalize the rules by November, with implementation no later than July 2023.

But Foxx, and many of her Republican colleagues, have criticized Biden's targeted student-loan forgiveness due to the cost those actions place on taxpayers amid rising inflation. Insider previously reported on the issues inflation brings when it comes to implementing student-loan relief — and even some members of Biden's White House share that fear. As Biden is inching closer to a decision on broad student-loan forgiveness, some of his advisors believe that canceling student debt and then resuming loan payments will balance out potential inflationary effects.

Jared Bernstein, a member of the White House Council of Economic Advisers, previously told The New York Times that "the key economic fact here is that if debt payment restart and debt relief were to occur at roughly the same time, the net inflationary effect should be neutral."

But advocates believe the payment pause, currently set to expire August 31, needs to be extended to allow time for relief to be fully implemented.

"We strongly urge your administration not to threaten the financial security of people with student debt as a tactic to fight inflation," nearly 200 organizations recently wrote to Biden.