Biden's student-loan forgiveness plans are 'a Titanic heading straight for an iceberg,' a top Republican lawmaker says
- Rep. Virginia Foxx criticized Biden's student-debt relief plans on the House floor on Tuesday.
- She said his plans to reform income-driven repayment plans would lead to "over-borrowing."
A top Republican lawmaker is pleased President Joe Biden's broad student-loan forgiveness plan is held up in court — but she wants to see his other proposed reforms to the industry struck down, as well.
On Tuesday, Rep. Virginia Foxx — the top Republican lawmaker on the House education committee – took to the House floor to criticize not only Biden's plan to forgive up to $20,000 in student debt for federal borrowers, but also his plans to reform targeted loan forgiveness and repayment programs.
"President Biden is turning the federal student loan program into a Titanic heading straight for an iceberg," Foxx said. "The Biden administration's changes to these programs will make a bad system worse."
After Biden announced his broad debt relief at the end of August, a number of conservative lawsuits arose seeking to block the plan, and two of those lawsuits are currently in the hands of the Supreme Court, which will hear arguments to the cases in February. Foxx has expressed support for those lawsuits, and while Biden extended the student-loan payment pause in response to the legal challenges, millions of federal borrowers will not see relief anytime soon.
But Biden's plans to reform income-driven repayment plans by lowering monthly payments for borrowers are not held up in court, and they're scheduled for implementation in the summer. Specifically, the changes would require borrowers to pay no more than 5% their discretionary income monthly on their undergraduate student loans — down from the current 10% — which Foxx said is "certainly not the plan Congress wrote and passed."
"These changes will have long term consequences because they create perverse incentives for over-borrowing," she said. "Why would students make smart financial decisions when they know Uncle Joe, or another administration, will pay off their loans?"
There is no indication yet that the reforms would lead to over-borrowing, and following recent reports that found income-driven repayment plans were failing borrowers because of issues with paperwork and tracking payment progress, many Democratic lawmakers and the Biden administration agreed a new plan was warranted.
While Foxx introduced legislation to block Biden from implementing new reforms, including ending the promise of loan forgiveness after at least 20 years of repayment through income-driven repayment plans and capping borrowing for graduate students, Biden's administration is moving ahead with targeted relief as borrowers wait for the Supreme Court to make an ultimate ruling on the broad loan forgiveness.