The Senate Banking Committee recently delved into the topic of student loan debt in a hearing focused on examining the practices of servicers and their handling of debt forgiveness programs. Yet the conversation underscored just how far apart Democrats and Republicans are on policy solutions aimed at alleviating ballooning student debt levels.
Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking, Housing and Urban Affairs committee, largely focused on issues stemming from income-driven repayment plans and the Public Service Loan Forgiveness (PSLF) program.
“Too many of the debt-forgiveness programs that students are told they’ll be able to count on are mismanaged — or not really managed at all — by student loan servicers,” Brown said, citing recent reports on administrative failures related to those two programs.
Brown took issue with how the previous administration conducted oversight of the servicing industry and how the lack of supervision continues to create adverse outcomes for students.
“We created this program to protect people from being trapped in debt forever. Clearly it isn’t working,” Brown said.
Sen. Pat Toomey (R-Pa.) used his remarks to highlight how student loan debt forgiveness would serve as a benefit for wealthy individuals at the expense of taxpayers for an expense that is voluntarily incurred.
“Congress created the student loan program with the same expectations as any other loan program: the loans would be paid back,” Toomey said.
While members remained at odds over the available policy solutions, witnesses also urged Congress to take a role in addressing other issues created by the federal student loan landscape.
“The student loan system itself, created by Congress in a long evolution of well-intended but poorly thought out programs and patches, is a byzantine mess that is inscrutable to borrowers, servicers, and quite possibly ED itself,” said Neal McCluskey, the director of the Cato Institute’s Center for Educational Freedom. “It features a dizzying array of loans and repayment plans, often festooned in arcane lending terms, the sheer volume of which alone is a great deal to wrap one’s head around.”
Publication Date: 5/10/2022