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Foxx Outlines Republican Vision for Higher Education Reform

By Maria Carrasco, NASFAA Staff Reporter

As the midterm elections approach, Rep. Virginia Foxx (R-N.C.), ranking member of the House Education and Labor committee, spoke about implementing the Responsible Education Assistance Through Loan (REAL) Reforms Act as a part of a future Higher Education Act (HEA) reauthorization — should her party win the House.

Foxx discussed parts of the REAL Reforms Act at an event with the American Enterprise Institute. She said the legislation is the first part of the GOP's future HEA reauthorization and that Republicans have planned a "vigorous" higher education bill for next year. 

The REAL Reforms Act would, among other things, place caps on the overall amount any borrower would repay on their loans, make a number of adjustments to income-driven repayment (IDR) plans that would offer more targeted relief to borrowers, and give schools the authority to limit loans for populations of borrowers in certain circumstances. The legislation was introduced by Foxx, Elise Stefanik (R-N.Y.), House Republican Conference chair, and Rep. Jim Banks (R-Ind.), Republican Study Committee chairman.

"Despite policy goals of income-driven repayment, this system has left millions of borrowers trapped under a mountain of interest," Foxx said at the event. "Many of these borrowers have done everything right, making their monthly payments and following through on their promise to taxpayers. Yet they find themselves years later making little to no progress on their principal, even after paying back far more than what was originally asked of them. The Republican bill not only ensures this unjust accumulation of interest will not happen for the millions of freshmen borrowing for their first semester this year, but it makes it right for those borrowers who have been wronged."

NASFAA President and CEO Justin Draeger released a statement about the REAL Reforms Act, saying NASFAA is pleased about the thoughtful proposals included in the legislation that would provide targeted support for struggling borrowers, as well as much needed changes to the way the student loan repayment system operates.

"We are, however, alarmed by the proposal to eliminate the Public Service Loan Forgiveness program, which encourages students to pursue careers for the betterment of our country," Draeger said. "While program reform is needed, NASFAA supports PSLF reforms that preserve the intent of the program and ensure its promises can be easily delivered to student borrowers. What's more, eliminating the Grad PLUS program — creating a net effect of lower overall annual and lifetime limits on borrowing for graduate and professional students — would significantly and negatively impact graduate and professional students." 

Earlier this week, NASFAA sent a letter to the cosponsors of the legislation to offer feedback on the bill, share NASFAA's recent loan reform efforts, and call for collaboration on drafting legislation for student loan reform to benefit both students and taxpayers. The letter noted areas of the bill that have promise, such as eliminating interest capitalization and capping the amount borrowers must repay under income-driven repayment plans, as well as where the bill falls short, including eliminating the Grad PLUS and Public Service Loan Forgiveness (PSLF) programs.

Foxx touted "Workforce Pell Grants," which are part of the REAL Reforms Act, during the conversation at AEI. The grants would be limited to students enrolled in between 150 and 600 clock hours offered over a period of eight to 15 weeks in programs that provide education aligned with in-demand industry sectors or occupations. 

"We want Workforce Pell as well as every other program and postsecondary education to prove its worth," Foxx said. "We want there to be high quality programs that are accountable. And we will work that into our proposals as we go through proposing the HEA."

She criticized Biden's proposal to double the maximum Pell Grant, saying if the administration is going to increase financial aid, there needs to be "increased accountability" and she's not sure if doubling Pell is the answer. 

Foxx also spoke about Biden's student loan relief announcement, which she said is delivering "free college for a select few." Foxx said that Biden's student loan debt relief would charge  every American taxpayer approximately $3,000 "to pay off the debt that someone else willingly took on." The University of Pennsylvania's Penn Wharton Budget Model estimated the total cost to taxpayers would fall between $469 billion and $519 billion over 10 years. 

"This is not responsible policy, nor does it provide targeted relief for those harmed by the very programs Democrats themselves created," Foxx said. "This dishonorable debt transfer demonstrates that so many of us believe the federal government should respect its constitutional role and leave education policy to parents and states. The government's incompetence in creating this mess is a clear example of the harms that come from abandoning federalism."

Foxx added that Republicans are "doing everything we can" to stop Biden's relief plan.

"We hope that there will be ways to stop it," Foxx said. "We're looking for ways to stop it. And we're open to suggestions for ways to stop it. And right now, we don't know exactly what's going to happen, but we do believe there will be actions that will come forward and that will be able to stop it."

 

Publication Date: 9/15/2022


David S | 9/15/2022 10:34:36 AM

Darren, can you explain how if a first year student can borrow no more than $5500 and a private school's COA might be as high as $80K, and that $5500 has been in place for years and will likely remain right there for more years to follow, but the COA is going to increase each year, the "inflated, out of control cost of education in this country perpetuated by the student loan system created by our Government?" No school - even if they wanted to - can say "we're increasing our tuition because all of our students can borrow more money every year," because students simply can't. The Bennett Hypothesis is very easy to disprove.

Darren C | 9/15/2022 8:49:54 AM

One of the goals of this reform is to "place caps on the overall amount any borrower would repay on their loans". On all sides of politics they want to make loan debt disappear in some way. We know that people pick sides though with Repubs and Dems and get emotionally invested in that. However, making student loan debt disappear is not a real solution to a deeper systemic issue.

Instead of capping what people have to pay back or forgiving $10,000 in debt for no good reason, lets start talking about the inflated, out of control cost of education in this country perpetuated by the student loan system created by our Government. Start capping the cost of education to a degree that all people will be reasonably expected to pay it back. Until cost of education discussions start happening, it's all smoke and mirrors.

James C | 9/15/2022 8:26:41 AM

So the Republicans would offer relief to borrowers through forgiving interest but Biden forgiving principal is bad? In both scenarios loan debt is forgiven. I also think these estimates of how much Biden's loan forgiveness is going to cost is overblown. Some of this debt is from borrowers who would likely default and not pay back the loan anyway. We know borrowers who drop out, even with low loan debt amounts, are the borrowers most likely to never pay back the loans..

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