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