President Biden is Sinking the Federal Student Loan System
WASHINGTON, D.C., December 13, 2022
Today, Education and Labor Committee Republican Leader Virginia Foxx (R-NC) spoke on the House floor to warn the American people about the catastrophic consequences of President Biden’s unilateral changes to the federal student loan programs.
Republican Leader Foxx’s Remarks:
“President Biden is turning the federal student loan program into a Titanic heading straight for an iceberg. The Biden administration’s changes to these programs will make a bad system worse.
“For starters, President Biden’s sixth extension of the student loan repayment pause brings the total cost of this unjustifiable policy to $195 billion. This is foolish by every measure.
“Most college-educated workers were not the ones to lose their jobs during the pandemic and were able to adjust to flexible work arrangements, so why are they getting special treatment from the Biden administration? Would it be fair to force student loan borrowers to pay off the car and mortgage loans of the millions of blue-collar Americans who lost their jobs because of forced economic shutdowns? The answer is a resounding no.
“To add insult to injury, President Biden is falsely promising a $400 billion bailout knowing full well this illegal, disgraceful action will likely get struck down in court. Using the livelihoods of 40 million borrowers to score political points at the expense of hardworking taxpayers and the next generation of students is politics at its worst.
“President Biden’s use of the executive pen to stab taxpayers in the back doesn’t end there. Since taking office, President Biden has been canceling massive amounts of loans under the guise of ‘fixing’ broken programs—the very programs Democrats themselves created, including nearly $50 billion through the administration’s illegal waivers. This is a blatant disregard for the rule of law. Our student loan system already operates in the red, and these changes will ensure it costs taxpayers even more.
“Yet, it is only the tip of the iceberg.
“Indeed, the Biden administration’s new Income-Driven Repayment (IDR) plan will turn federal student loans into untargeted grants costing taxpayers a fortune in the process. Because President Biden couldn’t get his radical agenda through Congress, he is dismantling the federal student loan program and pushing Democrat’s ‘free’ college plan by executive fiat.
“Between slashing payments for high-income graduate students to expanding the number of individuals who will receive forgiveness, economists and policy experts agree that the average student loan borrower will pay roughly half of what he or she owes if this plan is enacted. This is not what taxpayers signed up for when the program was created, and it is certainly not the plan Congress wrote and passed.
“These changes will have long term consequences because they create perverse incentives for over-borrowing. Why would students make smart financial decisions when they know Uncle Joe, or another administration, will pay off their loans? Instead of solving the problem for all borrowers, President Biden is sticking future borrowers in a ship with cracks in the hull.
“These foolhardy changes will accelerate tuition inflation. With taxpayer-subsidized tuition, colleges and universities will have no incentives to keep costs down. It will also turn more postsecondary institutions into degree mills. The only thing loan forgiveness does is encourage colleges and universities to offer even more degree programs they know do not pay off once students enter the workforce.
“Our country needs reforms that can right the ship, not sink it even deeper into a fiscal abyss. Republicans are proposing commonsense solutions that will make the federal student loan program seaworthy. The REAL Reforms Act provides targeted relief for those that need it most instead of stealing from taxpayers to provide ineffective and expensive bailouts. This legislation also provides practical solutions for the underlying problems plaguing higher education. These are the kinds of policies we need—policies that will make our federal student loan program capable of serving borrowers without throwing taxpayers overboard.”