WASHINGTON – Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) today highlighted the systemic issues with the financing of postsecondary education as the Congressional Budget Office (CBO) released a report on student loan repayment. Chairwoman Foxx requested that CBO study the issue in June of 2020.
“If there’s one takeaway from the CBO’s findings, it’s that the current system is broken. Students sign up for enormous debt without fully understanding the consequences, colleges and universities have no incentive to rein in costs or deliver outcomes, and yet the taxpayer ends up assuming all of the risk. It’s time to pass the College Cost Reduction Act and actually fix the problem,”said Chairwoman Foxx.
In the decade prior to the pandemic, CBO found that:
Fifty-seven percent of loans had higher balances than when they entered repayment six years prior;
Just 38 percent of borrowers were making monthly payments greater than $10; and
Borrowers with the worst repayment outcomes were concentrated at low-value schools where most students never graduate.
BACKGROUND:
In 2020, Chairwoman Foxx sent a letter to Phillip Swagel, Director of the CBO, to request “that CBO examine the repayment of federal student loans, both by the characteristics of the student and of the school.” Foxx stressed the importance of understanding the evolution of student loan balances relative to the initial amount borrowed and the indicators that could predict the likelihood of repayment long term.
Since then, Foxx has championed her bill, the College Cost Reduction Act, which includes meaningful bipartisan reforms to lower college costs for students and families. The bill makes three key reforms:
Permanently fixes our broken student loan program by streamlining loan options, eliminating unnecessary fees, and providing a real safety net for borrowers offering targeted relief for those who need it instead of blanket bailouts for those who don’t;
Ensures information about costs and return on investment is clear, accessible, and personalized for prospective students and families; and
Holds institutions financially responsible for overpriced degrees that leave students with unaffordable debt, and funds colleges based on student outcomes and lifts excessive regulations that further increase costs to families.
