U.S. House Education Committee Chair Rep. Virginia Foxx, R-NC, is speaking out against the Biden Administration‘s latest action on student debt forgiveness, arguing that it is “trampling the rule of law.”
Biden’s Student Debt Forgiveness
The U.S. Department of Education recently announced that they will forgive $39 billion worth of student loan debt for over 800,000 borrowers. This decision came after the U.S. Supreme Court struck down the administration’s previous student debt forgiveness plan, stating that it lacked legal authority to forgive student loan debt unilaterally and must seek Congressional approval, The Carolina Journal reported.
Biden’s new student debt forgiveness plan, known as SAVE (Saving on A Valuable Education), aims to “cut payments” for those who owe student loans through income-driven repayment (IDR) plans. The administration argues that the action is an administrative “fix” to correct inaccurate IDR payment amounts. However, Foxx is not convinced and sees it as an attempt to bypass the Supreme Court’s recent decision on loan debt.
Foxx expressed her concern that the Biden administration is encouraging borrowers not to repay their loans and is expecting taxpayers to foot the bill. The $39 billion loan forgiveness has been met with divided opinions, with some experts believing it may withstand legal scrutiny due to its different nature compared to Biden’s previous large-scale debt forgiveness plan.
However, concerns arise regarding the cost of the student debt forgiveness plan, estimated to be nearly $559 billion over the next ten years by the Penn Wharton Budget Model. This figure exceeds the previously projected cost of $276 billion by the Congressional Budget Office (CBO).
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Potential Consequences of Student Debt Forgiveness Policies
Foxx also emphasized the potential consequences of the student debt forgiveness policies, warning that colleges may increase tuition, taxpayers will carry more of the burden of college costs, and students may have less incentive to study diligently.
The $39 billion loan forgiveness is set to take effect this fall, around the same time student loan repayments will resume after a two-year freeze due to the COVID-19 pandemic. As debates on the legality and impact of the student debt forgiveness plan continue, students and taxpayers remain closely watching for further developments in the ongoing issue of student debt forgiveness.
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