December 5, 2023

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Diving Overview:

  • Republicans on the House Subcommittee on Higher Education and Workforce Development on Thursday attacked the Biden administration’s plans to overhaul the federal student loan system, reiterating conservative arguments that the initiatives are nothing more than government handouts that would not lower college costs.
  • Topics such as the president’s proposals to forgive large amounts of student loans and regulatory overhaul of the income-based repayment model dominated the debate during Thursday’s subcommittee hearing. Democrats on the panel argued that such programs would ease the financial burden of the most disadvantaged borrowers.
  • But there were flashes of partisanship when the discussion turned to holding colleges directly responsible for unmanageable amounts of debt and inflated student costs.

Diving statistics:

President Joe Biden’s education department has prioritized overhauling the beleaguered student loan system, which has helped grow the national debt to about $1.7 trillion.

A program that attracted the most attention is canceling massive amounts of student debt — up to $20,000 for borrowers who earn $125,000 or less for a year. The plan is on hold because a federal court ruling temporarily blocked it. His now in consideration The U.S. Supreme Court and pundits expect the conservative majority to declare the plan illegal.

While the program may be repealed, that didn’t stop House Republicans from taking on it during Thursday’s hearing.

Several Republicans suggested the debt relief measure, announced in August, was a political ploy to boost Democrats’ chances ahead of last year’s election. Other conservatives took aim at what they saw as administrative bloat at colleges, with rising tuition paying for officials’ salaries rather than opportunities for students.

Republicans they proposed legislation it would cap loan amounts for graduate students and eliminate the Public Service Loan Forgiveness, or PSLF, program that forgives the debt of government and service workers after a set number of payments. Meanwhile, Democrats presented an alternative proposal invest more in the Pell Grant program, the primary vehicle for federal student aid, as well as updates to PSLF.

Carlo Salerno, an education economist, told the panel that many of the new higher ed costs are coming from complex services that colleges have put in place — more counselors, for example. Some of these services, especially at community colleges, focus on students who might otherwise stop.

Salerno said colleges need a “carrot and a whip” to push them to cut costs. He also claimed that some of the actions of the Biden administration, such as the continued freeze on student repayments and others delayed simplification z Free Application for Federal Student Aid, or FAFSA, are not fair to borrowers or financial aid administrators.

Another speaker predicted that if the loan forgiveness measure continued, the economic ripples that followed would trigger further inflation. Colleges would also be incentivized to continue raising tuition, said Marc Goldwein, senior vice president and chief policy officer of the Committee for a Responsible Federal Budget, a nonpartisan think tank.

There has been no evidence that colleges have raised tuition in response to loan forgiveness.

While Democrats and Republicans have not directly agreed on a program that would hold colleges more financially accountable for burdensome loans and costs, lawmakers on both sides of the aisle have said they want more oversight in the area.

Management was also interested in this. The Ministry of Education has this planned make a list of poorly performing colleges that would be made public, partly as a shaming tactic.

“Who benefits from this debt debacle that has come in recent decades?” said Rep. Burgess Owens, Republican of Utah and chairman of the subcommittee. “The only ones I really see the benefits to are these colleges that have no risk, no skin in the game, they get paid no matter what happens.”

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