A new proposal in Congress would prevent President Joe Biden from canceling student loans.
Here’s what you need to know — and what it means for your student loans.
Five Republican U.S. senators introduced The Stop Reckless Student Loan Actions Act yesterday in Congress. If passed, this legislation would:
- end the current student loan payment pause;
- prohibit the president from canceling student loans due to a national emergency;
- prevent the U.S. Secretary of Education from suspending student loan payments or the accrual of student loan interest for consecutive 90-day periods;
- prohibit the president of Education Secretary from pausing student loan payments or the accrual of student loan interest for any student loan borrower with annual household income more than 400% above the poverty line;
- still allow the president to suspend federal student loan payments temporarily for low- and middle-income student loan borrowers during future national emergencies; and
- if the president or Education Secretary cancels student loans or pauses student loan payments through executive or regulations action, then Congress has the legal authority to disapprove of such action under the Congressional Review Act.
“As Americans continue to return to the workforce more than two years since the pandemic began, it is time for borrowers to resume repayment of student debt obligations,” Sen. John Thune (R-SD), who introduced the legislation, said. “…Any future suspension of federal student loan repayments should be left to Congress, not the Biden administration.”
This legislation may face an uphill battle in the Democrat-controlled Congress. That said, Republicans could gain support from at least moderate and conservative Democrats. While that support may not guarantee passage of this proposed bill, it could help persuade Biden to not enact wide-scale student loan cancellation or to end the student loan payment pause.
Student loan forgiveness: why these senators want to end this student loan relief
Thune, along with Senators Richard Burr (R-NC), Mike Braun (R-IN), Bill Cassidy (R-LA) and Roger Marshall (R-KS) cite several reasons why they want to end this student loan relief, including:
- The Higher Education Relief Opportunities for Students (HEROES) Act of 2003 was intended to help members of the armed services, not all student loan borrowers;
- The executive branch has engaged in an “unilateral payment pause” that has cost $100 billion (the New York Fed estimates that it’s closer to $195 billion);
- The student loan payment pause disproportionately has benefited doctors, who receive “11 times the benefit of bachelor’s degree recipients and 14 times the benefit of associate’s degree recipients”; and
- Student loan borrowers with a bachelor’s degree or higher hold 70% of student loan debt, but this borrower group has an unemployment rate of only 2.2%.
“…Unemployment is not at pandemic levels and a student loan repayment pause benefits those who are high income and able to pay their bills,” Cassidy said. “The administration is spending without congressional approval. That should be considered unconstitutional.”
Student loan relief: will this legislation pass?
Biden has canceled $17 billion of student loans, and there’s speculation that he could seek to enact some wide-scale student loan forgiveness. (No, Biden is not canceling most student loan debt). Senate Majority Leader Chuck Schumer (D-NY) is unlikely to bring this bill to the Senate floor for a vote. That said, this proposed legislation renews the debate about the extent of the president’s and Congress’s respective constitutional powers, particularly under the Separation of Powers Clause of the U.S. Constitution. The limits of presidential authority isn’t solely a Republican issue. For example, Speaker of the House Nancy Pelosi (D-CA) has said that only Congress, and not the president, has the legal authority to enact wide-scale student loan forgiveness.
Temporary student loan relief is slated to end on August 31, 2022. Will Biden extend student loan relief? There are no guarantees on the student loan payment pause or mass student loan forgiveness. It’s best to prepare for your financial future in case Biden doesn’t provide more student loan relief. Start evaluating all your options for student loan repayment. Here are some potential strategies to consider to save money and pay off student loans: