Student loan cancellation focused on Capitol Hill today
Canceling student loans became the primary focus today during hearings on Capitol Hill.
Here’s what you need to know.
At a Senate Judiciary Committee hearing today, senators discussed a new bipartisan student loan bill that would make it easier for more student loan borrowers to get credit. cancellation of their student loan in the event of bankruptcy. However, the initial focus of the hearing turned to the large-scale cancellation of student loans. Senior committee member Senator Chuck Grassley (R-IA) addressed the issue of student loan cancellation, its impact on student loan borrowers, and the potential reasons for high US student debt. Here is what he said:
Student loan cancellation: why student loans are broken
Grassley said the federal student loan system is broken and it’s hurting both student loan borrowers and taxpayers. He referred to various student loan cancellation proposals, whether it was $ 10,000 or $ 50,000, for example, for each student loan borrower. Grassley noted that the amount of student debt has doubled over the past 10 years, with the federal government now holding 92% of all outstanding student debt. Why? According to Grassley, student loan debt has increased due to rising tuition fees, implying that colleges and universities have directly led to more student loan borrowing. Grassley says we need to fix the underlying problem with student loans.
Here’s what else Grassley said about a flawed student loan system:
- “Federal student loans are available regardless of who can pay and beyond what is needed. “
- “Colleges have unlimited funding, which does not encourage colleges to cut costs. ”
- Grassley noted that some senators want to hold colleges and universities more accountable for student outcomes such as placement, but this is difficult in practice because “different schools have different standards” and that still may not solve the problem. .
- Grassley also didn’t address whether canceling student loans would boost the economy, although recent research indicates that canceling student loans isn’t the best financial stimulus.
- Grassley is a strong supporter of information disclosure so that students better understand college costs. He introduced three separate bills to Congress to provide students with better information about finding colleges and understanding the full cost of financial aid.
- Grassley believes this will lead to “more transparency, more informed choices and more price competition between colleges.”
- More importantly, Grassley says that greater transparency will limit borrowing to what every student loan borrower can afford.
Student loan cancellation: Grassley says student loan forgiveness is “regressive”
Grassley turned to student loan cancellation as a policy. Discussing the notion of large-scale student loan cancellation, Grassley said:
- “Canceling the student loan is a questionable idea.”
- “Canceling student loans would be a very regressive idea and would massively benefit the rich at the expense of others.”
- “We shouldn’t ask those who didn’t go to college to foot the bill for those who did.”
- Grassley says President Joe Biden does not have the legal authority to write off student loan debt.
- Grassley quoted House Speaker Nancy Pelosi (D-CA) who also said last week that Biden did not have the legal authority to cancel a student loan without express permission from Congress. Quoting Pelosi, Grassley said: “The president can’t do it. So it’s not even a discussion.
- “We have to take into account moral hazard and the cost to taxpayers.
- Grassley said any reauthorization of the Higher Education Act must look at the factors that lead to high levels of student loan debt and high cost levels, and then focus on how to deal with each of them.
Student loans: why we have high student debt
Grassley went on to explain why America has such high student debt:
- Grassley says that “we have a lot of bad federal policies.”
- “We have a federal policy that encourages young people to take on more debt than they should.”
- “When you have banks making loans, there is more to considering how much loan you should take than what a direct government loan gives.”
- “We have a federal policy that encourages our universities to tell students maximum amount they can borrow and, as a result, they borrow more than they should.
- “We shouldn’t be encouraging people to borrow more than they need. “
Student loans: higher education is down
“The incentives in higher education are severely shattered,” Sen. Jon Cornyn (R-TX) said at the hearing. Cornyn added that teens are expected to borrow tens of thousands of dollars to get a good job only to find that upon graduation jobs are limited or their work does not match their field of work. studies, which creates a lag in the repayment of student loans. Cornyn also said:
- “Student loans can pave the way for a better life. “
- Cornyn doesn’t want to stop a student borrower from borrowing a student loan.
- “Schools sell a product for a price, and that price has to match what these students get for it. “
- “Some schools have taken advantage of the US taxpayer.”
Biden or Congress did not enact large-scale student loan cancellations. That said, Biden has canceled $ 3 billion in student loans since becoming president. It is possible that Congress will pass bipartisan legislation to make it easier for student loan borrowers to cancel student loans in bankruptcy. However, it won’t be the same as full-scale student loan cancellation. If you have student loans, make sure you have a student loan repayment game plan. Here are some popular options to help you save money: