Ranking Member Cassidy on Senate Democrats Blocking Effort to Overturn Biden’s Newest Student Loan Scheme
WASHINGTON – Today, U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, released a statement following U.S. Senate Democrats voting against his Congressional Review Act (CRA) to overturn President Biden’s new income-driven repayment (IDR) rule. This rule will result in a majority of bachelor’s degree student loan borrowers not having to pay back even the principal on their loans, costing taxpayers as much as $559 billion. On September 5th, Cassidy introduced the CRA resolution with U.S. Senators John Thune (R-SD) and John Cornyn (R-TX). The final vote count was 49 to 50.
“Just like Biden’s original student debt cancellation scheme, this IDR rule does not ‘forgive’ debt. It transfers the burden of $559 billion in federal student loans to the 87% of Americans who chose not to go to college, paid their way, or already responsibly paid off their loans,” said Dr. Cassidy. “The president’s student loan policies are not a fix — they are merely a Band-Aid that forces taxpayers to shoulder the responsibility of paying off someone else’s debt.”
“I have been sounding the alarm for months on President Biden’s various budget-busting student loan debt bailouts that would force 87 percent of Americans who do not have student loan debt to bear the costs of the 13 percent of Americans who do,” said Senator Thune. “This shouldn’t be a partisan issue, and I’m extremely disappointed that my colleagues on the other side of the aisle chose to force hardworking Americans to foot the bill for other people’s student loans.”
“The Biden administration’s latest election-year student loan stunt forces hardworking Texans to foot the bill for hundreds of billions of dollars in other people’s student loans,” said Senator Cornyn. “This resolution would have stopped this indefensible debt scheme in its tracks, and I’m disappointed Senate Democrats refused to shield Americans from an unfair financial burden.”
Earlier today, Cassidy spoke on the Senate floor about his CRA resolution that overturns Biden’s new student debt transfer scheme.
Cassidy, Thune, and Cornyn are joined by U.S. Senators John Barrasso (R-WY), Marsha Blackburn (R-TN), Mike Braun (R-IN), Ted Budd (R-NC), Shelley Moore Capito (R-WV), Susan Collins (R-ME), Tom Cotton (R-AR), Kevin Cramer (R-ND), Mike Crapo (R-ID), Steve Daines (R-MT), Joni Ernst (R-IA), Deb Fischer (R-NE), Lindsey Graham (R-SC), Chuck Grassley (R-IA), Bill Hagerty (R-TN), Cindy Hyde-Smith (R-MS), Ron Johnson (R-WI), James Lankford (R-OK), Mike Lee (R-UT), Cynthia Lummis (R-WY), Joe Manchin (D-WV), Roger Marshall (R-KS), Jerry Moran (R-KS), Pete Ricketts (R-NE), James Risch (R-ID), Mitt Romney (R-UT), Mike Rounds (R-SD), Marco Rubio (R-FL), Eric Schmitt (R-MO), Tim Scott (R-SC), Thom Tillis (R-NC), Tommy Tuberville (R-AL), Todd Young (R-IN), Roger Wicker (R-MS) in cosponsoring this resolution.
U.S. Representative Lisa McClain (R-MI) introduced the companion CRA resolution in the U.S. House of Representatives.
- Reduces payments to 5%, from 10%, of borrowers’ discretionary income monthly on undergraduate loans [(Total Income)-(Expenses)=(Discretionary Income)].
- Raises the assumed amount of expenses to 225% of the Federal Poverty Line from 150%, increasing likelihood that a borrower would have no discretionary income and an expected loan payment of zero.
- An individual would need an income above $32,805 before being expected to pay anything.
- A family of four would need to have total income over $67,500 in 2023 (roughly equal to the median income of all households in the US) before being expected to pay anything.
- Covers unpaid monthly interest for loan payments less than the full amount, including zero payments, preventing the loan balance from growing.?
- Forgives loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less. Adds one year for every additional $1,000, capping at 20 years for undergrad, 25 years for graduate loans.
- Lacks any guardrails to prevent households making over $250,000 a year from collecting taxpayer-funded assistance if they file taxes separately.
Encourages taking on debt:
- Under this change to an originally targeted program, 91% of new student debt would be eligible for reduced payments and eventual transfer to taxpayers.
- On average, only $0.50 on every $1 borrowedwill be repaid to taxpayers.
- This rule will turn the federal student loan financing system into a poorly targeted taxpayer-funded grant program.
- Even those who can fully afford their education would be leaving money on the table by not taking out loans they could expect to eventually be paid off by taxpayers.
- The Penn Wharton Budget Model found that the IDR rule will incentivize community college students to collectively borrow billions more dollars per year due to the expectation that they will not have to pay the debt.
On June 14th, Cassidy and U.S. Senators Chuck Grassley (R-IA), John Cornyn (R-TX), Tommy Tuberville (R-AL), and Tim Scott (R-SC) unveiled their groundbreaking Lowering Education Costs and Debt Act, a package of five bills aimed at directly addressing the issues driving the skyrocketing cost of higher education and the increasing amounts of debt students take on to attend school. Later that day, the senators held a press conference to discuss the legislation.
Recently, Cassidy headlined an event hosted by the American Enterprise Institute (AEI) to discuss his student loan reform package that addresses the drivers of skyrocketing higher education costs and the increasing student debt burden.
Click here for a one-pager on the IDR rule.
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