Ranking Member Cassidy, Thune, Cornyn, Colleagues Introduce CRA to Overturn Biden’s Newest Student Loan Scheme

WASHINGTON – Today, U.S. Senators Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, John Thune (R-SD), John Cornyn (R-TX), and 14 Republican colleagues introduced a Congressional Review Act (CRA) resolution to overturn President Biden’s reckless income-driven repayment (IDR) rule, which 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 June 30^th, President Biden announced the final IDR rule following the U.S. Supreme Court?ruling to block his illegal student debt scheme that attempted to transfer hundreds of billions of dollars in student loan debt onto taxpayers.  

“Once again, Biden’s newest student loan scheme only shifts the burden from those who chose to take out loans to those who decided not to go to college, paid their way, or already responsibly paid off their loans,” said Dr. Cassidy. “Our resolution protects the 87 percent of Americans who don’t have student debt and will be forced to shoulder the burden of the President’s irresponsible and unfair policy.” 

“Instead of creating a real plan to lower the costs of higher education, President Biden continues to propose budget-busting student loan 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. “It’s incredibly unfair to those who never incurred student debt because they didn’t attend college in the first place or because they either worked their way through school or their family pinched pennies and planned for higher education. I’m proud to join my colleagues in introducing this resolution that would overturn President Biden’s latest misguided and fiscally irresponsible student loan bailout.”   

“The Biden administration’s latest election-year student loan stunt would force hardworking Texans to foot the bill for hundreds of billions of dollars in other people’s student loans,” said Senator Cornyn. “This resolution would stop this indefensible debt scheme in its tracks and shield Americans from an unfair financial burden."

Cassidy, Thune, and Cornyn are joined by U.S. Senators John Barrasso (R-WY),  Mike Braun (R-IN), Mike Crapo (R-ID), Steve Daines (R-MT), Joni Ernst (R-IA), Chuck Grassley (R-IA), Cindy Hyde-Smith (R-MS), Ron Johnson (R-WI), James Lankford (R-OK), Cynthia Lummis (R-WY), Roger Marshall (R-KS), James Risch (R-ID), Tim Scott (R-SC), and Thom Tillis (R-NC). 

U.S. Representative Lisa McClain (R-MI) introduced the companion CRA resolution in the U.S. House of Representatives. 

The IDR rule:  

• 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 borrowed will 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 14^th, 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. 

Click here for a one-pager on the IDR rule. 

“Rather than seriously address the important issue of college affordability, President Biden’s income-driven repayment (IDR) plan would spend hundreds of billions of dollars on arbitrary subsidies that will boost tuitions, increase borrowing, bolster low-quality institutions, support well-off doctors and lawyers, and expand the national debt. We commend the Senators working to rein in this costly uniliteral executive action and we encourage policymakers to work together on a responsible plan to truly improve the quality and affordability of higher education,” said Maya MacGuineas, President, Committee for a Responsible Federal Budget. 

"President Biden is ignoring the will of the Supreme Court and Congress by implementing a de facto student loan bailout through his Income-Driven Repayment Plan that reduces payments for many borrowers to zero. In addition to flagrant executive overreach, this move is also bad policy. It allows colleges to escape accountability for their role in driving the student loan crisis by overcharging students. JCN commends Sens. Cassidy and Thune for fighting to block this move through the Congressional Review Act. Only by tearing up Biden's blank check to colleges to continue their price gouging can we actually solve this problem,” said Alfredo Ortiz, President & CEO of Job Creators Network. 

“DFI thanks Ranking Member Bill Cassidy of the Senate HELP Committee, as well as CRA resolution sponsors Senator John Cornyn and Senator John Thune, for working to overturn President Biden’s recklessly expensive Income-Driven Repayment regulations. The Department of Education’s half-trillion dollar regulatory boondoggle will only impose more complexity on borrowers, accelerate the rising cost of college, and turn the federal student loan program into a de facto grant program. We appreciate this important effort to restore fiscal sanity to higher education financing,” said Bob Eitel, President & Co-Founder, Defense of Freedom Institute. 

“President Biden’s income-driven repayment scheme is just a backdoor attempt at forcing through his reckless and unfair student loan amnesty campaign promise after the Supreme Court struck down his administration’s first attempt. Independent analysis estimates that this plan would cost taxpayers at least $330 billion, while the implicit promise of future loan amnesty will incentivize universities to further increase the cost of higher education. Additionally, it represents a massive wealth transfer from responsible Americans to the wealthy elite. Congress should immediately pass Senators Cassidy and Cornyn’s Congressional Review Act resolution of disapproval to block the administration’s blatant attempt to payout a favored constituency,” said Ryan Walker, Acting Executive Director, Heritage Action. 

“The Biden administration uses every stretch of the imagination to expand its statutory authority and forgive as much student loan debt as possible through sweeping changes to income-driven repayment. Americans are already struggling to survive in Biden’s high inflation economy – taxpayers simply cannot afford to take on this additional debt. Congress must intervene now to rein in this administration’s unconstitutional attempt to spend hundreds of billions in taxpayer dollars not appropriated by Congress,” said Brent Gardner, Chief Government Affairs Officer, Americans for Prosperity. 

“The Biden administration's unilateral expansion of income-driven repayment plans could end up costing more than the one-time loan cancellation scheme which the Supreme Court struck down as an unlawful overextension of the president's authority. Worse, the IDR expansion will encourage colleges to raise tuition and make debt a more central feature of the higher education finance system. IDR has a critical, limited role as safety net, but the Biden administration is turning it into just another student loan giveaway,” said Preston Cooper, Senior Fellow, Foundation for Research on Equal Opportunity. 

“President Biden’s latest unilateral action on student loans would sidestep Congress to transfer $475 billion of debt to taxpayers. The Congressional Review Act resolution introduced by Senators Bill Cassidy (R-LA), John Thune (R-SD), and John Cornyn (R-TX) would provide regulatory relief, rein in the executive branch, and, especially important in this case, reassert the power of the purse,” said Demian Brady, Vice President of Research, National Taxpayers Union Foundation. 

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