Congressional Republicans unveiled legislation Thursday that would substantially reform the federal student loan program as President Joe Biden weighs whether or not to issue expansive student loan forgiveness.
The Responsible Education Assistance through Loan Reforms Act, or REAL Reforms Act, was introduced Thursday by Reps. Virginia Foxx (R-NC), Elise Stefanik (R-NY), and Jim Banks (R-IN), and would end the pause of student loan repayments while capping interest accumulation to 10 years for borrowers who consistently make payments.
The bill would also phase out the Public Service Loan Forgiveness program, which offers student loan forgiveness to borrowers who work in certain public sector jobs and have made consistent payments for 10 years. Other provisions include prohibiting the Department of Education from issuing regulations that increase the cost of the student loan program without congressional approval and provides defaulted borrowers an opportunity to “rehabilitate their loans” and begin repayment again.
Colleges and universities would also have the ability to lower borrower limits for students to “protect students from taking out debt they cannot afford to pay back.”
“Our reforms are fiscally responsible, practical solutions to help students and borrowers,” the bill sponsors said. “This bill provides targeted relief for borrowers in the greatest need and helps Americans who have been excluded from postsecondary education access high-quality short-term programs. This will allow individuals to gain quickly the skills needed to fill in-demand jobs. It rejects broad student loan forgiveness for those earning six-figure salaries and curtails the Department of Education’s ability to unilaterally forgive debts.”
While the majority of the bill curtails the federal student loan program, it also would allow Pell grants to be used for career-focused programs including trades and apprenticeships.
The legislation comes as Biden reportedly plans to extend the pause on federal student loan payments again that was first put in place by the Trump administration in March 2020 in the early days of the pandemic. The pause is currently set to expire on Aug. 31.
Liberal activists and Democratic politicians have repeatedly called on Biden to issue blanket student loan forgiveness, which the administration has hinted is a path it may pursue. Plans reportedly under consideration include a $10,000 forgiveness for borrowers making less than $125,000 a year.
The sponsors of the REAL Reform Act see their bill as a direct contrast to loan forgiveness proposals.
“Unlike Democrats’ mass student loan forgiveness scheme, these reforms provide targeted relief to borrowers who need it the most and recognize that not every career path requires a baccalaureate degree,” the bill sponsors said.
