U.S. Senator Mitt Romney (R-UT) joined his Senate Republican colleagues, led by Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, in introducing 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 30th, 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.
“I’m proud to join my colleagues in introducing this resolution to overturn the Biden Administration’s latest attempt to cancel student loan debt,” Senator Romney said. “Not only is the Administration’s latest move unfair to those who already repaid their loans or decided to pursue alternative education paths, but it would also increase inflation and contribute to our $32 trillion national debt.”
“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.”
Also cosponsoring the CRA include Senators John Thune (R-SD), John Cornyn (R-TX), 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).
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.
Click here for a one-pager on the IDR rule.
