Advocates Rally Against GOP’s Move to Overturn Student Loan Forgiveness

House Republican leaders introduced the College Cost Reduction Act (CCRA) in January 2024. This new legislation aims to repeal core elements of President Biden’s student debt relief programs, including student loan forgiveness and income-driven repayment (IDR). 

GOP leaders described the bill as a necessary package of reforms to make college more affordable and simplify the federal student loan system for borrowers.

“The College Cost Reduction Act will provide much-needed relief for countless students and families who have been continually charged exorbitant tuition for degrees without worthwhile economic benefit,” said House Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) in a statement last week. 

Students and families deserve better than the current dysfunctional postsecondary system…

Virginia Foxx (R-NC)

“It’s the first bill in many years that implements substantive reforms to postsecondary education in the form of increased transparency, accountability, and most importantly, affordability. Students and families deserve better than the current dysfunctional postsecondary system and the passage of this bill through the Committee is an important step towards meaningful change.” 

But advocates for student loan borrowers are sounding the alarm. They argue that key elements of the bill could substantially increase the cost of student loan repayment for millions of borrowers.

An overhaul to student loan forgiveness and repayment

The College Cost Reduction Act seeks to make sweeping changes to the federal student loan system, reversing many of the Biden administration’s efforts to make student loan repayment more affordable. The proposed changes include: 

• Repealing borrower-friendly regulations enacted by the Biden administration which aimed to make student loan forgiveness easier to obtain through programs like Borrower Defense to Repayment and Closed School discharge.
• Eliminating Biden’s new Saving on a Valuable Education (SAVE) plan, an IDR option billed as the most affordable plan ever. This change would replace SAVE with a different IDR plan, increasing monthly payments and extending repayment periods much longer than 20 or 25 years, as current IDR plans provide. It would also eliminate student loan forgiveness unless the borrower repaid the equivalent amount needed for a 10-year payoff.
• Introducing new restrictions on the Secretary of Education’s ability to enact new federal student loan regulations if officials cannot demonstrate that they would be cost-neutral to the federal government. 

The bill would also eliminate the Parent PLUS and Grad PLUS loan programs for new borrowers. It is unclear if this would save the government money in the long run, as parents and borrowers with graduate degrees often have more of an ability to repay their loans than lower-income borrowers. 

However, it would also leave families with fewer financing options to pursue higher degrees, potentially forcing some to either take out more risky private student loans or forgo higher education. 

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Advocacy groups critical of GOP student loan reform proposals

Organizations advocating for student loan borrowers slammed the legislation as dangerous for borrowers. 

“Despite its name, the College Cost Reduction Act would actually further increase the cost of college or career training for many Americans, especially the millions who rely on student loans to afford tuition,” said Abby Shafroth, Director of the National Consumer Law Center's Student Loan Borrower Assistance Project, in a statement last week. 

This bill would increase borrowers’ monthly student loan payments and eliminate the promise that borrowers will be debt free after a certain number of years of making payments.

Abby Shafroth, Director of the National Consumer Law Center's Student Loan Borrower Assistance Project

“This bill would increase borrowers’ monthly student loan payments and eliminate the promise that borrowers will be debt free after a certain number of years of making payments. Instead, this bill would leave some borrowers stuck in debt for the rest of their lives, simply because they sought an education… Additionally, the bill would repeal critical protections against schools that prey on students for their financial aid dollars, making it more likely that students and taxpayers will waste money on worthless degrees.”

“Make no mistake, H.R. 6951 is a dangerous attack on working families masquerading as the solution to the college affordability and student debt crises,” said Student Borrower Protection Center (SBPC) Senior Advisor for Policy and Strategy, Aissa Canchola-Bañez in a statement. “In reality, this bill will snatch the dream of a higher education from countless students and drive millions of borrowers and their families into the jaws of the predatory private student loan industry.”  

Coalition appeals to Chairwoman Foxx

Twenty-two organizations signed a letter to Chairwoman Foxx last week expressing concerns about the bill.

“The CCRA would undo baseline student and borrower protections that have undergone extensive public input over recent years,” wrote the coalition. “The legislation would also make student loan repayment significantly more expensive for millions of current and future borrowers by increasing monthly payments—likely driving more borrowers into delinquency and default—while removing existing safeguards that protect borrowers from carrying debt for more than 25 years. This model could mean that some borrowers would stay in debt for the rest of their lives.”

The CCRA isn’t all bad, but does the bad outweigh the good?

While borrower advocates were largely critical of the bill, specific proposals could get some traction. For example, the bill simplifies the student loan repayment system by narrowing the options to just two plans: one 10-year standard plan and one IDR option, allowing borrowers to pay down their principal even if they are underwater on interest. 

The bill also places borrowing limits on students, ends most instances of interest capitalization and gives borrowers in default on their federal student loans a second chance at rehabilitation.

However, advocates concluded that the other elements of the legislation far outweighed areas of agreement. 

“The tremendous downsides of the bill outweigh its good cost reduction ideas, including restructuring income-driven repayment so that when borrowers make payments their balances go down, fully eliminating interest capitalization, and doing away with origination fees,” said Shafroth. 

“We urge members of the House Education Committee to reject the so-called College Cost Reduction Act and to pursue legislation that would truly reduce the cost of education for working and middle-class students and their families, ensure access to education, prevent student loan distress from pushing families into poverty, and protect students and taxpayers from having their investment in education wasted.”

Student loan bill is unlikely to pass now but could be a preview of next year

In its current form, the bill stands little to no chance of becoming law in 2024. Republicans hold only a slim majority in the House. Even if it could pass that chamber, it would likely fail in the Democrat controlled Senate. Beyond that, President Biden would be sure to veto the bill if it somehow managed to pass Congress.

But there’s an election in November 2024, and the College Cost Reduction Act may be a sign of what student loan reform could look like if Republicans manage to hold the House while retaking the Senate and White House.