WASHINGTON – Today, U.S. Sens. Mike Braun, John Thune, Richard Burr, Bill Cassidy and Roger Marshall introduced the Stop Reckless Student Loan Actions Act, legislation that would end President Biden’s untargeted, budget-busting suspension of repayments on qualifying federal student loans, following 24 months of non-payment and six executive actions extending the payment pause. The bill would still allow the president to temporarily suspend repayment for low- and middle-income borrowers in future national emergencies and would prohibit the president from cancelling outstanding federal student loan obligations due to a national emergency.
“The majority of Americans do not have college degrees,” said Braun. “Why should they be forced to pick up the tab for college degrees in the name of pandemic relief? This transfer of wealth is not a move to ‘advance equity,’ but rather a taxpayer handout to appease far-left activists.”
“As Americans continue to return to the workforce more than two years since the pandemic began, it is time for borrowers to resume repayment of student debt obligations,” said Thune. “Taxpayers and working families should not be responsible for continuing to bear the costs associated with this suspension of repayment. This common-sense legislation would protect taxpayers and prevent President Biden from suspending federal student loan repayments in perpetuity. Any future suspension of federal student loan repayments should be left to Congress, not the Biden administration.”
“The Biden Administration continues to call for a return to normalcy from the pandemic, while simultaneously extending emergency relief programs like the student loan repayment freeze,” said Burr. “They can’t have it both ways. Resuming student loan repayments is long overdue, especially in today’s strong job market. That’s why I’m proud to work with my colleagues on this important bill, which will end the repayment moratorium that has exacerbated the existing moral hazard against borrowers and cost taxpayers an estimated $5 billion per month.”
“If the administration wants to follow the science regarding COVID, we must also follow the facts,” said Dr. Cassidy. “Unemployment is not at pandemic levels and a student loan repayment pause benefits those who are high income and able to pay their bills. The administration is spending without congressional approval. That should be considered unconstitutional.”
“Early in the pandemic when millions were out of work it was understandable to provide temporary relief for borrowers,” said Marshall. “Two years removed, this White House and Democrats in Congress continue to pursue the fiscally unsustainable policy of suspending payment, and ultimately canceling, student loan debt, nearly two trillion dollars owed to the federal government. Following the costly response to the pandemic, we must focus on implementing a fiscal strategy that will address the unsustainable path we’re on, not compound it.”
“The moratorium on federal student loan repayments has cost American taxpayers over $100 billion and will cost $5 billion every month it remains in place,” said Grover Norquist, president of Americans for Tax Reform. “Continuing this reckless policy will make surging inflation worse, at a time that we have seen it hit a 40-year high. Less than 17 percent of U.S. adults have federal student loans, and that group is disproportionately wealthy, white, and highly educated. It is unsustainable and unfair for working families to fund this indefinite giveaway to progressive elites. Senators Thune, Burr, Braun, Cassidy, and Marshall should be commended for introducing legislation to end this moratorium and protect taxpayers in the future by narrowing the president’s authority to defer loan repayments.”
“The student debt repayment pause will add $120 billion to the deficit through August, offer a massive handout to doctors and lawyers, and feed more inflation. It’s time to end ongoing COVID relief, or at least fully offset any further extensions,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “We applaud Senators Thune, Burr, Braun, Cassidy, and Marshall for introducing the Stop Reckless Student Loan Actions Act, which would put an end to the pause and limit a president’s ability to unilaterally cancel student debt.”
The current suspension of federal student loan repayments disproportionally benefits higher-earning borrowers and has cost American taxpayers billions of dollars.
- For example, medical doctors with student debt, on average, have received the equivalent of approximately $50,000 in forgiveness as of May 1, 2022, according to the Committee for a Responsible Federal Budget.
- According to the Federal Reserve, the net worth of households led by college graduates soared during the pandemic by $23.4 trillion. Meanwhile, the approximate two-thirds of households that are not led by a college degree holder only saw a net worth increase of $3.5 trillion.
- Each repayment extension has cost taxpayers $5 billion per month, which is in addition to the more than $100 billion Americans have already spent on this repayment moratorium, according to the Department of Education.
- Prior to the pandemic suspension, upper-income borrowers made three-quarters of the student loan payments, according to the Brookings Institution.
- According to the Committee for a Responsible Federal Budget, individuals who are bachelor’s degree holders or higher hold 70 percent of education debt – a population with an unemployment rate of only 2.2 percent.
On April 6, 2022, President Biden announced his fourth extension of the suspension of qualifying federal student loan repayments through August 31, 2022. He also announced that when repayments do resume, all borrowers whose federal student loans are delinquent or in default would be made current. Prior to this extension, the repayment of these federal student loans was scheduled to resume in May 2022. Notably, nothing in this bill would prohibit the U.S. Department of Education from continuing to work with individuals who may be struggling to make timely payments, like helping struggling borrowers enter into income-driven repayment plans.