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Louisiana Republican Senator Bill Cassidy has joined a group of GOP lawmakers attempting to block the Biden administration from canceling any student loan debt. The move comes after the President met with Senate Majority Leader Chuck Schumer (D-NY), Sen. Raphael Warnock (D-GA), and Sen. Elizabeth Warren (D-MA) on Wednesday to discuss debt cancellation.
Late last month, Biden told reporters that he was “considering dealing with some debt reduction” and that he planned to have an answer on the matter “in the next couple of weeks.” The Department of Education announced in April that it was taking steps to fix longstanding issues with the public service loan and income-driven repayment forgiveness plans that would result in immediate debt cancellation for 40,000 borrowers under the Public Service Loan Forgiveness (PSLF) Program.
“Student loans were never meant to be a life sentence, but it’s certainly felt that way for borrowers locked out of debt relief they’re eligible for,” said U.S. Secretary of Education Miguel Cardona in a press release announcing the changes. “Today, the Department of Education will begin to remedy years of administrative failures that effectively denied the promise of loan forgiveness to certain borrowers enrolled in IDR plans. These actions once again demonstrate the Biden-Harris administration’s commitment to delivering meaningful debt relief and ensuring federal student loan programs are administered fairly and effectively.”
While the bill filed today does contain exemptions for existing federal student loan forgiveness, cancelation, and repayment programs protected under the Higher Education Act, it would prevent the Biden administration from adding any additional methods of cancelation. Some Democrats and activists have been pushing for up to $50,000 in student loan forgiveness for all borrowers, something the President has consistently maintained is not under consideration.
The bill was authored by Sen. Tim Scott (R-SC) and is co-sponsored by Sen. Cassidy along with Sens. Mitt Romney (R-Utah), Richard Burr (R-NC), and Thom Tillis (R-NC).
“Prices continue to soar, thanks in large part to government spending. Canceling trillions of dollars in student debt would only exacerbate inflation and further harm the very individuals this administration claims to fight for,” Scott said in a statement. “It’s time President Biden took our economy seriously, and he can start by getting rid of this misguided plan.”
However, economists don’t necessarily agree.
“There’ve been some estimates that US real GDP could be boosted on average by $86 billion to $108 billion per year,” said William Foster, a vice president with Moody’s, a nationwide financial services company. “That’s if you had total loan forgiveness.” However, Foster notes that even some loan forgiveness could have a significant effect on the economy.
“Student loans are now contributing to what’s perceived as lower economic prospects for younger Americans,” with millions of young people delaying, or even giving up on the idea of homeownership, Foster says. Student loans are currently the second-biggest debt item for households. Carrying that kind of debt around has consequences that have a significant and lasting effect on consumer behavior, noted Adam Looney, a nonresident senior fellow at Brookings. Looney worked on student loan debt proposals in the US Department of Treasury under President Obama.
“People clearly feel like there’s this huge psychological cost of student debt where they agonize over the balance and worry that it impairs their long-term prospects.”
