Cornyn, Cassidy Introduce Bill to Simplify Student Loan Repayment Process
WASHINGTON – U.S. Senator John Cornyn (R-TX) and Senate Committee on Health, Education, Labor and Pensions Ranking Member Bill Cassidy (R-LA) today introduced the Streamlining Accountability and Value in Education (SAVE) for Students Act, which would simplify the student loan repayment process for borrowers, increase accountability on behalf of the federal government, ensure new federal student loans are paying for degrees that actually produce higher incomes for graduates, and save taxpayers nearly $50 billion:
“Student loan repayment should not fall on the backs of hardworking American taxpayers, and students should not be getting federal loans for degrees that don’t result in better-paying jobs,” said Sen. Cornyn. “I’m proud to join my colleagues in supporting this legislation to streamline this confusing system, save students money, and ensure higher education is accessible to Americans without an out-of-touch loan cancellation scheme.”
“Our federal higher education financing system contributes more to the problem than the solution,” said Dr. Cassidy. “Unlike President Biden’s student loan schemes, this plan addresses the root causes of the student debt crisis. It puts downward pressure on tuition and empowers students to make the educational decisions that put them on track to academically and financially succeed.”
This legislation is part of the Lowering Education Costs and Debt Act, a package of five bills proposed by Senate Republicans aimed at directly addressing the issues driving the skyrocketing cost of higher education and the increasing amounts of debt students take on to attend school.
The current federal student loan repayment system includes nine different repayment options, which often causes confusion and poor advising for borrowers by the Department of Education (ED), loan servicers, and financial aid administrators. There is now a growing industry of loan repayment advisors akin to tax advisors catering to this confusing system, further increasing costs to borrowers. Taxpayers are also supporting loans for programs with poor workforce outcomes. The SAVE for Students Act would address flaws in the current system by:
- Streamlining repayment options for borrowers to two options:
- The 10-year standard repayment plan;
- And REPAYE+, an income driven repayment plan that provides earlier forgiveness for low-income, low-balance undergraduate borrowers.
- Prohibiting new federal student loans from paying for undergraduate programs in which half of the former students are unable to earn a salary higher than the median high school graduate;
- Prohibiting new federal student loans from paying for graduate programs in which half of the former students are unable earn more than a median bachelor’s degree recipient;
- Ending the ability of the ED to create additional repayment plans without congressional approval;
- And prohibiting the Secretary of Education from implementing the Biden administration’s proposed income-driven repayment regulation that would not require the majority of borrowers to pay back even half of the principal on their loans.
The introduction of this legislation comes as President Biden attempts to enact his student debt cancellation scheme, which would transfer up to $20,000 in student loan debt per borrower onto taxpayers, totaling an estimated $400 billion. Pres. Biden’s scheme does nothing to address the underlying cause of the debt crisis and would lead to America returning to the same level of debt in five years. Earlier this year, Sens. Cornyn (R-TX), Cassidy (R-LA), and Ernst (R-IA) introduced a Congressional Review Act (CRA) resolution to overturn this student loan scheme. After Congress passed the CRA with bipartisan support two weeks ago, Pres. Biden vetoed the resolution.
The Penn Wharton Budget Model has provided a preliminary analysis estimating this legislation would reduce the 10-year deficit by $48 billion compared to Pres. Biden’s student loan repayment proposal, which is estimated to cost $220 billion according to Congressional Budget Office (CBO).