Opinion of Senator Grassely
Q: Do you support President Biden’s plan to erase student debt? A: When something seems too good to be true, it usually is. Once again, the Biden administration is operating under the false assumption that money grows on trees. When the economy shut down in 2020, Congress passed a series of pandemic relief programs to help American families, rural hospitals and small businesses stay afloat. One of the financial lifelines has been a pause in student loan payments and interest. Despite the reopening of the economy and unfilled jobs holding back the recovery and forcing small businesses to cut services and hours of operation, the Biden administration has unilaterally extended the deferral of payments to student borrowers on multiple occasions. This action pushes the cost of the student loan payment pause to $150 billion.
By pressing the pause button, President Biden is allowing high earners with college degrees to defer monthly payments for two years and more. But even that is still not enough.
Big spenders want President Biden to let student borrowers off the hook and get away with their debts. The people of Iowa know that debt cannot be erased with the wave of a magic wand and disappear into thin air.
I often say that Washington, DC is an island surrounded by reality. This proposal brings Fantasy Island to the banks of the Potomac River. And the taxpayer will foot the bill.
Don’t make a mistake. Canceling student debt is a slap in the face for generations of working families and borrowers who have saved, sacrificed and worked their way through school to pay for their own expenses. For the millions of Americans who are not attending college and pursuing careers in the trades or climbing the retail and hospitality industries, the Biden administration would pick their pockets through higher taxes to pay off $1.75 trillion in outstanding student loans. . It’s a regressive proposition that benefits people with advanced university degrees the most. They tend to have the highest debts, as well as the highest salaries and highest lifetime earnings.
Ultimately, the president does not have the unilateral power to snap his fingers and make a trillion dollars disappear. Congress holds the purse strings for a reason. And I will continue to keep a tight grip on taxpayers’ money.
That’s why I recently joined Senator John Thune on the Stop Reckless Student Loan Actions Act. This bill would explicitly prevent the President from unilaterally canceling student debt, end the current student loan pause, and ensure that a pause cannot go on forever like this in the future.
Q: What are your initiatives to help prevent borrowers from getting in over their heads?
A: First, let’s clarify why I oppose unilateral student debt cancellation. It’s a slippery slope with no return. Once Uncle Sam starts handing out freebies and clearing debts, the demand for debt freebies will expand to car loans, home mortgages, credit cards and more. It also discourages families from saving for their children’s college education.
Canceling student debt for today’s borrowers makes fools of the savers and borrowers who have saved, saved, and sacrificed to pay their own way. It also gives colleges and universities the green light to keep raising tuition fees because Uncle Sam will eventually forgive the loans. President Biden’s proposal does nothing to reduce runaway tuition fees.
I’ve drafted three bills to help families and students manage the true costs of college before they take on a mountain of debt. The federal My Know Before You Owe student loan law would bring transparency to the process and help students understand if their loan matches their likely income based on their degree so that they fully consider the cost of a college education. . This has the added benefit of injecting the free market into the process to help bring down the price of higher education.
Guidance would also be needed to show students their student loan repayments against their likely projected income. The Understanding the Real Cost of College Act would create a universal financial aid award letter so students can compare financial aid programs between schools. The Net Price Calculator Enhancement Act would provide students with individualized higher education cost estimates and financial aid options before deciding where to apply.
I also introduced bipartisan legislation with Senator Joni Ernst that would address skyrocketing loans and tuition fees by allowing students to understand the costs of what they borrow up front.
Our transparency for students to understand education decisions Net Terms would provide student loan seekers with an estimate of the total amount of interest they would pay based on a 10-year repayment plan during or before acceptance of a loan.
Students looking to earn a higher degree will come out on top if they’re smart not to get in over their heads under a mountain of debt in the first place.