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Democrats are reintroducing bill to highlight Biden’s student loan forgiveness plan

While President Joe Biden’s far-reaching plan to cancel student debt remains questionable, Democrats are arguing for a second time this week for Congress’s role in addressing the debt crisis.

On Tuesday, a cadre of about 125 progressives in the Senate and House issued a letter reiterating their support for Biden’s beleaguered plan and hinting at upcoming legislation to support loan payments. On Thursday, a pair of Democratic leaders in the House announced the reintroduction of a bill that would lower college costs and make it easier for current and future borrowers to pay down their debt.

Thursday’s news coincided with Biden’s fiscal 2024 spending proposal, which includes proposals similar to those outlined in the House bill, as well as money to help borrowers get back on loans once the moratorium is lifted from the pandemic. era ends.

“As the president’s plan advances to the Supreme Court, Congress must address the root causes of the debt crisis, including the declining value of the Pell Grant and our flawed student loan system,” said Rep. Bobby Scott, a senior member of the House Committee on Education and the Workforce and the co-author of the bill, at a news conference Thursday.

But the prospects for these efforts are dim, especially in a Republican-controlled House. Republicans, who scrapped Biden’s student debt cancellation in their own pitch for 2024 spending, have made it clear they stand ready to reject any semblance of widespread relief. Last month, a group of Republican senators introduced a bill to end the payment freeze, and last week a private loan refinancing firm filed a lawsuit to the same end.

Still rooting for student loan forgiveness: As lawsuits pile up, Democrats make another attempt to cancel student debt

House Democrats reintroduce bill to cut college costs

The LOAN (Lowering Obstacles to Achievement Now) Act, which has notably secured no Republican co-sponsors, aims to reduce college costs and debt for current and prospective students. Specifically, it would:

  • Double Pell Grants, federal financial aid reserved for low-income Americans up to a maximum amount of $14,000 per year;

  • Enhance the government loan forgiveness program by shortening the time frame for receiving relief and making a forgiveness permanent that makes participants’ previous payments count;

  • Eliminate interest capitalization on student loans when borrowers are in deferment or forbearance and strengthen support for “vulnerable” borrowers; And

  • Lower and maximum interest rates for new borrowers, including those of private loans.

This legislation “is something that will affect so many people,” Representative Frederica Wilson, who co-sponsored the bill with Scott, said at Thursday’s press conference, pointing to the intergenerational build-up of debt and sustained interest that prevents borrowers from being able to pay off their principal. “They don’t have any equity in anything.”

It’s also a symbolic gesture: “We’re just trying to reinforce this message and hope that the Supreme Court will hear us,” Wilson continued, “that they’ll take into account what we say when they make this decision about President Biden’s plan.”

‘Big new program’: Supreme Court majority signals skepticism about Biden’s student loan forgiveness plan

Biden’s budget: Preparing for the end of the student loan payment pause

That plan, to relieve tens of millions of Americans of up to $20,000 each in student loans, is on shaky ground as it is debated by the Supreme Court.

Even with that relief, borrowers will likely have to resume their loans. And Biden’s 2024 spending proposal sets aside money to support that shift, with a proposed $620 million in additional funding for the Federal Student Aid Office.

“This additional funding is needed to better support student loan borrowers, especially if they have to pay back,” the budget reads. “This increase would enable FSA to make critical improvements in student loan amortization, continue to modernize its digital infrastructure and ensure the successful management of its financial aid programs through a simplified and streamlined process for students and borrowers.”

The pandemic-era moratorium on refunds was enacted and subsequently extended by President Donald Trump. It was repeatedly extended under Biden.

Biden’s 2024 budget would also:

  • Increase the maximum Pell Grant reward

  • Provide grants to fund the expansion of free community college

  • Reintroduction of the expanded child tax credit, which has helped significantly reduce child hunger and poverty rates during the pandemic

“I cannot stress enough how critical this funding is to continuing to meet the needs of students and borrowers,” James Kvaal, undersecretary of the Department of Education, said at a budget press conference. “If implemented, these investments will help us partner with university leaders, faculty and students to build a higher education system that delivers on the promise of upward mobility, equity and economic growth.”