Biden’s rule would cost taxpayers $559 billion
WASHINGTON – Senator Tommy Tuberville (R-AL) joined U.S. Senators Bill Cassidy (R-LA), ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, John Thune (R-SD), and John Cornyn (R-TX) along with 20 other Republicans in cosponsoring a Congressional Review Act (CRA) resolution to overturn President Biden’s reckless new income-driven repayment (IDR) rule, which will result in a majority of bachelor’s degree student loan borrowers not having to pay back even the principal on their loans, costing taxpayers as much as $559 billion. On June 30th, President Biden announced the final IDR rule following the U.S. Supreme Court’s ruling to block his illegal student debt scheme that attempted to transfer hundreds of billions of dollars in student loan debt onto taxpayers.
“President Biden’s student loan forgiveness ‘plan’ is nothing but a political ploy,” said Senator Tuberville.“This scam could end up costing hardworking American taxpayers over half a trillion dollars. Not on my watch. While I will always champion students and fight to lower exorbitant tuition costs, it is not the taxpayers’ responsibility to foot the bill.”
BACKGROUND:
Coach Tuberville spent 40 years of his career coaching, educating, and mentoring students. He has dedicated his life to ensuring the next generations can achieve the same American dream that he did.
Since arriving in Washington in 2021, Coach has continued to champion students in the United States Senate. Whether through legislation to protect student-athletes, fight for women’s sports, or lower the cost of tuition, Coach is fighting to make sure young Alabamians have the tools to succeed.
Following the Biden Administration’s illegal student loan forgiveness policy, Senator Tuberville took action by supporting legislation aimed at lowering costs while protecting taxpayers. Coach is the author of the GOAL Act, legislation to lower the cost of graduate loans.
Biden’s new IDR rule:
- Reduces payments to 5%, from 10%, of borrowers’ discretionary income monthly on undergraduate loans [(Total Income)-(Expenses)=(Discretionary Income)].
- Raises the assumed amount of expenses to 225% of the Federal Poverty Line from 150%, increasing the likelihood that a borrower would have no discretionary income and an expected loan payment of zero.
- A family of four would need to have a total income of over $67,500 in 2023 (roughly equal to the median income of all households in the US) before being expected to pay anything.
- Lacks any guardrails to prevent households making over $250,000 a year from collecting taxpayer-funded assistance if they file taxes separately.
Encourages taking on debt:
- Under this change to an originally targeted program, 91% of new student debt would be eligible for reduced payments and eventual transfer to taxpayers.
- On average, only $0.50 on every $1 borrowed will be repaid to taxpayers.
- This rule will turn the federal student loan financing system into a poorly targeted taxpayer-funded grant program.
- Even those who can fully afford their education would be leaving money on the table by not taking out loans they could expect to be paid off by taxpayers eventually.
- The Penn Wharton Budget Model found that the IDR rule will incentivize community college students to collectively borrow billions more dollars per year due to the expectation that they will not have to pay the debt.
See here for a one-pager on the IDR rule. U.S. Representative Lisa McClain (R-MI) introduced the companion CRA resolution in the U.S. House of Representatives.
Senator Tommy Tuberville represents Alabama in the United States Senate and is a member of the Senate Armed Services, Agriculture, Veterans’ Affairs, and HELP Committees.
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