Congress seeks to provide borrowers and student loan servicers with guidance on the payments and interest that resume in this fall. The Department of Education and Biden administration are pursuing a rulemaking as an alternative to plans struck down by the U.S. Supreme Court.
07/14/2023 11:25 A.M.
2 minute read
Legislation on student loan repayment and higher education policy is surfacing on Capitol Hill as student loan interest and payments are set to resume this fall for borrowers.
In the House of Representatives, Education Committee Chair Virginia Foxx, R-N.C., has introduced the Federal Assistance to Initiate Repayment (FAIR) Act to establish one income-driven repayment plan, prevent mounting interest for borrowers and require the Department of Education to provide more guidance to student loan servicers, according to a summary of the bill (PDF).
The FAIR Act is cosponsored by U.S. Reps. Burgess Owens, R-Utah, and Lisa McClain, R-Mich.
“This Republican solution takes important steps to fix the broken student loan system, provide borrowers with clear guidance on repayment, and protect taxpayers from the economic fallout caused by the administration’s radical free college agenda,” Foxx and the co-sponsors said, according to an article in Inside Higher Ed.
It is also designed to stop the Biden administration’s plans for income-driven repayment changes, according to the article.
The guidance for student loan servicers would focus on how to help borrowers impacted by the pause on payments and interest.
Senate Republicans have also released a proposal to rein in costs for higher education and address why students are taking on more loans, according to Inside Higher Ed.
After the U.S. Supreme Court overturned the Biden administration’s student loan relief plan in a 6-3 decision at the end of its summer term, new plans on student loan forgiveness were announced, The Hill reports.
The Hill reports advocates for the rulemaking under the Higher Education Act say the law allows the Department of education to “compromise, waive, or release” student loans.
A public hearing is set for July 18 on an “alternative plan to debt relief,” according to a press release from the Department of Education.
The department also says it is instituting a 12-month plan for borrowers whose payments will resume in the fall. From Oct. 1, 2023, to Sept. 30, 2024, borrowers who miss payments will not be “considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.”
ACA’s Take
ACA members in student loan servicing have successfully helped consumers develop income-driven repayment programs that work. They also explain the options for consumers who truly cannot afford to pay. In many cases, discussions with servicers can also rectify past financial decisions that were not a consumer’s best option.
ACA supports the FAIR Act’s goal to simplify the repayment process for borrowers and provide guidance to student loan servicers.
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