Gerard Scimeca
Chairman, CASE

February 21, 2023

There is no more glowing piece of evidence pointing to the utter failure of America’s higher education system than the $1.6 trillion owed in student loans which a sizable portion of borrowers cannot ever repay. The current student loan system encourages students to take on an eye-popping amount of debt to obtain a degree that proves far less valuable than originally hoped for.

It is a twisted and often cruel scheme that every year gives millions of students  an education in the reality that the college degree that puts them in a lifetime financial ditch won’t help them earn back the money it cost them to obtain it.

Today, in plain sight, we see the pyramid scheme higher education has become, with schools over the past few decades charging enormous sums in tuition, room and board, and other related expenses knowing the loans their students will take on are guaranteed by the federal government and (barring very rare circumstances) can’t be discharged in bankruptcy.

For years the Democrats, the primary champions of profligate borrowing, have sought to churn this mess into a political advantage by proposing wide-ranging blanket student loan forgiveness, regardless of a borrower’s individual circumstances. The fact that this would burden the 80 percent of American adults who either paid off or never had student loans was entirely irrelevant; the point was to add more than a trillion dollars to our national debt to buy votes.

None of this went very far until 2022, when Joe Biden’s Department of Education (DOE) carried out an Executive Order (E.O.) to arbitrarily cancel — without individual review or adjudication — over $200 billion dollars in federal student loans, without congressional approval.

The result is an absolute assault on the American taxpayer and the people who have been dutifully and faithfully repaying their loans as responsible borrowers. Biden’s blanket forgiveness was indiscriminate, awarding people making six-figure salaries who could certainly afford to make loan payments while ignoring students truly in need of financial assistance.

With Biden announcing plans to recklessly ladle out hundreds of billions of dollars in additional student loan forgiveness, Republicans in Congress are finally stepping up, and fighting back.

To protect taxpayers, borrowers, financial institutions, the last remaining remnants of integrity in higher education, and our overall economy already swimming in trillions of debt, GOP leaders in Congress have proposed the Responsible Education Assistance through Loan (REAL) Reforms Act – a fair, effective, and fiscally sane approach to addressing America’s student loan debt crisis.

Led by Reps. Virginia Foxx (NC) and Elise Stefanik (NY), the Real Reforms Act differentiates itself from Democrat proposals by ending the corrupt and abusive practices that reward the undeserving, the greedy, and the irresponsible while punishing honest borrowers and working Americans not carrying student loan debt.

This means no more loan cancellations for the affluent earning high salaries, or rewarding borrowers who have made no honest attempt to keep pace with even minimal payments on their loans.  It puts limits on outrageous costs colleges can charge for graduate programs, and handcuffs politicians and bureaucrats from gaming the system to buy votes, or give favor to some institutions over others.

The specifics matter, and will make all the difference in turning the current cesspool of student loan abuse into an honest engine for higher learning and economic empowerment. Some of the key provisions of the REAL Reforms Act include:

• • Offers forms of relief for responsible students in need who have made loan payments or tried to keep them current, regardless of financial circumstance
  • Helps students pay down their principal balance when previous payments have largely gone to cover interest
  • Denies loan cancellation for high-income borrowers
  • For students in income-driven repayment plans (IDR), limiting the size of their balance and helping ensure payments are credited to what is owed taxpayers (as opposed to going to the banks charging high interest rates)
  • Offers a plan for students in default to start making payments while having derogatory remarks removed from their credit profiles
  • Ends the endless repayment pauses that cost taxpayers over $4 billion per month
  • Reins in the massively expensive Public Service Loan Forgiveness (PSLF) program that provides loan forgiveness for students who take certain jobs in public service, as many of these students come from affluent families and colleges have a built-in incentive to overcharge education costs due to the guarantee of complete loan forgiveness
  • Ends uncapped borrowing for graduate students who at times may remain in college for up to a decade, replaces this with reasonable loan limits
  • Permits institutions to lower lending limits to prevent students from taking on debt for a degree with a high probability of no return on investment

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Finally, while the Real Reforms Act aims to stop the DOE from serving as an outpost for unethical and wasteful political spoils that force taxpayers and those free from college debt to pay the tab, this Act encourages lending for students seeking to fill much needed vocational occupations:

• • Allows the use of Pell Grants for career-focused programs that provide training and invaluable credit for numerous private sector jobs in desperate need of workers
  • Requires Workforce Pell Grants to go to programs that are actually engaged in helping students move up the economic ladder with a career-oriented education that have proven to be much more focused and cost-effective than traditional 4-year baccalaureate programs

 

The Real Reforms Act is exactly what our broken, busted, and corrupt system of higher education needs right now. It rewards responsible borrowers and good financial stewardship, it gives help to those most in need and denies handouts to the affluent and greedy, and it puts institutions of higher learning on notice that they can no longer put their outrageous fees on the taxpayer’s credit card. A tremendous debt of gratitude is owed to Reps. Foxx and Stefanik, and the early supporters of this legislation in Congress, where honest Americans are being given a break, and we are finally seeing a smart, sensible, fair, and long overdue correction of our nation’s student loan mess.