WASHINGTON, D.C. – Yesterday, U.S. Senator Shelley Moore Capito (R-W.Va.), Ranking Member of the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies (Labor-HHS), joined a group of 129 lawmakers in a letter to U.S. Department of Education (Education) Secretary Miguel Cardona urging the department to withdraw its latest attempt to illegally transfer student loan debt onto American taxpayers. The proposed rule will cost hard-working Americans an additional $147 billion and bring the total student loan debt transferred to taxpayers to as much as $1 trillion. This effort was led by U.S. Senator Bill Cassidy, M.D. (R-La.), Ranking Member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and U.S. Rep. Virginia Foxx (R-N.C.-05), Chairwoman of the House Education and the Workforce Committee.

“The latest Notice of Proposed Rule Making (NPRM) proposed by your Department of Education (Department) on April 17, 2024, represents the latest in a string of reckless attempts to transfer as much as $1 trillion of student loan debt from those who willingly borrowed to those who did not or have already repaid their loans,” the lawmakers wrote. “In addition to the fiscally irresponsible nature of this backdoor attempt to enact ‘free’ college, the administration continues to use borrowers as political pawns knowing full well these proposed actions are illegal. The Supreme Court has made it abundantly clear that there is zero authority to write-off federal student loans en masse last June when the Department’s ‘Plan A’ was ruled unconstitutional.” 

“Instead of exacerbating the problems of inflated college costs and low-value degrees, we urge you to withdraw this NPRM and work with Congress. It is past time that we fix our nation’s broken higher education financing system,” the lawmakers continued.  

BACKGROUND:

In this plan specifically, recipients of this loan forgiveness have a typical income of over $300,000.

While the Biden administration prioritizes enacting student loan schemes, it failed to properly implement the Congressionally-mandated Free Application for Federal Student Aid (FAFSA). These continued delays prevent students and families from accessing crucial financial aid information as they choose the college they can afford to attend. 

At a Labor-HHS Subcommittee hearing last month to review President Biden’s proposed Fiscal Year 2025 budget for Education, Senator Capito pressed Secretary Cardona on his agency’s emphasis on student loan forgiveness while ignoring issues with FAFSA.

Read the full letter here or below.  

Dear Secretary Cardona:

The latest Notice of Proposed Rule Making (NPRM) proposed by your Department of Education (Department) on April 17, 2024, represents the latest in a string of reckless attempts to transfer as much as $1 trillion of student loan debt from those who willingly borrowed to those who did not or have already repaid their loans. We strongly urge you to withdraw it.

The Biden administration describes this regulation as “targeted relief,” yet the Department’s own estimates show the opposite. This is even broader than the Department’s first attempt: at an estimated price tag of $147 billion, taxpayers are being forced to take on the debt of nearly 28 million borrowers. Moreover, while the Department likely does not wish to highlight how much their proposal would help the wealthy, outside estimates show that borrowers eligible for “relief” under certain provisions in this proposal will have a typical income of over $300,000. Unfortunately, the Department did not include its own analysis of the distributional effect of these regulations.

In addition to the fiscally irresponsible nature of this backdoor attempt to enact “free” college, the administration continues to use borrowers as political pawns knowing full well these proposed actions are illegal. The Supreme Court has made it abundantly clear that there is zero authority to write-off federal student loans en masse last June when the Department’s “Plan A” was ruled unconstitutional.

Further, this regulation is only part of the Department’s “Plan B.”  The Department notes that the long-anticipated regulation to “cancel” loans for borrowers facing “hardship”—a broad term defined under the NPRM to grant the Department full authority to cancel any loan it pleases—is still forthcoming.  According to budget experts, those additional changes would bring the total cost of the Department’s “Plan B” to nearly $750 billion, at almost double the cost of “Plan A”.

“Plan B” hinges on creating these extensive regulations based on scant statutory text written in 1965. That text, which describes how the then Commissioner of Education at the Department of Health Education and Welfare could “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right or redemption” under the Federal Loan Insurance Program. It is certain that drafters in 1965 through the last reauthorization in 2008, did not contemplate that these words would be used to cancel massive portions of student loan balances. This statute has no history of broad use by any previous Secretary and was previously deemed by this administration as less likely to hold up in court than “Plan A.”

While the administration dedicated resources needed to draft this proposal to benefit those who already were able to attend college, it simultaneously failed to competently implement the Free Application for Federal Student Aid (FAFSA). The FAFSA is a simple 36-question form that helps the nation’s neediest current and prospective college attendees understand what federal financial aid is available to them. Failure to make the FAFSA available to these prospective students on time will have life-long consequences for many young Americans. We already know, as of March 29, FAFSA completion for seniors in high school is down by 40 percent. Those who do not file will likely not attend college next year and maybe never will.

Instead of exacerbating the problems of inflated college costs and low-value degrees, we urge you to withdraw this NPRM and work with Congress. It is past time that we fix our nation’s broken higher education financing system.

Sincerely,

# # #