As an individual who has been highly critical of the GOP’s recent stance on student loans, I must admit that I was pleasantly surprised by their latest efforts.

Within their comprehensive package, some notable borrower-friendly proposals and ideas have the potential to empower individuals to make informed decisions about higher education. However, there are also some awful ideas that are potentially detrimental to current borrowers and future students.

In this article, I will delve into the details of this proposed legislation, shedding light on the areas that present opportunities for bipartisan agreements.

What’s in the Republican Student Loan Package?

The student loan and higher education reforms come from five new bills:

• The College Transparency Act (CTA)   
• The Understanding the True Cost of College Act  
• The Informed Student Borrowing Act  
• The Streamlining Accountability and Value in Education (SAVE) for Students Act
• The Graduate Opportunity and Affordable Loans (GOAL) Act

Some of these bills have bipartisan support and present a real opportunity to improve our flawed student loan system. Others are clunkers that would devastate borrowers and future students.

The College Transparency Act (CTA)

The College Transparency Act is bipartisan legislation cosponsored by Republican Bill Cassidy and Democrat Elizabeth Warren.

The bill would require detailed reporting on student outcomes including enrollment, completion, and post-college success across colleges and programs.

Adding transparency to the college selection process would be a huge win for borrowers. More information about job placement numbers, starting salaries, and student loan balances is always good.

Sherpa Tip: This is one area where the government has already made some progress. The Department of Education’s College Scorecard is an excellent resource for selecting a school.

The Understanding the True Cost of College Act

This particular act isn’t new, but it’s a good idea.

The objective of the Understanding the True Cost of College Act is to make it easy to compare financial aid offers from schools.

The act would:

• Require colleges to use a uniform financial aid offer form,
• Establish basic minimum information that must be included on page one of the uniform financial aid offer form, and
• Facilitate the creation of uniform definitions of various financial aid terms.

Like the CTA, this proposed legislation isn’t revolutionary, but it adds clarity to a confusing process, which is good.

The Informed Student Borrowing Act 

The Informed Student Borrowing Act is another attempt to increase transparency in the federal borrowing process.

This bill would change student loan entrance counseling from a one-time event to a yearly requirement.

It would also require that borrowers review median earnings for their particular program, completion rates, and projected monthly payments for their loans.

Lastly, borrowers must request a specific loan amount rather than having the school handle this calculation.

This is one of those bills that sounds like a great idea in theory, but it might not be so great in practice. Better informing borrowers is a reasonable goal. However, these new requirements could easily become burdensome hurdles that drive borrowers to risky private loans.

Careful implementation would be critical to this bill if it becomes law.

The Streamlining Accountability and Value in Education (SAVE) for Students Act

The SAVE Act is where things will start to get controversial.

On the positive side, it would automate enrollment in income-driven repayment. Under current federal law, automating IDR isn’t allowed, so this would be an improvement for borrowers.

Additionally, it would eliminate the nine current repayment plans and reduce the number to two. In the interest of avoiding borrower confusion, it is a step forward.

However, the terms of those two repayment plans become critically important. This is where the bill transitions from potentially helpful to awful for borrowers.

The 10-year repayment plan, like a cockroach in the apocalypse, survives.

The only other plan becomes the REPAYE+ plan, a new variation on the REPAYE plan. REPAYE+ would help borrowers with smaller balances qualify for forgiveness quicker, count certain deferments and forbearances toward forgiveness, and allow borrowers to make up missed payments to keep progress toward forgiveness.

Unfortunately, there are many downsides to this new plan. For starters, it would prevent the creation of President Biden’s proposed new repayment plan. The Biden plan is far more affordable than the proposed REPAYE+ plan.

The legislation would also prevent the Department of Education from creating new federal repayment plans.

The Graduate Opportunity and Affordable Loans (GOAL) Act

The GOAL Act is where things get ugly.

The stated objective of lowering the price of college is one that everyone can agree upon. College is too expensive, it is driving the student loan crisis, and it needs to get fixed.

However, the proposed legislation is not the answer.

To fix the problem of high education costs, Congressional Republicans want to eliminate Graduate PLUS loans and put restrictive caps on borrowing for graduate students.

The theory is that if people don’t have sufficient federal loans, they won’t be able to afford graduate school, so colleges will have to lower prices.

Pricing people out makes graduate school a privilege available only to the wealthy. If you think our healthcare and legal systems are unfair to the poor, imagine what would happen to those systems if only the wealthy could access medical or law school.

Sherpa Thought: This one is personal to me, and it is hard to be objective. If it weren’t for Graduate PLUS loans and the high borrowing limits, I wouldn’t have been able to attend law school. I wouldn’t have been able to serve my community as a prosecutor, and I wouldn’t be able to help borrowers as the Student Loan Sherpa.

Cutting the cost of higher education has to be a priority, but we can’t do it in a way that restricts access to education.

Will the GOP Legislation Become Law?

President Biden would almost certainly veto the GOAL Act and the SAVE Act. Both acts would also have uphill battles in the Democratically-controlled Senate.

The legislation that creates more transparency in borrowing and school selection has a realistic chance of passage. Even if the particular acts announced this week don’t pass in their current forms, the ideas behind them have broad support. There is a good chance we will see some of these changes happen in the coming years.

Opportunities for Progress

Earlier this month, Republicans passed legislation that would have canceled the one-time forgiveness plan currently before the Supreme Court. Buried in that legislation was language that would have retroactively charged borrowers interest from the student loan payment pause.

The bill was sure to get vetoed by Biden, and it was seemingly crafted to punish borrowers.

In stark contrast, the new legislation package seems like a step forward. Some proposed bills may generate sufficient bipartisan support to become law.

If you have a healthy dose of optimism and squint just right, it looks like there is a chance Congress might make some progress on the student loan crisis.

The post Breaking Down the GOP’s New Student Loan Legislation: What It Means for Borrowers appeared first on The Student Loan Sherpa.

Republican lawmakers have largely opposed these moves.

Like so many other issues in American politics, the management of federal student debt has become quite polarized.

It wasn’t always this way.

Today we will look at how party views have changed over the years, why these changes happened, and what it means for borrowers.

Bipartisan Support for Student Loans and Borrowers

The federal student loan program was created in 1958 in response to the Soviet launch of Sputnik. It received bipartisan support and was signed into law by Republican President Dwight D. Eisenhower.

In more recent history, the Public Service Loan Forgiveness program was created with bipartisan support and signed into law by Republican President George W. Bush.

Today, there is almost no consensus between the two major parties on student debt issues.

Democrats have become increasingly aggressive with their proposals to help borrowers and make college more affordable. At the same time, Republicans have sought to prevent these programs and claw back existing resources for borrowers.

A Note from the Sherpa: The purpose of this article is not to “get political” or to tell people how to vote.

Instead, the objective is to examine how politics affect public policy and how borrowers can advocate for themselves.

A Changing Electorate

Historically, college-educated voters tended to vote Republican.

In the 1994 election cycle, 54% of voters with college degrees identified with or leaned toward Republicans, while only 39% supported Democrats.

In the 2020 Presidential Election, Joe Biden received the support of 61% of college-educated voters, carrying him to victory in a close election.

Since that time, the voter education gap has only grown. Voters with degrees are increasingly likely to vote Democrat, while voters without a college education are more likely to vote Republican.

The Chicken or the Egg?

Do more college-educated voters support Democrats because of their student loan policies? Or do Democrats have better student loan policies to keep their voters happy?

The answer is probably a little bit of both.

For student loan borrowers, the causation question doesn’t matter. The real question is, how do we get more politicians to advocate for student loan borrowers?

Student Loan Borrowers Need to Become “The Small Business Owner”

I’m not suggesting that all student loan borrowers need to start a business. Instead, I’m suggesting that student loan borrowers need the small business owner treatment from politicians and the electorate.

Both parties love small business owners. Politicians routinely call them the backbone of the economy. This treatment isn’t a surprise. Americans overwhelmingly prefer small businesses over big corporations.

It isn’t a stretch to think borrowers can achieve this goal.

Having a college degree makes someone less likely to rely on government safety net programs and more likely to contribute more money in taxes. On average, each college degree is worth $381,000 to the federal government. Americans that want fewer people on welfare and more people to pull themselves up by the bootstraps should be incentivizing a college education.

A better-educated America also helps us beat our international rivals. The original student loan program was a response to Sputnik and helped us win the space race. Today, Americans from both parties view China as a threat. If American innovation and ingenuity is the key to success, we should cultivate great minds for the next generation.

It’s time to remind people that higher education doesn’t just benefit the individual; it benefits everyone.

The post Democrats and Republicans Move in Opposite Directions on Student Loans appeared first on The Student Loan Sherpa.

Student loan forgiveness for all is becoming very popular.

Support extends beyond the borrowers who would directly benefit. Many consumer advocates and economists also support debt cancellation. Consumer advocates point to the inequalities of student debt. Economists think student loans are a drag on the economy.

Despite the increasing popularity of forgiveness for all, three major obstacles prevent debt cancellation from becoming a reality.

Former Borrowers Outraged By Talk of Forgiveness

People who recently paid off their student loans are often vocally opposed to student loan cancellation.

A common refrain on social media is, “what do I get?” Many former borrowers argue that it wouldn’t be fair to cancel loans after working hard to pay off their debt.

To a certain extent, they have a point. Student loans are a significant issue in America, and it sucks that they had such a negative experience. However, it would seem silly to avoid fixing a problem in the name of fairness.

Addressing this particular issue is complicated. However, by showing some empathy, current borrowers may win over some outraged former borrowers.

Republicans

Most prominent Republicans remain opposed to student loan cancellation.

While there are certainly some Democrats who are hesitant to forgive large amounts of student debt, the opposition is much stronger within the Republican party.

Borrowers and advocates have two options on this issue:

1. Convince Republicans to support debt cancellation.
2. Vote Republicans out of office.

Many Republicans campaigned on a desire to improve the economy. Republicans could lead the charge on debt forgiveness, help the economy, and win over many student loan borrowers in the process.

Prior to the 2020 election, I argued that President Trump could improve his chances of winning the election by canceling some federal student loans. An improved position on loan forgiveness could help Republicans score points with many key demographics.

Despite the potential political gains for Republicans, the party continues to oppose student loan forgiveness for all.

The Ridiculously High Cost of Education

The price tag of a college education is probably the most significant obstacle preventing solving the student loan crisis.

Here is the problem: even if we forgive student loans for millions of borrowers today, we will have millions of borrowers with the same problem in the future.

Forgiveness may even make the student loan crisis worse for future students. If people see loans forgiven today, they may think that future loans will qualify for forgiveness. Future students may borrow irresponsibly, under the assumption that their loans will also be forgiven. More student loan borrowing enables colleges to continue to raise the cost of education. As the cost of college grows, the student loan crisis gets worse.

A single round of forgiveness may set a dangerous precedent that ultimately worsens the student loan crisis.

For this reason, current borrowers should support policies aimed to make college more affordable. Free community college or a four-year education would be a massive win for existing borrowers. If we make college affordable, any fix to the student loan crisis can be a one-time expense rather than an ongoing issue.

Final Thought

Want to get student loan forgiveness for all?

We just need to make college more affordable and convince Republicans and former borrowers to get on board.

The post The Three Things Preventing Student Loan Forgiveness for All appeared first on The Student Loan Sherpa.