On Monday, U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released a statement following the Congressional Budget Office’s (CBO) announcement that President Biden’s reckless income-driven repayment (IDR) rule will cost American taxpayers $230 billion over the next ten years. Under the IDR rule, a majority of bachelor’s degree holders would not have to repay their loans. Previously, the administration had drastically underestimated the price tag of the rule, publicly stating it would cost taxpayers $138 billion over the next ten years.
The proposed IDR rule would:
- Reduce payments to 5% of borrowers’ discretionary income monthly on undergraduate loans. This is down from the current 10%.
- Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment to 225% of the Federal Poverty Line from 150%.
- 225% ($32,805 for an individual/$67,500 family of 4)
- 150% ($21,870 for an individual/$45,000 family of 4)
- Cover borrowers’ unpaid monthly interest, so that, unlike existing income-driven repayment plans, no borrower’s loan balance will grow.
- Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
- Allow graduate borrowers to pay a percentage of discretionary income between 5% and 10% based on sizes of the amount borrowed for undergraduate and graduate loans.
This is a separate proposal from the administration’s loan cancelation effort that is currently before the Supreme Court and is estimated to cost taxpayers $400 billion.
“These student loan schemes do not cancel debt, they just transfer it from those who chose to take out loans to those who did not,” said Dr. Cassidy. “President Biden’s IDR rule is not only irresponsible but deeply unfair to those who chose not to go to college or sacrificed to pay off their loans and will now have to foot the bill.”
Last month, Cassidy and U.S. Representative Virginia Foxx (R-NC), chairwoman of the House Education and the Workforce Committee, rebuked President Biden’s IDR rule and called on the administration to rescind the rule. Cassidy and Foxx also criticized the Biden administration for shortening the public comment period for the proposal and urged Education Secretary Miguel Cardona to extend the comment period from 30 days to 60 days.
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