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REPUBLICANS OPT TO MAKE EDUCATION AN UPPER-CLASS PRIVILEGE  
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David Dayen
April 30, 2025
The American Prospect
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_ The goal is to save money on higher-education assistance to pay for
tax cuts for the rich. _

Debt Collective student loan borrowers lead chants in protest outside
the Department of Education, December 4, 2024, in Washington., Joy
Asico-Smith/AP

 

Republicans on the House Education and Workforce Committee advanced
their contribution to the giant tax cut and safety net reduction
package yesterday, taking aim at nothing less than America’s future.
The student loan provisions in the package would give high school
graduates without family wealth two choices: don’t attend college,
or find a private and likely high-cost loan so they can afford the
education they are repeatedly told they need to compete in the
21st-century economy.

Federal student loans, as envisioned in the bill, would be an
expensive, punitive, and downright dangerous financial vehicle. In
perhaps the most shocking provision, victims of fraud by their
colleges would _still have to pay_ the loans issued to attend them.
Other changes would make it easier for fraudulent colleges to re-enter
higher education, after being drummed out by regulators in the recent
past.

The Republican plan “reveals a betrayal of the promise Lyndon
Johnson made when he signed the Higher Education Act in 1965,” said
Rep. Bobby Scott (D-VA), ranking Democrat on the House Education and
Workforce Committee. “Most of the provisions targeted toward
reducing federal student aid exacerbate the college affordability
crisis by limiting the students’ access to Pell grants and federal
loans.”

The changes would reduce federal spending on student loans by up to
$330 billion over a decade, thus creating headroom for tax cuts that
will primarily benefit the wealthy. While Republicans on the committee
claim that they are trying to rein in an unaccountable
higher-education industry that has quintupled the real cost of college
since 1970—a cost bloat they attribute to the availability of
federal student loans—the pipeline from stingier financial aid to
tax cuts is clear.

Several student loan programs would be eliminated, including PLUS
loans for graduate students and parents of borrowers. All subsidized
loans to undergraduates would be terminated, which means that interest
will start to accrue as soon as students begin college, before
borrowers even start to pay the loans back. Borrowers would also have
a lifetime cap on available loan amounts of $50,000 for
undergraduates, $100,000 for graduate students, and $150,000 for
students in professional programs like medicine or law.

A $50,000 cap wouldn’t cover two years at many public colleges, let
alone an entire course of study. Republicans claim they’re aligning
with the median cost of college, definitionally meaning half of all
students would be negatively impacted. (They further argue that most
students don’t borrow the full amount available for an education
program, so far fewer would be affected.)

There would be really only two repayment programs: a standard plan
with a fixed interest rate (currently at 6.3 percent), and a variable,
“income-based” plan. The standard plan would last between 10 and
25 years, depending on the amount borrowed, and seek to repay
everything with interest during that time period. That could make the
balances impossibly high, with almost no escape given how student
loans are mostly not dischargeable in bankruptcy. The government has
just resumed collections on student loans
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meaning that tax refunds, Social Security payments, and even wages can
be garnished to pay the balance due.

The income-based plan, known as the Repayment Assistance Plan, only
extinguishes outstanding balances after 30 years. It is derived from
adjusted gross income (AGI), and has a strange step-up schedule.
Someone making between $10,000 and $20,000 a year would pay 1 percent
of AGI in loan repayments, but at $20,000 that jumps to 2 percent, at
$30,000 to 3 percent, and so on, until someone earning over $100,000
is paying 10 percent of their AGI on repaying their loans.

That creates large cliffs: Anyone making $80,000 a year would pay
$7,200 of that in student loan repayments, but if you make a dollar
more, that jumps to $8,100. The reality for most borrowers is that
income-based repayment would no longer help them relative to the fixed
loan schedule, especially because it extends out over 30 years,
accruing more interest. By contrast, President Biden’s income-based
repayment program would have significantly reduced these costs
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particularly on those earning less after college.

The Student Borrower Protection Center analyzed
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plans and concluded that the average single borrower with a college
degree and a job at the median income for college graduates (roughly
$80,000/year) would pay nearly $3,000 per year more today than under
the lowest-cost option put in by Biden. If that borrower were part of
a family of four, the additional payment would expand to $4,786.

The Public Service Loan Forgiveness program, which lets people working
in public service careers forgive loans after ten years of payments,
would continue, but to be eligible, borrowers would have to enroll in
the Repayment Assistance Plan, and therefore pay more in that period.
Time spent in medical residencies would no longer be considered
qualifying service for PSLF, weakening the ability of community health
centers to attract staff and for communities to deal with primary care
shortages.

Pell grants, which even Republicans rhetorically describe as a
“cornerstone” program for low-income people to afford college,
would also be cut in stealth fashion. Only “full-time” students
would now be eligible for Pell grants, defined as 30 hours of
coursework each academic year. This would disqualify millions of Pell
grant beneficiaries who work part-time to afford college costs. There
are some expansions of Pell grants for workforce training and a
backfill to address a funding shortfall, but on-need Pell grants would
be cut, because of how many beneficiaries would have to drop out.

But perhaps the most egregious section of the Republican bill cancels
a host of regulations that the Education Department currently uses to
assist borrowers and protect them from predatory actors. Borrowers who
contract a total, permanent disability would no longer be able to have
their loan forgiven. Borrowers whose schools abruptly close in the
middle of the school year without transferable credits to other
colleges would have to keep paying. And the “Borrower Defense to
Repayment” provision that allows victims of fraudulent colleges to
get their loans discharged would also be repealed. So students who
through no fault of their own are personally injured, abused, or
defrauded by their schools would have to suck it up and keep paying.

Rep. Lucy McBath (D-GA) attempted to change the closed school
discharge part of this with an amendment that would restore this
provision. “Students attending schools that abruptly closed are not
forced to pay back loans that should never have been issued in the
first place,” McBath said. But Rep. Bob Onder (R-MO) offered a
cryptic rebuttal, claiming that “students should not be penalized”
but claiming that the current regulations “come at great budgetary
cost for the taxpayer.” While he praised the first Trump
administration’s “commonsense” changes to the regulation, the
current Republican bill would just remove it entirely, giving students
no recourse if their school closed other than just paying the loan
debt.

On top of this, two rules that helped to keep predatory for-profit
colleges out of the market would also be repealed. The gainful
employment rule forces college programs to prove that graduates can
get employed in their field of study and earn enough to pay off the
debt. The 90/10 rule forces colleges to derive at least 10 percent of
their revenue from something other than federal financial aid. (The GI
Bill is not considered federal financial aid, which is why for-profit
colleges often target veterans.)

Removing these rules makes it more likely that low-quality for-profit
programs will ramp up again to enroll students. And eliminating the
anti-fraud and closed school provisions means that those students
would not be protected from being given worthless diplomas from
fly-by-night operators. Moreover, federal student loans under the
Republican bill would cost too much, wouldn’t stretch to cover the
actual cost of college, and when interacting with the other provisions
would be debt traps in waiting, subject to mandatory payment for
essentially no personal benefit.

Democrats on the Education and Workforce Committee stressed that
students in middle-class families would have to forgo college rather
than subject themselves to the inadequate assistance in this bill,
being thereby denied skills and advancement. “This bill is a
dream-killer,” said Rep. Suzanne Bonamici (D-OR). “Unless you’re
rich, you’re going to struggle to further your education.” The
only recourse would be the private markets. “Students would be
forced to turn to predatory lenders looking to profit off the desire
to get an education,” said Rep. Jahana Hayes (D-CT).

Nevertheless, all Democratic amendments were turned back by the
Republican majority, who are dead set on finding savings for tax cuts
and taking it out on students seeking to better themselves. The future
of the overall bill is still pretty uncertain, given the tensions
between Republican hard-liner demands for spending reductions and the
unpopularity of Medicaid cuts. But if something does pass, student
loans are pretty likely to take a huge hit.

That dooms a generation to growing up without any affordable
educational options that will actually help them through life. And in
a rarity for public policy, these crime victims will have to pay
expenses associated with the crime committed against them.

_David Dayen is the Prospect’s executive editor. His work has
appeared in The Intercept, The New Republic, HuffPost, The Washington
Post, the Los Angeles Times, and more. His most recent book is
‘Monopolized: Life in the Age of Corporate Power.’_

_Used with the permission © The American Prospect, Prospect.org
[[link removed]], 2025. All rights reserved. _

_Read the original article at Prospect.org:
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* Education
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* Student Debt
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* GOP
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* budget cutbacks
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