On Thursday March 23, 2023, The House Committee on Education and the Workforce held a hearing titled, Breaking the System: Examining the Implications of Biden’s Student Loan Policies for Students and Taxpayers. It was the first hearing led by the Subcommittee of Workforce and Higher Education in this Congress, signaling that the student loan debt crisis is an area of contention.

In his opening statement, Chairman Burgess Owen [R-UT] argues that students are worse off from loan forgiveness as it can incentivize higher education institutions to raise prices and result in inflation. He argues Biden’s loan forgiveness plan has negative consequences for taxpayers that did not attend college. Conversely, Ranking Member Frederica Wilson [D-WA] argues that students do benefit, reminding members of the subcommittee that the Biden Administration’s estimate found that 90% of relief went to those with annual incomes below $75,000. Biden’s plan aimed to reduce racial disparities between student loan borrowers and relieve the burden on the third of students with debt, but no degree. Representative Pramila Jayapal [D-WA] and others iterated that four decades ago, the Pell grant covered 75% of tuition and today, it covers less than a third.

The selected witnesses also focused on different aspects of the crisis. Marc Goldwein of the CRFB called Biden’s executive action a “temporary band-aid” and demanded Congress to hold institutions accountable for offering tuition rates and loan repayment programs that are financially responsible for the taxpayer. Similarly, Dr. Looney argued that Congress should decide which institutions and degree programs taxpayers should pay for. Dr. Salerno’s testimony suggested that colleges should cosign federal loans and partly share the repayment risk with students so that educational programs would be more tightly aligned to labor market needs. Finally, Mr. Gakaree, President of the Institute for College Access and Success agreed that we must hold colleges accountable for keeping down costs but added that Congress should support the Biden Administration’s efforts to implement income-driven loan repayment plans and reduce racial disparities in borrowing.

An important bill to follow is the Lowering Obstacles to Achievement Now (LOAN) Act, which was introduced by Committee Ranking Member Bobby Scott [D-VA] and Subcommittee Ranking Member Wilson. It would double federal Pell grants, enhance the Public Service Loan Forgiveness Program, lower interest rates for federal student loans, and make them more affordable.

By Ava Cloghessy, Policy Intern