Questions and Answers: Student Loans

Q: What is your opposition to the Biden administration’s student debt relief policy?

A: First, the Biden administration’s nearly $1 trillion plan is fiscally irresponsible and follows a trajectory of partisan spending excesses that will make it even harder for the Federal Reserve to contain inflation. The price is particularly reckless when you factor in the unprecedented $31 trillion in national debt, which will stun economic growth if Washington doesn’t get its finances in order. Don’t forget that eliminating student debt for 40 million borrowers won’t magically eliminate their debt. It shifts the burden onto the taxpaying public, onto the backs of those who paid their own way through college, and onto the shoulders of the majority of Americans who haven’t earned an advanced degree. Certain borrowers making up to $250,000 a year could be eligible for up to $20,000 in student debt relief under the proposal. With the stroke of a pen, President Biden stretched beyond his constitutional authority and recalled former President Obama’s declaration—“I have a pen and I have a phone”—to evade Congress. The president’s hyperbole ended up in the US Supreme Court thanks to our system of checks and balances. The final question before the Supreme Court is whether the President of the United States has unilateral authority to forgive half a trillion dollars in loans without Congressional approval. Article I of the Constitution gives Congress purse power and legislative powers; Article II clarifies that the President “must see that the laws are faithfully carried out”. Unchecked executive power disregards the separation of powers.

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make no mistake This misguided policy is a slippery slope that would pave the way for even bolder executive abuses, including future governments from both political parties. So I’ve joined Sen. John Thune to keep the administration in check. We passed the Stop Reckless Student Loan Actions Act to block President Biden’s efforts to unilaterally cancel student loan debt and transfer the loans to the taxpayer. This blatant takeover of power is priceless and unfair. Additionally, it won’t dampen rising college tuition in America. On the contrary, it would give colleges the green light to keep raising tuition year after year and create expectations among prospective student borrowers that their debt would be forgiven.

Q: What can be done to help families with college finance?

A: At my district assemblies across the state, I regularly hear from Iowans about the rising costs of higher education and the myriad of financial aid forms and packages. I’m working to bring transparency and clarity to this process for Iowa families so they can understand what they’re signing up for on the dotted line on the front end so student borrowers aren’t overwhelmed. I partnered with Sen. Tina Smith of Minnesota to introduce a trio of bipartisan bills that would help prospective and current college students be better informed about financial aid offers and credit decisions. Our bills would improve transparency in the loan process, allowing students to compare dollar for dollar on what makes the most sense for their future and hold colleges accountable for the way they present offers of financial assistance to students. Here’s how:

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The Net Price Calculator Improvement Act would improve the online tool to provide students with individual estimates of higher education costs and financial aid figures well in advance of deciding where to apply.

The Understanding the True Cost of College Act would create a universal financial aid offer letter and standardize the terms used to describe financial aid. These reforms would allow students to compare financial aid packages between schools, rather than using the current system in which colleges use different terms, calculate costs differently, and often drastically underestimate their costs. In fact, according to an audit by the Government Accountability Office, more than 90 percent of college financial aid letters offer ball low the cost that students would pay. That’s wrong. Sen. Joni Ernst is an original co-sponsor of our bill, and I also joined her in introducing the Student Transparency for Understanding Decisions in Education Net Terms (STUDENT) Act, which would require student loan applicants to provide an estimate of total interest receive the payments intended for them over the term of the loan before they take out the loan.

The Federal Loan Law Act “Know Before You Owe” would reform the college statute to strengthen loan counseling requirements for colleges. For example, our bill would make credit counseling an annual requirement before new loans are disbursed, and would compare a student’s borrowing rate to likely salary so students can make informed decisions early on, rather than being caught unawares by their debt burden after graduation . Additionally, our bill puts students in the driver’s seat and gives them the keys to decide how much to borrow, rather than offering the maximum possible loan amount as the default option. Rep. Mariannette Miller-Meeks introduced the Companion Bill to the House of Representatives. These bipartisan, bicameral bills would add stronger financial literacy tools to the toolbox to prevent student borrowers from being stuck with debt they can’t afford to pay back.

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