Congress introduced bill that would hold colleges responsible for student debt
With the Biden administration fast-tracking student loan forgiveness, a group of Republican lawmakers wants to hold colleges responsible for the ballooning student debt crisis.
Last month, Rep. Virginia Foxx introduced the College Cost Reduction Act. The bill seeks “To lower the cost of postsecondary education for students and families” by holding colleges and universities financially responsible for outstanding loans.
“The College Cost Reduction Act will provide much-needed relief for countless students and families who have been continually charged exorbitant tuition for degrees without worthwhile economic benefit,” Foxx said in a statement.
In an interview with NewsNation, the Republican lawmaker said, “We want to have the colleges and universities have some skin in the game on the issue [of student debt]. We want them to bring down the cost of going to college, and we want them not to saddle students with unsupportable debt.”
Foxx said the bill demands greater transparency from colleges about the cost of attendance.
“We want students and families to know exactly what it’s going to cost them and how much financial aid they’re going to get,” she explained.
The proposed legislation is backed by Republican lawmakers in the Education and the Workforce Committee. Key among the proposed measures is binding colleges to reimburse the federal government for defaulted student loans.
Some of the committee’s Democratic members oppose the legislation, with Rep. Bobby Scott of Virginia claiming that the bill reduces the amount of money students can borrow.
If that happens, students could face greater out-of-pocket expenses.
While the bill still has a long way to go before becoming law, there’s a growing sense of urgency in Congress to address the student debt crisis.
The cost of college continues to mount
College attendance used to be mandatory for only a handful of occupations, but that began to change around the 1980s when four-year degrees became compulsory for more jobs.
Since then, college tuition costs have skyrocketed.
According to Georgetown University, college tuition and fees have nearly tripled since 1980, rising by a cumulative 169%. Meanwhile, research from the Education Data Initiative found that average tuition costs are up 23 times since 1963.
All said, college tuition has outpaced headline inflation by nearly five times over the past five decades, according to College Board, a nonprofit organization.
Rising education costs have saddled American college-goers with record amounts of debt. According to Creditnews’ real-time student debt tracker, the federal student debt balance peaked at $1.77 trillion in the first quarter of 2023.
Students have an average debt load of $37,009, with average monthly loan payments ranging from $200 to $299, though some estimates are even higher.
Although college tuition and student indebtedness have been rising for decades, things may have reached a breaking point after Covid.
Student debt strike?
It’s been four months since the federal government resumed student loan payments, and early signs suggest things aren’t looking too good.
According to the Education Department, 40% of borrowers with payments due in October failed to pay a single penny. Activists say borrowers have staged a “massive student debt strike” as they awaited progress on debt relief.
The Biden administration fast-tracked forgiveness for up to 6.9 million borrowers last month, but that’s still well short of the Democrats’ push to help 40 million borrowers pay down their debt.
After more than three years of forbearance, borrowers have grown accustomed to not paying back their loans. That money is being put to use elsewhere, according to Astra Taylor, co-founder of the Debt Collective union.
“Faced with the impossible choice of feeding their kids, keeping a roof over their head or throwing an average of $400 a month into the Department of Education incinerator, borrowers are rightly choosing to keep themselves and their families financially afloat,” she said.
“Neither borrowers nor the student loan system were prepared to resume repayment” in October, said Persis Yu, a director at the Student Borrower Protection Center.
Yu had warned months earlier about transitioning borrowers back into repayment more subtly.
“It’s critically necessary that we have some kind of, like, reprieve for borrowers because the reality is that most Americans’ budgets don't have the flexibility to suddenly be making what is often hundreds of dollars of monthly payments right now,” she told CBS News.