Partisan divide on student loan solutions about to get louder

Republicans and Democrats have long agreed the student loan system needs to be reformed, but little has changed, as both claim the other side isn’t addressing the fundamental problem.

While some issues have consensus — such as the cost of U.S. colleges being too high and the student loan system being too difficult for borrowers — agreement quickly fizzles out when it comes to the solutions.

As the Supreme Court is set to decide on President Biden’s student loan forgiveness plan as soon as Thursday, the partisan divide is back in the spotlight as Democrats and Republicans are readying new proposals, from free college to targeted debt relief.

On the Democratic side, the issue is already getting heated, as activists are losing hope the conservative-majority court will rule in favor of Biden’s proposal to forgive up to $20,000 of a borrower’s debt. And while politicians and advocates tried to stay united around Biden to present a strong front of debt relief, it is quickly deteriorating.

The NAACP and Student Debt Collective hosted a rally this week for Juneteenth, calling for student debt cancellation if the court strikes down Biden’s current plan. 

Last week, Sen. Bernie Sanders (I-Vt.), chairman of the Senate Health, Education, Labor, and Pensions Committee, and Rep. Pramila Jayapal (D-Wash.) announced the “College for All Act.” The legislation aims to make college tuition free and debt-free for working-class Americans and would be paid for by another introduced bill, called the “Tax on Wall Street Speculation Act of 2023.”

“In the 21st century, a free public education system that goes from kindergarten through high school is no longer good enough. The time is long overdue to make public colleges and universities tuition-free and debt-free for working families. Education is one of the keys to a successful democracy and we must make it easier, not harder, for young people to obtain the degrees they have worked so hard for,” Sanders said.

The idea of free college has long been pushed by progressives as the end goal of fixing the student loan system, while proposals for student debt forgiveness offer temporary relief to borrowers.

Republicans reject the ideas of both student debt relief and free college, saying they are unfair to those who do not want to attend the institutions or have already paid off their obligations.

House and Senate Republicans were on the move last week introducing multiple bills that would increase transparency in financial aid offers from colleges and consolidate student loan repayment options to make the system easier to navigate. 

“Unlike President Biden’s student loan schemes, this plan addresses the root causes of the student debt crisis. It puts downward pressure on tuition and empowers students to make the educational decisions that put them on track to academically and financially succeed,” Sen. Bill Cassidy (R-La.) said. 

Experts say many of the proposals around student loan relief are more Band-Aid solutions than addressing the root issues, which are harder to sell politically. 

“There is a fundamental lack of willingness to acknowledge the real problem, and there’s a tension between, ‘Do we want university to be affordable?’ and, ‘Do we want it to be necessary?’” said Patrick Gourley, associate professor of economics in business analytics for the University of New Haven.

“A lot of times you’ll hear politicians say, ‘We need university to be affordable, but we also don’t want university degrees required for all jobs,’” Gourley said, arguing the two can’t coexist. 

“If you want to go back to a time where you could get a good white-collar job without a college degree, then college needs to be unaffordable for people,” he said. “And if you want it to be that everyone can afford to go to college, well, then you’re gonna wind up at our current state, where you have to go to college to get a huge amount of jobs.”

Universities, meanwhile, also have a huge influence. 

“As with every other policy area, there are special interest groups that have a vested interest in maintaining the status quo. When members of Congress try to initiate reform, they will often hear from university presidents, universities in their districts, and so there’s always that pressure to maintain the current structure of student loans and grants,” said Lindsey Burke, director for the Center for Education Policy at the Heritage Foundation. 

While some are concerned the focus on loan forgiveness has prevented other important conversations on the topic, Republicans and Democrats are about to crash onto another hurdle that could dominate the debate.

The Biden administration is set to solidify changes to income-driven repayment programs for student loans that will likely draw just as much ire from Republicans as his relief proposal did. 

The changes the administration proposes could cut some borrowers’ monthly payments in half, while others could pay as low as $0 per month.

“These are as consequential, one could argue, as the student loan forgiveness plan is, and taxpayers are going to pick up the tab for a lot of student loan cancellation as a result of income-driven repayment change,” Burke said. 

The issue is going to be top of mind for voters in the upcoming months as federal student loan payments are set to resume for the first time in three years; ending the payment pause was part of the debt limit deal the president made with Speaker Kevin McCarthy (R-Calif.).

In his effort to reach an agreement moderate enough to receive bipartisan support, Biden sacrificed his ability to extend the pandemic-related payment pause again — which his base had been pushing for — agreeing to let the payments resume 60 days after June 30.

Now, borrowers can expect interest to turn back on for their loans in September, and for payments to be due again in October.

In order for the conversation not to be solely focused on one aspect of the system or one proposal, Jared Bass, acting senior vice president for the education department at the Center for American Progress, says there should be more focus on the Higher Education Act, which has not been reauthorized in more than a decade. 

The law focuses on the role of government in higher education and the programs put in place for the institutions.

“We have not had a holistic or comprehensive reauthorization of the Higher Education Act for quite some time. I think we’re just out of practice. I see higher education and authorization as kind of like maintenance in your car. And I just think the check engine light, it’s been on for quite some time,” Bass said.

“So I really do think that we need the opportunity for folks to come together through a comprehensive reauthorization and really tackled these issues head-on,” he added.