New Senate bill would hold colleges accountable for student debt

The new legislation would require colleges to repay certain federal student loans to their students if they default on their debt. Sen. Josh Hawley, R-Mo., introduced a bill Wednesday that also allows borrowers to repay student loans through bankruptcy.

The “Make the Universities Pay Act” would require higher education institutions to be responsible for 50% of their student loans. Universities are prohibited from increasing tuition fees to cover this new responsibility “unless there is an equivalent percentage decrease in the administrative expenses of the institution”.

“For decades, universities have amassed billion-dollar endowments while teaching nonsense like men can get pregnant. While charging exorbitant tuition fees,” Hawley told the daily call. “Now Joe Biden wants to give an extra $1 trillion to prop up the system. It’s wrong. Instead, it’s time to put universities on the hook and give students the information they need to make informed decisions.

Hawley’s legislation would also allow student loan debt through the federal direct student loan program to be discharged in the event of personal bankruptcy. Federal law currently does not allow student loans to be considered in bankruptcy proceedings.

Any undergraduate student loan in default five years after the first payment is due will be eligible for a bankruptcy discharge, and after 15 years for graduate student loans.

Along with increased accountability, colleges and universities would be required to publish the career outcomes of their graduates. Mean and median earnings of graduates at one year, five years and 15 years after graduation would be made public.

Hawley introduced the legislation in response to President Joe Biden’s announcement that he would use executive powers to forgive each student borrower $10,000 and up to $20,000 per borrower who received a Pell Grant.

Analysts expect Biden’s program to cost the federal government between $500 billion and $1 trillion, according to The the wall street journal. Republican-aligned think tanks like the Heritage Foundation criticized Biden’s student loan forgiveness program for shifting debt to US taxpayers.

Lindsey Burke and Adam Kissel of the Heritage Foundation said the student loan forgiveness does nothing to address the rising costs of a college education, but rather exacerbates them.

“The possibility of future bailouts will push more students into more debt, which many colleges will gladly encourage in the name of higher tuition,” said Burke and Kissel.

Congressional Republicans have criticized Biden for his recent actions to deal with the student loan crisis while Democrats have increased conversation lower interest rates and expand eligibility for student loan forgiveness.

Norman D. Briggs