Senate Republicans introduce plan to tackle student loan debt

[mystery-ak]

 Senate Republicans introduce plan to tackle student loan debt
by Lexi Lonas - 06/14/23 12:46 PM ET

Senate Republicans are unveiling their own plan to tackle student debt as the Supreme Court is set to rule soon on President Biden’s student debt relief program.

The GOP package, called the “Lowering Education Costs and Debt Act,” consists of five bills that the senators say will address the root causes of the student debt issue such as the increasing price of college and students taking out loans they can’t afford.

The package was introduced by five Republican senators: Bill Cassidy (La.), the ranking member of the Senate Health, Education, Labor, and Pensions Committee; Chuck Grassley (Iowa), John Cornyn (Texas), Tommy Tuberville (Ala.) and Tim Scott (S.C.).

The first two bills in the package specifically deal with how colleges give students information before they decide to attend.

The “College Transparency Act (CTA)” would reform the college data reporting system so students have better information about outcomes at schools before committing to a university.

The “Understanding the True Cost of College Act” will require schools to have a similar style for their financial aid letters with a breakdown of the aid so students can better compare offers.

The last three bills deal directly with student loans, including how information is given to borrowers and limiting some borrowing.

The “Informed Student Borrower Act” requires students to be more informed when applying for a loan by acknowledging they received student loan entrance materials or they participated in entrance counseling.

more
https://thehill.com/homenews/education/4049576-senate-republicans-introduce-plan-to-tackle-student-loan-debt/

[Kamaji]

Uh, (a) how about requiring schools to have skin in the game by requiring that they fund a minimum percentage of each loan made to a student at the school, and (b) make bankruptcy a more meaningful option to resolve problem student loan debt.

[Smokin Joe]

Uh, (a) how about requiring schools to have skin in the game by requiring that they fund a minimum percentage of each loan made to a student at the school, and (b) make bankruptcy a more meaningful option to resolve problem student loan debt.

How about making the schools the lenders?

I can't think of a better way to produce graduates who can get good jobs with a larger paycheck, not to mention tighten admissions to limit the admission of those who are least likely to perform well enough to graduate and be employed.

[Kamaji]

How about making the schools the lenders?

I can't think of a better way to produce graduates who can get good jobs with a larger paycheck, not to mention tighten admissions to limit the admission of those who are least likely to perform well enough to graduate and be employed.

As a general matter, I agree, but I would be concerned that a 100% requirement might give an undue edge to the schools with large endowments over scrappy new schools, particularly technical colleges.

Also, lenders can usually offload some of the risk via loan participations, factoring, or hedging.  My idea is a requirement that a school have a minimum required exposure to each loan that the school has to eat if the student defaults in payment.  In fact, I would even make the school a subordinated lender vis-a-vis other creditors on the same student loan so that the school gets paid last, and therefore bears the greatest degree of risk of default.

[Kamaji]

I might send a letter to each of the sponsors suggesting something along these lines.