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The GOP's bill to permanently block Biden's student-debt relief could cause public servants' loan balances to unexpectedly balloon if it passes, advocacy groups say

Rep. Virginia Foxx
Rep. Virginia FoxxBill Clark/CQ-Roll Call, Inc via Getty Image
  • The SBPC and AFT released a report analyzing the impacts of a GOP bill to overturn student-debt relief.

  • The report said the bill would reinstate loans forgiven over the past year under PSLF.

  • GOP Rep. Virginia Foxx rejected that idea during a hearing last week as Democrats said loans would be reinstated under the bill.

Some advocates are sounding the alarm on possible consequences of a Republican bill to overturn President Joe Biden's student-debt relief.

The House is scheduled to vote on Wednesday on a bill, first introduced in March, that would overturn Biden's plan to cancel up to $20,000 in student debt, along with immediately ending the recent payment pause. The bill was introduced using the Congressional Review Act — a fast-track tool that lawmakers can use to overturn final rules put in place by government agencies.

However, the text of the CRA statute could suggest the GOP bill might do far more than block Biden's broad debt relief and the student-loan payment pauses. On Monday, the Student Borrower Protection Center and American Federation of Teachers released a report analyzing the impacts of the CRA — should it pass — on borrowers who received relief through, or are currently making payments toward, the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after ten years of qualifying payments.

That's because, as SBPC's Executive Director Mike Pierce said on a Tuesday press call, the text of the CRA itself  is "retroactive," meaning millions of borrowers who received debt relief through PSLF during the payment pauses risk having their loans reinstated.

Specifically, a clause in the CRA states that "a rule that does not take effect (or does not continue) may not be reissued in substantially the same form," which Pierce said means that "any subsequent executive action that mirrors the policy rebuked via the CRA is also invalid."

"This resolution will unwind debt relief already delivered to hundreds of thousands of public service workers across the country. This will happen because the seventh and eighth payment pauses also give credit towards Public Service Loan Forgiveness for each paused month covered by these executive actions," Pierce said, referring to Federal Student Aid guidelines that state paused payments will count toward PSLF progress as long as the borrower meets all other qualifications.

SBPC and AFT's report estimates that as a result of that clause, as many as 268,660 borrowers in public service who received debt relief from September 2022 through March 2023 could have $19 billion in debt reinstated, based on PSLF data from Federal Student Aid. The report also estimates that two million public servants making progress toward payments in PSLF could lose "at least some progress toward relief."

Still, while Democratic lawmakers said during a House education committee markup of the bill last week that payments would be reinstated under the legislation, chair of the committee Virginia Foxx rejected those statements.

"Unfortunately, radical advocacy groups whose sole mission is to see every last student loan transferred to taxpayers have put out untruthful claims about this legislation, scares student-loan borrowers, with zero evidence or historical precedent to rely upon," Foxx said during the markup. "These left-wing advocates are misleading borrowers by, among other things, telling them that they will have to make payments retroactively for the time student-loan payment was paused. That's just not true."

"My Democratic colleagues are unfortunately amplifying this deceitful claim," she continued. "However, I want to be clear, nothing in this bill requires the Department of Education to break down the doors of borrowers like Biden's IRS army and forced borrowers to make retroactive payments, and nothing in this bill directs the department to take away the months spent in forbearance that count towards programs like Public Service Loan Forgiveness."

Foxx's office did not immediately respond to Insider's request for comment on the topic.

The legislation will likely pass the House due to the Republican majority, but it faces a trickier path ahead in the Democratic-controlled Senate and White House. The Office of Management and Budget said in a Monday statement that Biden will veto the bill if it makes it to his desk.

Read the original article on Business Insider