September 15, 2022
Two prominent House Democrats introduced a bill Thursday that would double the maximum Pell Grant award and substantially rework the federal student loan system, including changes to the troubled Public Service Loan Forgiveness program.
The Lowering Obstacles to Achievement Now, or LOAN, Act, would also make certain unauthorized immigrant students eligible for federal financial aid, and it would attempt to lower interest rates on student loans so they would not exceed 5%.
The bill also aims to make loans cheaper, such as by giving graduate students attending nonprofit colleges access to subsidized loans at the same interest rate as unsubsidized loans. It would also repeal origination fees.
Democrats presented the LOAN Act as a continuation of President Joe Biden’s decision to cancel mass amounts of student loan debt, up to $10,000 per person making under $125,000 a year. Pell Grant recipients in the same income bracket can have up to $20,000 forgiven.
It can also be viewed as a Democratic foil to Republican proposals to broadly reshape postsecondary education.
Virginia Foxx, a North Carolina Republican who is ranking member of the House Committee on Education and Labor, said in an appearance this week the GOP is moving toward a comprehensive “vigorous higher ed bill next year” if it retakes the majority in Congress.
A first step in that undertaking is Republican leaders’ student loan system bill — the Responsible Education Assistance through Loan, or REAL, Reforms Act — which would pare down repayment plan options. It would also entirely end Public Service Loan Forgiveness, PSLF, which wipes away the debt of nonprofit and government workers after a decade of qualifying payments.