Is it just my imagination, or do major stories always seem to break right after I put out the monthly student loan update?? Ugh!
One of our long-standing rules around here which has served our clients and readers well over the years is that we don’t waste your time talking about legislative and policy proposals. That’s because 90% of what gets recommended never comes to fruition. Occasionally, we’ll see something which has a pretty good chance of making it through (like the proposed overhaul of the IDR plans), and we’ll get ahead of it for your benefit. But sometimes the media hypes this stuff up to such an extent that we feel it’s necessary to chime in…and that’s the case today.
Here’s the skinny: yesterday on May 24th, Republicans voted to block President Biden’s loan cancellation plan, and to immediately end the latest extension of the CARES Act payment and interest pause. Now, that should come as no surprise to anyone. From day one, the GOP has disagreed with the generous student loan provisions both on the grounds of executive overreach, and general unfairness as a transfer of wealth (or in this case, debt) from borrowers to taxpayers. The interesting headline that some outlets have extracted from this action is that Republicans are trying to reverse loan forgiveness and reinstate loans for some borrowers.
That is obviously a scary thought for some and sounds quite irrational. The reasoning for that analysis is the bill aims to cancel the current payment pause extension, which was first announced back in December. Some have interpreted this language to be retroactive, hence the reinstatement fears. GOP leadership has addressed this, saying they have no intention of reinstating any loans. This writer is no J.D., so I’ll stop short of giving an opinion as to whether the language in the resolution would actually allow that.
What I will comment on is whether any of this has any chance of passing. In short, I think the answer is NO. To date, we haven’t covered this story due to the very low chance of Congressional Republicans blocking Biden’s student loan initiatives. While Republicans can use their majority in the House to pass bills all day long, they do not have that luxury in the Senate, where Democrats hold a slim majority. And while a few Democrats have expressed trepidation in regard to Biden’s student loan initiatives, this is not one of those instances where they are likely to buck the party. And even if they did, and the measure passed, President Biden has already said he would veto the bill. From there it would take a 2/3 majority in both the House and Senate to pass, and that simply is not going to happen. No, the real event we’re waiting for here is the Supreme Court decision, which is likely coming in a few weeks.
We wanted to communicate this ASAP so you can enjoy your BBQ this weekend. Try not to sweat the student loan headlines, and we’ll let you know when the real stories break!
Brandon Barfield is the President and Co-Founder of Student Loan Professor, and is nationally known as student loan expert for graduate health professions. Since 2011, Brandon has given hundreds of loan repayment presentations for schools, hospitals, and medical conferences across the country. With his diverse background in financial aid, financial planning and student loan advisory, Brandon has a broad understanding of the intricacies surrounding student loans, loan repayment strategies, and how they should be considered when graduates make other financial decisions.