With Biden's student loan debt forgiveness in limbo, lawmakers consider colleges' role

Amid a clash Thursday over President Joe Biden's beleaguered student loan forgiveness plan, one theme emerged that at least some members of Congress could agree upon: Colleges need to take more responsibility for the debt crisis.

The House Subcommittee on Higher Education and Workforce Development, chaired by Republican Rep. Burgess Owens of Utah, held a hearing aimed at examining the implications of Biden’s student loan proposals for students and taxpayers. One of those – broad relief of up to $20,000 in debt for borrowers making less than $125,000 – is held up in the U.S. Supreme Court.

The two-hour hearing, the subcommittee’s first meeting this session, consisted largely of the usual partisan talking points. Republicans decried the burdens debt forgiveness places on “hardworking Americans” and the prospect of creating a culture of overreliance on loans. Democrats lamented the declining value of a Pell Grant amid skyrocketing tuition and the disproportionate rates of low-income Americans who have struggled to complete their degrees but are stuck with ever-mounting debt they can’t afford.

They agreed on little, even failing to see eye-to-eye on whether the pandemic qualified as an emergency.

The general idea of better holding colleges accountable for the outpaced growth in tuition and student debt, however, appeared to garner bipartisan consensus. Here’s how some experts would go about doing that:

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Require colleges to cosign on student loans

Among the experts asked to testify Thursday: Carlo Salerno, an education economist who has criticized Biden’s plan.

As part of his testimony, Salerno broached the idea of requiring colleges to co-sign the loans students take out. They would then be financially responsible if a borrower is unable to make good on their payments after graduating.

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"Students benefit from risk-sharing because institutions that are held financially liable for their student's success will put more effort into getting those students through the system faster and more cheaply," Salerno said. "Taxpayers benefit because ... part of the risk of loss gets covered by an entity that does not have to be skip-traced and compelled to repay."

Colleges “have the financial resources to help recover the losses,” Salerno said, and greater accountability means they could get greater autonomy in how they operate.

Salerno also suggested providing financial rewards for colleges that succeed in keeping costs low: The accountability system “needs to be built on both carrots and sticks,” he said, not just sticks.

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Reintroduce gainful employment rule

Sameer Gadkaree, president of the Institute for College Access & Success and a supporter of Biden’s plan, was another expert asked to testify at Thursday’s hearing.

Asked how Congress and the administration can continue holding “low-quality institutions … accountable for their predatory and harmful practices,” Gadkaree said the first step is clear: reinstating the gainful employment rule.

The rule, revoked under former President Donald Trump, required any program whose typical graduates’ debts exceeded a certain percentage of their income to improve their outcomes or risk losing access to federal funding. The vast majority of schools affected by the rule were for-profit colleges, which account for half of all student-loan defaults.

The Biden administration has discussed reinstating the rule but has yet to do so. Separately, it recently took steps to go after the leaders of colleges that produce high rates of default.

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Debt Collective: Members of Congress should be held accountable

The Debt Collective, a network of borrowers that advocates for student loan forgiveness, ahead of the hearing accused Republicans of convening “a sham hearing” and called out their "hypocrisy.”

An analysis comparing current tuition rates to when Congress members were in college shows striking growth in the cost of higher education over time, even when controlling for inflation. For example, the University of Miami, Owens’ alma mater, cost $2,633 when the representative attended in 1972. That would be $19,166 in today’s dollars.

The university’s actual sticker price in 2023? $58,102.

Maddy Clifford, an organizer with the Debt Collective, visited the Supreme Court on Feb. 28. Oral arguments were heard in two cases that challenge President Joe Biden's $400 billion student loan forgiveness plan.
Maddy Clifford, an organizer with the Debt Collective, visited the Supreme Court on Feb. 28. Oral arguments were heard in two cases that challenge President Joe Biden's $400 billion student loan forgiveness plan.

“These Republican members of Congress and right-wing pundits attended college when tuition was significantly cheaper,” said Thomas Gokey, an organizer with the Debt Collective, in a statement. “The same isn’t true for today’s student debtors, where the price of college has skyrocketed while wages have fallen – now, young people have been buried under crushing debt. The public helped pay for these members of Congress to attend college so that the amount they were expected to pay in tuition was so small it was still, for  some of them, it was possible to pay it off with a part-time summer job.”

According to the Debt Collective, Owens' opposition to student debt forgiveness is even more questionable considering his own financial challenges. Owens declared bankruptcy five times and had at least $1.5 million of his own debt canceled.

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Contact Alia Wong at (202) 507-2256 or awong@usatoday.com. Follow her on Twitter at @aliaemily.

This article originally appeared on USA TODAY: On student loan debt, should colleges be held responsible?