Millions of student-loan borrowers will experience 'devastating' delays in debt relief if a GOP proposal to cut spending goes through, Biden's Education Secretary says
Rep. Rosa DeLauro asked all federal agency heads how GOP spending cut proposals would impact them.
The agencies responded on Monday, with Education Sec. Miguel Cardona outlining the "devastating" impact the cuts would have on student-loan borrowers.
He said the cuts would delay student-debt relief and make it even harder to get customer service help.
Federal agencies are responding to a Republican plan to cut spending levels — and its impacts don't look pretty.
In January, House Appropriations Committee Ranking Member Rosa DeLauro wrote to all federal agency heads asking how a Republican plan to cap fiscal year 2024 spending at the 2022 level would impact their agencies and the Americans they serve.
On Monday, the agencies responded. House Appropriations Committee Ranking Member Rosa DeLauro said in a statement that Republican proposals to cut spending on federal programs would "cause irreparable damage to our communities by gutting the programs every single American relies on. Those proposals are unrealistic, unsustainable, and unconscionable."
"Continued Republican calls for cuts of this magnitude—both secret proposals from Republican leadership and public demands from extremists in the party—would be absolutely detrimental to all Americans, many of whom have not seen a pay raise in years and are struggling to pay their bills," DeLauro added. "The math is not there. These drastic cuts would put people at risk."
Education Secretary Miguel Cardona, in his response, elaborated on the "devastating effects" the GOP proposal would have on students and parents who rely on financial aid — especially student-loan borrowers. He noted that while specifics of the Republican plan have yet to be publicly released, the Education Department analyzed the impacts of capping programs at the fiscal year 2022 level, and 22% below the currently enacted level for fiscal year 2023.
Cardona said the impacts of the decreased spending would be significant when it comes to administering financial aid. A 22% spending reduction would cut $468 million to service financial aid, and if funding were kept at the 2022 level, "more than 40 million student loan borrowers would be impacted through decreased service hours and longer turnaround times to make changes to student loan repayment plans, or obtain a deferment, forbearance, or discharge of student loans."
He added that 17.6 million parents and students who apply for financial aid could experience "multiple-hour wait times and reduced call center hours," and applications for loans could take "weeks longer to process."
Student-loan borrowers are already faced with hours-long wait times to get simple questions answered from the companies that service their loans. With Biden's broad plan to cancel student debt stalled as the Supreme Court makes a final decision on the legality of the relief, borrowers have had questions on what the relief means for their repayment.
One borrower, for example, recently told Insider that "no one is taking the time to help me or to listen to me," causing her to spend hours emailing and calling federal agencies to get help with repayment.
Still, Democrats are waiting for a concrete plan from the opposing party on what type of spending cuts they want to see in a potential deal to raise the debt ceiling and keep the US on top of paying its bills, so it's unclear how exactly the Education Department will be impacted by any forthcoming cuts.
But the agency already has a lot on its plate with minimal resources, given Congress approved a budget last year that did not increase Federal Student Aid's funding. Biden's recently released budget requested a funding increase for the agency to help facilitate a smooth transition to repayment for borrowers this year, but it's not likely to be approved by a GOP-led House.
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