- The Education Department has a plan to return student-loan borrowers in default to good standing.
- GOP Rep. Virginia Foxx said doing so would be "insanity" because it would give them access to more debt.
- Per the department, borrowers would have a year after the payment pause expires to access the benefits.
A leading Republican lawmaker is once again not thrilled with President Joe Biden's plans to expand student-loan relief.
After extending the student-loan payment pause through August 31 in April, Biden's Education Department also announced a "fresh start" plan to give 7.5 million borrowers behind on payments, or in default, a chance to return to good standing upon entering repayment. On Wednesday, the Federal Student Aid office released additional details on what that plan would entail, but top Republican on the House education committee Virginia Foxx isn't on board.
"The Department's so-called Operation Fresh Start plan gives delinquent student loan borrowers the keys to borrow even more without any assurance they can afford to do so," Foxx said in a statement. "It's literally the definition of insanity. It's also wrong!"
"If these individuals were unable to pay back their loans the first time they borrowed, how will giving them access to more debt help? This is a terrible gamble—one for which taxpayers will end up paying the price," she added.
According to Federal Student Aid, defaulted borrowers will have at least one year once the payment pause ends "to make payment arrangements before defaulting on their debts and/or being subject to further collections efforts like most other borrowers eligible for the payment pause." During that time, eligible borrowers will regain access to income-driven repayment plans, federal financial aid, and negative credit reporting will be removed.
It's unclear when exactly the year of relief will begin, given borrowers do not yet know whether the payment pause will be extended beyond August 31. But there is speculation the timeline will be pushed back — and that's something Foxx and her GOP colleagues would rather not see happen. They recently introduced legislation that would prevent Biden from extending the pause again and canceling student debt broadly, along with ending targeted loan forgiveness through income-driven repayment plans.
Still, when it comes to borrowers in default, officials within Biden's administration recognize the need for reform. Under Secretary of Education James Kvaal recently said that "borrowers who default on their loans are people who have been failed by the policies and lagging investments in college affordability," prompting the department's "fresh start" idea.
And for now — with August 31 less than two weeks away — all federal borrowers are waiting for Biden to let them know if they will get more time without having to pay off their debt, along with a cut to their student-loan balances.