Top Education Department officials slam budget cuts in Republican debt ceiling proposal

Dive Brief:

• Top U.S. Department of Education officials on Tuesday continued to slam a Republican spending proposal spearheaded by House Speaker Kevin McCarthy that would raise the federal debt ceiling but impose deep budget cuts on the agency.
• Education Secretary Miguel Cardona, who has already publicly criticized the GOP debt ceiling plan, said in a phone call with reporters Tuesday that McCarthy is showing “staggering recklessness” with his approach. Cardona said the plan, which would strike down a plan to forgive mass amounts of student loan debt, would hurt the most vulnerable students.
• President Joe Biden has already rejected the GOP blueprint and said the White House will not negotiate over it. The plan is not expected to gain traction in the Democrat-controlled Senate.

Dive Insight:

Republicans are setting up a battle over the debt ceiling in an attempt to reign in federal spending. Pundits also say it’s meant in part to force the president to come back to the negotiating table before the 2024 presidential election. 

The proposal would lift the debt ceiling by $1.5 trillion or suspend it until March 2024, whichever comes first. The current national debt ceiling sits at $31.4 trillion — it was last raised in 2021.

The Republican plan doesn’t contain precise budget cuts, but would reduce discretionary spending to fiscal 2022 levels. The Biden administration has said the scheme would slash funding by 22% across the board, but since it wouldn’t touch defense spending, it would mean significant reductions for other federal agencies. 

Notably, the plan would also block Biden’s mass student loan forgiveness program that is currently stalled before the U.S. Supreme Court. The program would wipe away $10,000 in debt for borrowers earning up to $125,000 and up to $20,000 for those who received Pell Grants, a primary source of federal student aid for low-income families. 

Further, it would halt the Biden administration’s proposed regulatory changes to income-driven repayment plans, which would lessen the monthly amount borrowers pay back — from 10% of what the Education Department considers discretionary income to 5%.

And it would end the pandemic-era moratorium on student loan payments that began during the Trump administration.

A senior Education Department official during Tuesday’s call expressed particular concern about the plan forcing monthly payments to restart, citing a statistic that 1 million borrowers were defaulting on loans annually before the pandemic. 

Two prominent House Republicans are pressing the Education Department for details surrounding the upcoming loan payment reinstatement.

In a Tuesday letter to Cardona, North Carolina Rep. Virginia Foxx and Utah Rep. Burgess Owens called for a copy of the Education Department’s action plan to restart monthly payments, as well as communications between the department and loan servicers.

The lawmakers also asked how much funding and staff the department has designated for the return of student loan servicing. They set a May 9 deadline for Cardona to respond to their questions.

Payments are set to resume 60 days after one of two events — either the courts allowing the debt forgiveness program to start clearing balances or June 30, 2023, whichever comes first.