DeFazio will try a last time to ease debt burden on college borrowers, expand Pell

The Oregon congressman is bringing back legislation that would reduce payments and double funding under the federal Pell grant program

By: - January 19, 2022 1:44 pm

New legislation proposed by Oregon Congressman Peter DeFazio would lower student debt loads and expand the federal Pell grant program for low-income students. (Photo by Chip Somodevilla/Getty Images)

Each year since 2016, U.S. Rep. Peter DeFazio, Democrat from Oregon, has proposed lowering student debt and expanding the federal Pell grant for low-income students. 

His legislation has yet to pass.

In his last year representing the state’s 4th Congressional District before retiring after 36 years, DeFazio will try one last time.

He announced Wednesday that he will introduce the Helping Individuals Get a Higher Education while Reducing Education Debt Act (HIGHER ED Act) and the Achieving Independence through Degrees Act (AID Act).

He does so as calls to cancel student debt up to $10,000 or entirely have been so far unsuccessful, and the pause on federal loan repayments expires in May after being suspended for most of the pandemic. 

“This administration has, at some level, been discussing some forgiveness of student debt. That’s helpful, but it needs to go far beyond that,” DeFazio said.“This administration thinks forgiveness is controversial so they’ve been hesitant.”

Rep. Peter DeFazio speaks at the Eugene Depot on May 24. (Oregon Department of Transportation)

Instead of completely erasing student debt, DeFazio is proposing to make repayment more manageable. 

The Higher Education Act would change repayment terms on federal loans, so borrowers would not start paying until their income was at least 250% of the federal poverty level, or about $35,000. Currently, borrowers must start paying when they begin earning about $20,000 per year. 

The law would also cap monthly payments at 5% of discretionary income, or the income one has after taxes and after paying for essentials like housing. Any remaining loan debt would be forgiven after 20 years. 

While most student debt holders are between 25 and 34, those in their 30s and 40s carry the largest debt amounts, according to the Federal Reserve Bank of New York. Female borrowers tend to shoulder the largest debt amounts, with Black women shouldering the largest debts. 

This is because a larger share of women in the U.S. attend college than men, according to the Census Bureau, and because they take longer to pay their loans. Degree-holding women make about 74 cents on the dollar compared to men. Degree-holding Black women make about 70 cents to the dollar compared to their white male peers, according to analysis of Bureau of Labor Statistics data by the Pew Research Center.

The act would also change the Public Service Loan Forgiveness Program, which forgives debts for people working in public service after 10 years of repayment, to instead forgive 10% on loans every year for 10 years for qualified borrowers.

DeFazio’s second proposal would double Pell grants for low-income borrowers from about $6,500 per year to $13,000. It would allow students to use the money for living and non-tuition costs, and make it tax exempt. It would also expand who can access Pell, allowing borrowers to use it on workforce training programs, and expand student eligibility for the Supplemental Nutrition Assistance Program, the federal food stamps program.

DeFazio’s Congressional district encompasses both Oregon State University and the University of Oregon. If the expansion of Pell passes, it would cover most of the costs of in-state tuition at those schools for the highest needs students. 

During 2019, some provisions of DeFazio’s newest proposals made their way into the Future Act, which expanded funding to minority-serving institutions and slightly increased the amount of money available for Pell grants. Some provisions were also included in the College Affordability Act in 2019, which passed the House but not the Senate. That act would have effectively made community college free, substantially raised the amount of money for Pell grants and allowed them to cover living and other college expenses beyond tuition. 

It would also have extended Pell grant eligibility to undocumented students.

DeFazio said the largest impediment to passing legislation that would reduce or cancel student loans has been opposition from banks and private lenders, who charge higher interest rates on the loans than loans issued from the federal Education Department.

The average debt for a student borrower in Oregon during the 2018-19 school year was about $27,500, according to data from The Institute for College Access and Success. Of the state’s college graduates that year, more than half left school with debt, according to the institute. 

As of September 2021, 43.4 million borrowers in the U.S. owed $1.61 trillion, according to the Office of Student Aid at the U.S. Department of Education.

More than 90% of that debt is held by the federal Education Department.

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Alex Baumhardt
Alex Baumhardt

Alex Baumhardt has been a national radio producer focusing on education for American Public Media since 2017. She has reported from the Arctic to the Antarctic for national and international media, and from Minnesota and Oregon for The Washington Post. She previously worked in Iceland and Qatar and was a Fulbright scholar in Spain where she earned a master's degree in digital media. She's been a kayaking guide in Alaska, farmed on four continents and worked the night shift at several bakeries to support her reporting along the way.