The "Protecting Taxpayers from Student Loan Bailouts Act" limits the Secretary of Education's authority to enact regulations or executive actions related to student loans under Title IV of the Higher Education Act of 1965 if they are economically significant and increase subsidy costs. This bill aims to prevent economically impactful regulations that could negatively affect the economy or increase financial burdens.
Glenn Grothman
Representative
WI-6
The "Protecting Taxpayers from Student Loan Bailouts Act" limits the Secretary of Education's authority to propose regulations or executive actions related to student loans under Title IV of the Higher Education Act of 1965. Specifically, the Secretary cannot proceed with any regulation or action if it is deemed economically significant (an economic impact of $100,000,000 or more) and would increase subsidy costs. This limitation is in addition to other cost analysis requirements.
New Bill Shackles Education Secretary's Power Over Student Loans: The 'Protecting Taxpayers from Student Loan Bailouts Act'
This bill, officially called the "Protecting Taxpayers from Student Loan Bailouts Act," aims to significantly limit the Secretary of Education's power when it comes to making rules about federal student loans. It's all about tying the Secretary's hands on anything deemed "economically significant" – and that bar is set pretty low.
Red Tape for Student Loan Regs
The core of the bill (SEC. 2) prevents the Secretary of Education from proposing or enacting any regulation or executive action related to Title IV of the Higher Education Act of 1965 – the section dealing with federal student aid – if it meets two criteria:
- It's considered "economically significant."
- It would increase the government's cost for student loan subsidies.
What Counts as "Economically Significant"?
Here's where it gets interesting. The bill defines "economically significant" (SEC. 2) as anything that's likely to have an annual economic impact of $100 million or more, or that would negatively affect the economy, jobs, or even state and local governments. Think of a regulation requiring for-profit colleges to provide better career counseling. If that counseling costs schools – and by extension, the government, through increased loan defaults if students still can't find jobs – more than $100 million a year, this bill could block it.
Real-World Roadblocks
Let's say there's a surge in predatory lending practices targeting veterans. The Department of Education wants to step in with a new rule requiring lenders to disclose more information upfront. If that rule is projected to cost the government over $100 million annually (maybe because it reduces the number of loans taken out, thus reducing fees collected), this bill could stop it dead in its tracks. Or, imagine a situation where simplifying the FAFSA form (making it easier for students to apply for aid) is estimated to cost over $100 million due to increased staff or system updates. This bill could prevent those improvements, even if it means more eligible students get the aid they need.
The Bigger Picture: Chilling Effect?
This bill essentially creates a financial barrier to any significant changes in student loan regulation. While the title suggests protecting taxpayers, it could also prevent necessary actions to protect students and ensure the long-term health of the student loan system. It also sets a precedent: almost any meaningful change to a program as large as federal student loans is likely to have an impact of over $100 million. This could have a chilling effect, discouraging the Department of Education from even considering reforms that might be needed, simply because of the potential cost.