Building on President Joe Biden’s student debt cancellation plan, House Democrats on Thursday proposed new legislation that would increase federal student aid, lower interest rates on loans and take other steps to make college more affordable. The bill is being pushed as a complement to Biden’s plan, which promises to wipe away student debt for millions of Americans but does little to help future students avoid heavy levels of debt. Democrats say their plan would tackle the root causes behind America’s $1.6 trillion in federal student debt. “Simply put, by making loans cheaper to take out and easier to pay off, the LOAN Act will help improve the lives of student loan borrowers — both now and in the future,” said Rep. Bobby Scott, D-Va., chair of the House Education and Labor Committee. But similar to Biden’s loan cancellation plan, the proposed legislation does not address the rising cost of college itself, which has continued to increase for decades. The election-season bill has dim odds of passage in the House and virtually no hope in the Senate, where Democrats hold a slim 50-50 edge and Republican votes would be needed even to take the bill up. Still, it spells out Democratic priorities as both parties vow to address the nation’s ballooning student debt. Much of the proposal focuses on expanding federal Pell Grants, which are given to low-income students but have failed to keep pace with inflation and tuition rates. When the Pell program was started in the 1970s, the grants covered nearly 80% of tuition, fees and housing at a typical public university, according to federal data. Today, they cover about a quarter of those costs. The legislation would double the maximum Pell Grant, to $13,000, over a five-year span, and then make sure it stays even with inflation. Families that receive food stamps or Medicaid would automatically get an additional $1,500 per year. And students would be able to use Pell Grants for up to 18 semesters, up from 12 now. Interest rates on new federal student loans would be lowered starting in July 2023 to match the yield on the 10-year Treasury note, and all federal student loans would be capped at a 5% interest rate. Current caps vary depending on the type of loan but can reach as high as 10.5%. Older loans would be eligible for refinancing at the lower interest rates. Democrats also aim to permanently relax the rules for the Public Service Loan Forgiveness program, which was created to help public servants get their student debt forgiven but has been marred by complex rules. The proposal would allow public workers to get their debt cancelled after making 96 monthly payments, down from 120, and it would allow certain periods of non-payment to count, including military service or time in the Peace Corps. The Education Department recently loosened some rules during the pandemic, but the changes are set to expire at the end of October. Several of the bill’s components are perennial aspirations for Democrats, who have long sought to increase Pell Grants and fix the loan forgiveness program. But those goals have been thwarted by a deeply divided Congress — Biden has repeatedly sought to double Pell Grants but had to settle for a $400 increase this year as part of a bipartisan […]

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