Reynolds signs letter to repeal loan forgiveness

“I’m proud to stand up for hard working Americans and their tax dollars!” Iowa Gov. Kim Reynolds tweeted Monday, sharing a Fox News article detailing her signing a joint letter asking President Joe Biden to repeal the student loan forgiveness plan.

On Aug. 24, the Biden-Harris Administration announced a student debt relief plan that includes one-time student loan debt relief targeted to low- and middle-income families.

The U.S. Department of Education (ED) will provide up to $20,000 in debt relief to Federal Pell Grant recipients and up to $10,000 in debt relief to non-Pell Grant recipients. Borrowers with loans held by ED are eligible for this relief if their individual income is less than $125,000 or $250,000 for households.

The application process is set to open online in early October.

“Your loan, your responsibility,” Reynolds said. “I support affordable and accessible higher education, but I don’t support it at the expense of other American taxpayers. Biden’s student loan forgiveness plan will cost each American taxpayer more than $2,000 or $600 billion total. We cannot afford this.”

The letter, led by Reynolds, signed by 22 GOP governors states:

“As governors, we support making higher education more affordable and accessible for students in our states, but we fundamentally oppose your plan to force American taxpayers to pay off the student loan debt of an elite few—a plan that is estimated to cost the American taxpayer more than $2,000 each or $600 billion total, a price the people of our states cannot afford.

Only 16-17 percent of Americans have federal student loan debt, and yet, your plan will require their debts be redistributed and paid by the vast majority of taxpayers. Shifting the burden of debt from the wealthy to working Americans has a regressive impact that harms lower income families. Borrowers with the most debt, such as $50,000 or more, almost exclusively have graduate degrees, meaning hourly workers will pay off the master’s and doctorate degrees of high salaried lawyers, doctors, and professors. What’s more, the top 20 percent of earning households hold $3 in student debt for every $1 held by the bottom quintile, generating a lopsided reality where the wealthy benefit at the expense of the working. Simply put, your plan rewards the rich and punishes the poor.

College may not be the right decision for every American, but for the students who took out loans, it was their decision: able adults and willing borrowers who knowingly agreed to the terms of the loan and consented to taking on debt in exchange for taking classes. A high-cost degree is not the key to unlocking the American Dream—hard work and personal responsibility is. For many borrowers, they worked hard, made sacrifices, and paid off their debt. For many others, they chose hard work and a paycheck rather than more school and a loan. Americans who did not choose to take out student loans themselves should certainly not be forced to pay for the student loans of others.

At a time when inflation is sky high due to your unprecedented tax-and-spend agenda, your plan will encourage more student borrowing, incentivize higher tuition rates, and drive-up inflation even further, negatively impacting every American. Even economists from your own party oppose your plan for raising demand and increasing inflation. Rather than addressing the rising cost of tuition for higher education or working to lower interest rates for student loans, your plan kicks the can down the road and makes today’s problems worse for tomorrow’s students.

Bipartisan opposition to your plan includes more than economic objections but process problems as well. As president, you lack the authority to wield unilateral action to usher in a sweeping student loan cancellation plan, a position shared by leaders of your party. Last year, Speaker of the House Nancy Pelosi (D-CA) stated, ‘People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone, he can delay, but he does not have that power. That has to be an act of Congress.’

For these reasons and more, we call on you to withdraw your student loan plan immediately.”

Reynolds’ 2022 Democrat opponent Deidre DeJear also tweeted Monday about the letter saying, “So let me get this straight… You make college more expensive and now you criticize the President for WORKING to fix the problems you fueled? This should not be a political issue.”

In terms of the loan forgiveness being taxed, the student aid website states “One-time student loan debt relief will not be subject to federal income taxes. State and local tax implications will vary.” In seven states, the forgiveness payments could be taxed as income; however, Iowa is not one of those states.

In addition to Reynolds, the letter was signed by Alabama Gov. Kay Ivey, Alaska Gov. Mike Dunleavy, Arizona Gov. Doug Ducey, Arkansas Gov. Asa Hutchinson, Florida Gov. Ron DeSantis, Georgia Gov. Brian Kemp, Idaho Gov. Brad Little, Maryland Gov. Larry Hogan, Missouri Gov. Mike Parson, Montana Gov. Greg Gianforte, Nebraska Gov. Pete Ricketts, New Hampshire Gov. Chris Sununu, North Dakota Gov. Doug Burgum, Ohio Gov. Mike DeWine, Oklahoma Gov. Kevin Stitt, South Carolina Gov. Henry McMaster, South Dakota Gov. Kristi Noem, Tennessee Gov. Bill Lee, Texas Gov. Greg Abbott, Utah Gov. Spencer Cox, and Wyoming Gov. Mark Gordon.