House Democrats introduced legislation Thursday to cancel $1.5 trillion in federal student debt and halt the transfer of borrower accounts to the Treasury Department, according to a statement from the U.S. Department of Education. The proposal, which includes provisions to prevent the Department of the Treasury from assuming responsibility for managing student loan portfolios, marks a significant escalation in the party’s efforts to address the crisis, according to White House officials.
The bill, formally titled the “Student Debt Relief and Accountability Act,” requires the Education Department to retain oversight of all federal student loans, including those held by private lenders. A senior administration official confirmed the measure aims to “prevent the mismanagement of borrower data and ensure continued access to repayment options,” citing Department of Education records.
Key Details of the Proposed Policy
The legislation would immediately block the Treasury Department from taking over student loan servicing, a move that has drawn sharp criticism from Republican lawmakers. “This is a dangerous power grab that undermines fiscal responsibility,” said Rep. Cathy McMorris Rodgers (R-WA), ranking member of the House Education Committee, in a statement. The bill also includes a provision to forgive up to $10,000 in debt per borrower, with additional relief for low-income borrowers, according to Congressional Research Service data.
Education Department officials emphasized the proposal aligns with ongoing efforts to “streamline loan forgiveness programs and reduce administrative burdens,” citing StudentAid.gov as a reference. The measure would also require the Treasury to return all borrower records to the Education Department within 90 days of enactment, according to federal regulatory filings.
Political Reactions and Next Steps
Senate Majority Leader Chuck Schumer (D-NY) called the proposal “a critical step toward economic justice,” while Senate Republicans warned of “massive taxpayer liability.” The American Federation of Students, a prominent advocacy group, praised the measure as “a long-overdue correction to the privatization of student debt,” according to AFS press releases.
The bill faces immediate challenges in the Republican-controlled House, where Speaker Mike Johnson (R-LA) has criticized the debt cancellation component as “fiscally reckless.” A Politico analysis noted the measure lacks sufficient support in the chamber, with 23 Republican lawmakers already signaling opposition.
What Comes Next?
The bill is expected to advance through the Senate by late June, with a vote anticipated by July 4, according to Senate leadership schedules. If passed, the measure would require the Treasury Department to return all loan records by August 1, 2025, according to Treasury Department guidelines.
Legal experts caution the legislation could face court challenges, with the Center for American Progress estimating “a 40% probability of litigation within 180 days” based on judicial precedent. Meanwhile, the Consumer Financial Protection Bureau has begun reviewing the impact of debt cancellation on credit reporting systems, according to CFPB filings.
As the debate intensifies, the outcome could reshape the $1.7 trillion student loan market, with implications for borrowers, lenders, and federal budgets. The next critical milestone is the Senate’s scheduled vote on June 28, according to White House timelines.
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