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Reauthorization of the Higher Education Act in recent years has come to feel a little like Charlie Brown, Lucy and that darn football. Every year lawmakers seem poised to present legislation and we think THIS year they mean it. But then other priorities seem to get in the way and our dreams of an HEA bill are yanked away from us again.
2018 may just be different, though. Because it seems while many in Washington were focused on healthcare and tax reform, Republicans in the House of Representatives were simultaneously crafting an HEA reauthorization plan that would make big changes to student loans, borrower consumer protections, career-focused programs and more.
Meanwhile, the Senate Health, Education, Labor and Pensions Committee is on track to soon release its own reauthorization bill and recently kicked things off with a hearing on FAFSA (Free Application for Federal Student Aid) simplification. As the HELP Committee continues its work, we have some advice on which provisions in the House PROSPER (Promoting Real Opportunity, Success and Prosperity through Education Reform) bill should be replicated and which should be jettisoned.
The House bill has some good news for programs that focus on giving students hands-on experience and job skills, or what it calls “earn and learn” opportunities. It allocates $183 million to community colleges for two-year apprenticeship programs and nearly doubles federal funding for work-study programs. With employers expressing increased concern over a widening skills gap in the US today, lawmakers are right to prioritize those programs and innovations that will ensure more students are 21st century ready for opportunities in a changing job market. Additionally, the Senate bill should replicate the House’s extra step of expanding Pell Grant eligibility to short-term certificate programs.
We do have some concerns, though. First, while everyone can agree that strengthening career readiness should be a priority among lawmakers, we have to ask if Congress should really look to tackle this issue in the Perkins Career and Technical Education Act rather than the HEA. As it stands now, PROSPER’s earn-and-learn initiatives come at the expense of teachers; the legislation strikes entirely Title II of the HEA, which included programs that help elementary and secondary school teachers prepare for their profession, to make room for the expanded apprenticeship opportunities. That’s a mistake – we should be able to prioritize both of these educational needs, as a nation. Second, we hope that the new apprenticeships ensure quality by being required to adhere to the Registered Apprenticeship standards already in place.
Another good move by the bill is maintaining all the existing TRIO college access programs. However, there is also some troublesome language in the bill pertaining to TRIO that we’ll explain further below.
The House bill also calls for simplifying federal aid, by paring back the current maze of offerings into one grant and one loan. Under the new ONE loan program, undergraduates could borrow up to $39,000 in total, while parents and graduate borrowers would be subject to new limits on how much they could borrow (that’s not all good, though – more on that below). Another good development for borrowers is the bill’s proposed elimination of origination fees, and a streamlining of all the various loan repayment options down to two. However, the plan would also do away with some forgiveness options – another detrimental move for borrowers we’ll get into below.
PROSPER would do away with the interest subsidy on all federal education loans. Currently, students demonstrating financial need are eligible for subsidized Stafford loans, which means the government pays the interest on the loan while the borrower’s in school and during authorized periods of deferment. The legislation would also set caps on federal PLUS loan amounts for graduate and parent students: A cumulative limit of $150,000 for graduate students and $56,250 for parents.
Currently, PLUS borrowers can borrow up to the total cost of attendance at a higher education institution, which includes not just tuition and fees, but also living expenses, books and the like. PLUS loans have certainly greatly contributed to the spike in the nation’s collective amount of student debt owed: According to CNBC, annual parent PLUS loan volume alone has increased nearly fivefold over the past decade.
So an argument could be made that we should have considerable policy debate about placing caps on PLUS loan amounts, particularly in the case of parents who do not receive any direct career benefit from the loan themselves and in fact may be jeopardizing their own financial security in a bid to attain their kid’s dream college at any cost (as we set forth in our Retirement Delayed paper).
But there’s also a dangerous side to capping federal loans without giving students and families worthy alternatives. Federal loan caps could restrict students in accessing the higher education institution of their choice, which after all was the initial idea behind student aid. And if graduate students and parents can’t borrow enough through the federal program, they could turn to riskier private loans with fewer repayment options and less consumer protections.
Even worse, the House bill would end Public Service Loan Forgiveness, a worthy program that hasn’t even technically got off the ground yet (Enacted in 2007, PSLF requires 10 years of public service and loan payment before any forgiveness is granted, making this year the first time that any borrowers will see benefit from the program). PSLF is a noble initiative that encourages college-educated workers to become the teachers, social workers, and public servants our nation needs, by promising them some measure of education debt relief. We shouldn’t end this program before even giving it a chance to prove its societal worth.
Similarly, we hope the Senate bill doesn’t follow the House’s lead in eliminating partial loan forgiveness for student loan borrowers paying back their loans under an income driven repayment plan after 20 to 25 years. As student debt loads spiral upwards, more and more borrowers find themselves needing to make monthly payments a more manageable percentage of their income and stretch out the payment term. But student debt shouldn’t be a life sentence; 25 years of good faith efforts to repay these loans should be enough.
The worst aspects of PROSPER are its ambiguity around TRIO college access programs, as well its abandonment of valuable consumer protections for students. As mentioned above, the legislation maintains all the current TRIO programs, but the bill’s language seems to infer that the Education Secretary could decide to award up to 100 percent of funds allocated for TRIO programs to new service providers who haven’t demonstrated results, putting in jeopardy the thousands of programs nationwide that have shown outstanding results and helped students find a path to higher education for decades.
On the consumer protection front, the bill eliminates the “90-10 rule,” which bars higher education institutions from receiving more than 90 percent of their revenue from federal student aid. In fact, the Senate bill should go in the opposite direction and close the loophole that doesn’t count veteran federal education benefits as student aid against the cap. This loophole has been the incentive for many unscrupulous actors in the for-profit higher education space to target veterans for their GI Bill benefits over the years, and closing the loophole would protect both veterans and tax payer money at the same time.
And the Senate should most definitely part ways with the House when it comes to the regulatory changes it wants to make. For example, the House bill would make it harder for borrowers to discharge their loans when their school commits fraud, and the bill not only terminates gainful employment regulations—a rule that requires schools to show that a certain threshold of their students are gainful employed in their field of study– but prohibits such a rule from ever being brought up again.
In summary– this bill is certainly a mixed bag when it comes to student borrowers. While simplification of processes is certainly needed, it can’t come at the expense of borrower protections. While a focus on the knowledge and skills students are gaining for career and long-term success is needed, it can’t come at the expense of the teachers who will need to help prepare our students for those career opportunities. We hope when the Senate drafts their bill they remember who it’s most important to protect – the students. Not the colleges and universities. Not for-profit institutions. Not business interests. But the students. As President Johnson said at the signing of this legislation into law, “The President’s signature upon this legislation passed by this Congress will swing open a new door for the young people of America. For them, and for this entire land of ours, it is the most important door that will ever open—the door to education. And this legislation is the key which unlocks it. To thousands of young men and women, this act means the path of knowledge is open to all that have the determination to walk it. It means a way to deeper personal fulfillment, greater personal productivity, and increased personal reward. This bill, which I will make law, is an incentive to stay in school. It means that a high school senior anywhere in this great land of ours can apply to any college or any university in any of the 50 States and not be turned away because his family is poor.” That is the promise of the Higher Education Act, and we hope the Senate will keep that noble purpose at the forefront as they reauthorize this important legislation.