Higher Education Act Would Amount to More Debt, and Higher Risk for Students and Taxpayersby GDN Shared Post February 5, 2018
The recent blog series about the Higher Education Act, How the PROSPER Act Stacks Up for Student Debt, took a deep dive into the HEA reauthorization legislation recently passed by the House of Representative’s Committee on Education and the Workforce. Across five detailed posts, we explored how some of the bill’s major changes would impact student debt.
How the PROSPER Act Stacks Up for Student Debt:
Congress is preparing to rewrite the Higher Education Act (HEA) for the first time since 2008. While a college degree is more valuable than ever, many students struggle to cover the cost of college, and the lowest income students continue to bear a disproportionate student debt burden. Reauthorization of the HEA presents a unique opportunity to solve widely-agreed upon problems, including a confusing array of student loan repayment options, the need for quality assurance to protect students from low-quality programs and colleges, and college affordability barriers that leave too many students with burdensome debt.
On whole, the PROSPER Act would do significantly more harm than good, saddling students with more debt and loosening standards in a way that would open higher education and taxpayer dollars up to an unacceptable level of risk. These changes massively overshadow the bill’s attempt to simplify programs, and improve loan counseling and data transparency.
We found that:
- The ONE loan proposal would increase cost of Federal loans for most borrowers and increase risks of private loan borrowing. More here.
- Changes to loan repayment would simplify the system, but at the cost of raising monthly payments for all, and increasing the risk of default and weakening a crucial safety net for the lowest income borrowers. More here.
- Loan counseling and consumer information enhancements are steps in the right direction, but more complete data are needed, and consumer testing will be critical to helping students and families make the most of it. More here.
- Discarding reasonable accountability standards will lead to a rise in unmanageable debt and more waste, fraud, and abuse in higher education. More here.
- Narrowing of borrower defense eligibility, limiting of closed school discharge, and preemption of state consumer protections would harm student borrowers attending low-quality or even fraudulent for-profit colleges. More here.
Each of our posts last week focused on provisions in the PROSPER Act that would impact student debt and repayment, highlighting our recommended alternatives along the way (many of which already have bipartisan support). But it is also important to highlight that meaningful investments in the Pell Grant are also urgently needed to lower the burden of student debt, and such investments are noticeably absent from the PROSPER Act. Allowing the grant’s annual inflation adjustment to expire after this year, and freezing the guaranteed maximum award amount (as the PROSPER Act does) will mean that the grant’s already historically low purchasing power will continue to decline, and the already disproportionate burden of debt carried by Pell Grant recipients will continue to grow.
As the process to reauthorize the Higher Education Act moves forward and the Senate continues to shape its own proposal for how it should be improved, we hope Congress will ultimately work together to craft student-centered solutions to today’s problems of college affordability, access, and student success.