The Republican-led Congress plans to propose a bill (HR 2523) to reauthorize the Higher Education Act, which was last authorized by Congress in 2008.
Named the Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act. the bill would implement sweeping changes in higher education.
The committee has proposed limiting the number of student aid options and instead offering just “one grant program, one loan program, and one work-study program.” It also recommends setting financial aid borrowing caps on undergraduate and graduate students.
This idea has long been championed by conservatives, who claim colleges intentionally raise tuition in order to receive the maximum amount of federal aid money. This could also incentivize many students to look to private lenders in order to fill in the gaps.
There are several other big changes to mention.
The bill proposes disbursing student loan funds on a weekly or monthly basis instead of in one lump sum. The new system would allow the government to retain control over disbursing funds. This would help stymie the problem of dropouts being left with high levels of student debt.
It also seeks to cut down on Pell Grant fraud. Under the new proposal, Pell Grant recipients who have collected three payments without finishing any college credits would have their funds taken away. This would ensure that Pell Grant recipients are actually taking advantage of Pell Grant funding, and it places much more accountability on the recipient.
The bill also seeks to simplify the Free Application for Federal Student Aid(FAFSA). Interestingly, the financial aid application would be available on mobile. While it makes the FAFSA more accessible, it makes one wonder whether it would make the application more vulnerable.
One of the biggest changes involves student loan forgiveness.
The public service loan forgiveness program, which offers loan forgiveness to public service employees who make ten years of consecutive loan payments, would be eliminated under the new bill. Borrowers currently enrolled in the program would be grandfathered in, retaining their benefits.
The PROPSER ACT would overhaul the Income-Driven Repayment Programsand simplify repayment options as a whole.
The number of income-driven options would be scaled back to just one income-based repayment plan, and the chance of forgiveness after ten years of payments would be gone. Additionally, all remaining repayment options would be replaced with the ten-year standard repayment plan.
College accountability would change.
Under the PROPSER Act, the Gainful Employment Rule is eliminated. This Obama-era rule tied a school’s financial aid eligibility to graduate debt-to-income ratios.
The bill would eliminate the 90-10 rule, which states that colleges must receive at least ten percent of their revenue from somewhere other than the federal government. The plan would also hold colleges responsible for a certain portion of all federal student loans that students don’t pay back.
While these rules were important, they are being replaced with a new accountability measure. The PROSPER Act still places accountability on colleges by tying federal funding eligibility to graduate rates. This might help solve the dropout and student loan issue, but it might not fully address the problem with misleading promises of income and employment.
It tries to shift focus on vocational and skilled-labor education.
The bill seeks to expand on two-year apprenticeship programs and “industry-led earn-and-learn programs that lead to high-wage, high-skill, and high-demand careers.” This is not entirely surprising as Education Secretary Betsy DeVos previously called for a shift away from reliance on the traditional four-year degree.
It remains to be seen whether this bill will enjoy bipartisan support, as it varies greatly from the changes Democrats have proposed to higher education. If the bill is passed, it will introduce some of the biggest changes seen in higher education in decades.
Author: Andrew Rombach
Join the LendEDU Newsletter
News, insights, & tips once a weekThanks for submittingPlease Enter a valid email
Student Loan Guides
Student Loan Reviews