ACE, Groups Call for Overhaul of the Federal Financial Aid System in Comments on Education Department’s Income-driven Repayment Plans
February 13, 2023

ACE and 29 other higher education associations have expressed their appreciation to the Department of Education (ED) for making “important and long overdue corrections” to the student loan repayment system in its proposal to overhaul the Revised Pay As You Earn (REPAYE) income-driven repayment plan.

The proposed changes would provide significantly more generous repayment and forgiveness terms. But the groups also said that the “piecemeal” approach ED is forced to take in the absence of any congressional action falls short of a much-needed comprehensive revamp of the federal financial aid system.

The proposed changes to REPAYE were announced in the Federal Register on Jan. 11, with a 30-day comment period. As Inside Higher Ed reported this morning, the department has received over 13,000 comments on the plan, which must be reviewed before the final version is released later this year.

The proposal, which bases monthly payments on an individual’s income and family size, would cut payments in half for undergraduate loan debt, with a cap of 5 percent on a borrower’s discretionary income. Those who take out $12,000 or less in loans would qualify for relief in 10 years, and borrowers would stop seeing their balances grow due to the accumulation of unpaid interest after making their monthly payments. Borrowers also would be automatically enrolled in the program.

Providing borrowers access to a repayment plan that includes these elements is “an important and long overdue correction,” the groups wrote in comments submitted to ED Feb. 10. The proposal contains a number of recommendations offered by the higher education community in recent years. 

However, a more effective way to address the myriad problems with this and other programs would be a “comprehensive effort to review the entirety of our lending and repayment system, along with a complete reauthorization of the Higher Education Act,” the groups wrote.

ACE, Groups Submit Comments on “Low-value Postsecondary Programs”

Alongside the proposal for REPAYE, ED also issued a request for information regarding how best to identify low-value postsecondary programs, which the department defines as programs “for which total costs exceed the financial benefits provided to students.”

ACE and 22 other associations also submitted comments in response to this RFI, acknowledging that such information would be useful not only to students, but also to institutions and policymakers. However, they are concerned that the department intends to use existing data, which has significant limitations for this purpose.

Apart from the data problems, the groups also believe that the design of the proposed system carries with it inherent problems, such as using the same criteria to measure vastly different programs. For example, measuring earnings two years after completion may give an accurate picture of the economic benefits of a trade-specific certificate program, but not an MD program. Given the incredible diversity of postsecondary programs at all credential levels, it would be almost impossible to establish criteria that work equally well in evaluating each program.

Ultimately, the groups wrote, the idea that the merits of an educational program can be reduced to just its financial return is the most pressing concern with moving forward with this plan now.

“These are difficult comments to offer, because we share the Department’s desire to help inform students and to shed light on bad actors,” the groups concluded. “But unless the significant data gaps and fundamental flaws can be resolved, moving forward with such a list as a public tool intended for consumer information is likely to do far more harm than good.”

Read the Comments

On Proposed Changes to REPAYE IDR Plan

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On Identifying Low-value Programs

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