Rep. Virginia Foxx (R-NC), chairwoman of the House Committee on Education and the Workforce, has introduced a comprehensive bill that aims to overhaul the student loan process and restrain college costs.
The bill—which contains a mix of positive and concerning provisions—is the latest in a series of measures that Foxx and other House Republicans are proposing to update the Higher Education Act of 1965, which is supposed to be renewed every five years. However, the last reauthorization was in 2008, and it has been running on a series of temporary extensions ever since.
The College Cost Reduction Act (H.R. 6951) incorporates several policy proposals that have the possibility to benefit students and institutions, although other provisions are concerning.
The bill seeks to double the maximum Pell Grant award for juniors and seniors who are on track to graduate on time and are enrolled in bachelor’s degree programs considered to provide a high return on investment. The bill also would repeal a number of regulations from the Department of Education, some of which are problematic, such as the gainful employment and financial value transparency regulations.
On the student loan side, the bill would prevent interest from capitalizing on student loans, simplify the student loan repayment process, and require students to only pay back what they would have owed on a 10-year standard repayment plan. In addition, it prevents the Department of Education from regulating third-party servicers and enhances financial responsibility requirements.
However, the bill also seeks to eliminate the Federal Supplemental Educational Opportunity Grant program, a vital support for many low-income students. It also would terminate PLUS loans for graduate students and parents, put strict limits on other forms of student loan borrowing, and make changes to the overall need analysis formula that would limit aid to low-income students.
In addition, the bill contains a new version of a risk-sharing proposal that would make colleges and universities responsible for loans that their former students do not pay off. It would create a new value-added earnings metric that picks winners and losers based on what institutions charge per program relative to what students earn at their jobs after leaving the institution.
The path forward for the bill is unclear, but the bill likely will be marked up in committee at some point.
ACE has prepared a summary of the 224-page measure, which you can download here.