Renewing the Higher Education Act: The 115th Congress (2016-18)

HEA Reauthorization

The HEA is the single most important piece of legislation overseeing the relationship between the federal government, colleges and universities, and students. It authorizes various federal aid programs within the Department of Education that support students pursuing a postsecondary education, including grant programs that support efforts to expand and increase access for low-income and first-generation students, such as Pell Grants. The HEA also includes rules and regulations that higher education institutions must comply with to be eligible for Title IV federal student aid programs, including the Clery Act, which requires annual campus crime reports; rules governing the accreditation process; and financial responsibility requirements.

Legislation in the House

Two HEA reauthorization bills were introduced in the House in 2017 and 2018, one by Republicans and a separate bill from the Democrats. With the Republicans in the majority, their bill—known as the PROSPER Act—was the focus of all the action in the House Committee on Education and Workforce, as well as advocacy efforts by higher education associations and others. Under the new Democratic majority, their bill, dubbed the Aim Higher Act, is likely to be the starting point in 2019.

The Aim Higher Act (H.R. 6543) would be significantly more generous than current programs for students and borrowers, increasing funding levels for Pell Grants, TRIO, and GEAR UP and making loans more affordable. The bill also proposed reviving the Perkins Loan Program, which expired in 2017, and restructuring the Federal Work-Study and Supplemental Educational Opportunity Grant programs. However, it also would have added significant new requirements for institutions, increasing reporting and regulatory burden.

On the Republican side, House Education and Workforce Chair Virginia Foxx (R-NC) introduced the Promoting Real Opportunity, Success, and Prosperity Through Education Reform (PROSPER) Act (H.R. 4508) in the 115th Congress. The committee marked up and approved the bill along party lines in December 2017 but was unable to advance it to the floor for a vote. ACE, the higher education association community, and veterans’ groups are on record opposing the PROSPER Act.

Resources on House Bills

Documents and Sites

Summary of the House PROSPER Act
American Council on Education
Talking Points on the PROSPER Act
American Council on Education
AACC’s Brief Summary of the “Promoting Real Opportunity and Success and Prosperity through Education Reform Act”
American Association of Community Colleges
PROSPER Act: House Republicans' HEA Bill
National Association of Student Financial Aid Administrators
APLU Top Concerns with the Promoting Real Opportunity, Success, and Prosperity Through Higher Education Reform (PROSPER) Act, H.R.4508
Association of Public & Land Grant Universities
Summary of APLU's Top Concerns
Association of Public and Land-grant Universities
Department of Defense Information Paper in Opposition to the PROSPER Act
Inside Higher Ed

PROSPER Act Op-Eds

Congress Needs To Follow The Research And Prioritize Higher Education
Forbes | May 29, 2018
What Betsy DeVos Should Have Said About The PROSPER Act
Forbes | May 23, 2018
Congress, Pass the PROSPER Act for Federal Student Aid Reform
The Hill | May 23, 2018
Predatory Schools, Freed to Fleece College Students
The New York Times | May 22, 2018 (sub. req.)
Why the PROSPER Act Creates Big Problems for Students and Their Families
The Hill | May 21, 2018
Shua Sanchez: Prosper Act Would Devastate Graduate Education and Scientific Advancement
The Spokesman-Review | May 8, 2018
The Risk of Kicking Higher Ed Reauthorization Down the Road
The Hill | April 21, 2018
To Succeed In Tomorrow’s Workforce, Today’s Students Need Equity-Driven Policy
The Hechinger Report | April 17, 2018
Just Do It!: Modernize the Higher Education Act
The Hill | April 10, 2018
Finding the Right Balance on College Regulation
U.S. News & World Report | Jan. 16, 2018

Statements and Letters on House Bills

Letters to the House on the PROSPER Act

Letter signed by 37 higher education associations on the PROSPER Act
Dec. 11, 2017
National Association of Student Financial Aid Administrators
Dec. 8, 2017
American Association of Community Colleges and Association of Community College Trustees
Dec. 12, 2017
Association of Public & Land-grant Universities
Jan. 25, 2018
AGB Alert: Letter by AGB President Rick Legon Opposing H.R. 4508
Jan. 29, 2018
APLU to Lawmakers: House HEA Reauthorization Bill Would be an Alarming Setback for Students Association of Public & Land-grant Universities
Jan. 25, 2018
Letter to Speaker Paul Ryan and Majority Leader Nancy Pelosi from 39 higher education groups
Feb. 15, 2018
Letter to House Leadership opposing PROSPER Act from 35 Veterans Organizations
March 27, 2018

Association Statements on the PROSPER Act

Developments in the Senate

HELP Chairman Lamar Alexander and Ranking Member Patty Murray (D-WA) held a series of hearings on affordability, accountability, access and innovation, and financial aid and transparency throughout 2018. Last February, Alexander and Murray issued a bipartisan call for input from the community on the reauthorization. The following comments were submitted:

However, no comprehensive legislation has so far been introduced.

Resources on Senate Developments

Letters and Documents

Higher Education Act Reauthorization Principles
Senate Democratic Caucus
Letter to the Senate HELP Committee on the Bennett Hypothesis
American Council on Education
Letter from David H. Feldman, professor of economics at the College of William & Mary, on the Bennett Hypothesis
College of William & Mary

Lamar Alexander's Higher Education Accountability

Higher Education Accountability
White Paper from Lamar Alexander, Chair of the Senate Committee on Health, Education, Labor and Pensions
American Association of Community Colleges
Response
Association of American Universities
Response
Association of Public and Land-grant Universities
Response

Undergraduate Students

Under HEA, the Department of Education provides funds to help students access postsecondary education. These include awards that do not need to be repaid such as Pell Grants, Federal Work-Study (FWS), and Federal Supplemental Educational Opportunity Grants (FSEOG). The federal government also operates the Stafford Direct Loan Program, which provides subsidized and unsubsidized loans to students.

The House PROSPER Act

The PROSPER Act had multiple provisions that would have negatively impacted current and future undergraduate students. As part of efforts to “streamline and simplify” federal student aid, this bill would have eliminated or reduced these important programs:

Federal Supplemental Educational Opportunity Grants

FSEOG targets grant aid to low-income students whose needs are not fully met by Pell Grants and other sources of aid. For more on how the program works to support these students, see the brief, "The Case for Federal Supplemental Education Opportunity Grants."

Subsidized loans to low-income undergraduates

These loans are based on financial need, and the federal government pays the interest on the loan while the student is in school and during certain grace and deferment periods. As a result, students would wind up paying significantly more over the life of their loans.

A number of existing benefits available to students in the current loan programs

The most significant of these was the elimination of loan forgiveness that allows borrowers who have made on-time payments to have their balances forgiven by the federal government after 10, 20, or 25 years (depending on certain factors).

Federal Work-Study dollars would have been reallocated across a larger number of institutions

This provision would have benefited students at some colleges and universities, but would have reduced available funds at most institutions currently participating in FWS.

Click here to download a file with estimates of the impact of the reallocation of SEOG and FWS on your institution. (Additional information about the calculations can be found here.)

Developments in the Senate

The Senate Committee on Health, Education, Labor, and Pensions held several hearings on issues important to undergraduates in 2018, including “Improving College Affordability” and “FAFSA Simplification and Transparency.”

Committee Chairman Lamar Alexander (R-TN) was the sponsor of the Financial Aid Simplification and Transparency (FAST) Act of 2015. The legislation would streamline the campus-based aid programs and existing loan programs, eliminate SEOG, and create a single loan program for undergraduate and graduate students. Under this legislation, SEOG and the subsidy for undergraduate student loans would be eliminated.

FSEOG helps students complete degrees faster. The average FSEOG student earns a bachelor's degree about one year faster than the average Pell-only student.

Resources for Undergraduate Students

Resources

Summary of the House PROSPER Act
American Council on Education

Talking Points on the PROSPER Act
American Council on Education

A Description of the Likely Effects of the Significant Changes to the Federal Student Loan Program Proposed by the House Committee on Education and the Workforce
American Council on Education

The Case for Federal Supplemental Education Opportunity Grants
American Council on Education

Reallocation of SEOG and Federal Work-Study Under the PROSPER Act: The Impact on Institutions
(Excel; 1.2 MB)

Additional information about the calculations

Department of Education Resources

Federal Work-Study

The Pell Grant Program

Federal Direct Student Loans

Federal PLUS Loans

Public Service Loan Forgiveness

Graduate Students

The federal government provides grants and loans to graduate students, but this support has been on the decline in the past decade.

To begin with, graduate students pay higher interest rates on student loans than undergraduates. Then in 2012, the government eliminated the subsidy for federal graduate student loans, meaning interest begins to accrue from the time the loan is disbursed. Graduate students also lost eligibility for campus-based Perkins loans, which provided lower interest rates and cancellation options for public service until Congress allowed it to expire in September 2017.

The government also has cut funding for federal grant programs that support areas of study for graduate students, including the Jacob K. Javits Fellowship Program, which supports fellowships in the humanities, and the Graduate Assistance in Areas of National Need (GAANN) program, which supports grants in science, technology, engineering, and mathematics (STEM) fields and other areas of national need.

The House PROSPER Act

The PROSPER Act continued the recent trend of cutting federal support for graduate students by eliminating eligibility for Federal Work-Study (FWS), eliminating graduate PLUS loans, capping graduate loan limits, and eliminating Public Service Loan Forgiveness (PSLF).

Federal Work-Study

Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need. It is available to full-time and part-time students. In 2016-17, over 619,000 students benefited from $990 million appropriated to FWS in FY 2017.

Graduate PLUS Loans

Graduate PLUS loans provide federal student loans up to the cost of attendance for qualified borrowers.

The House PROSPER Act set an annual limit for Graduate ONE loans of $28,500 with an aggregate cap of $150,000 (including undergraduate loans). Given these new limits on federal student loans, graduate students would have needed to borrow in the private loan market at greater cost and with less favorable terms. This chart illustrates the current federal Stafford Direct Loan limits and the new proposed federal ONE Loan limits. (Current limits that would have been struck under the House PROSPER Act are struck through. New loan limits are illustrated in black text. Click to enlarge.)

Public Service Loan Forgiveness forgives the balance of federal student loans for qualifying borrowers after 10 years working in the public sector. This program has helped to recruit social workers, teachers, federal and state government workers, doctors serving high need, rural populations, and others.

Developments in the Senate

The Senate held several hearings on the Higher Education Act reauthorization in 2018, but none have specifically focused on graduate students. Senate HELP Chairman Lamar Alexander (R-TN) has previously proposed legislation that would eliminate the current Grad PLUS program and create a new loan program that would impose annual borrowing limits for graduate students. The legislation would continue existing provisions that provide higher annual limits for students in programs with higher need (such as medical schools).

Resources for Graduate Students

Resources

Summary of the House PROSPER Act
American Council on Education

Talking Points on the PROSPER Act
American Council on Education

A Description of the Likely Effects of the Significant Changes to the Federal Student Loan Program Proposed by the House Committee on Education and the Workforce
American Council on Education

Department of Education Resources

Federal Work-Study

Federal PLUS Loans

Public Service Loan Forgiveness

Graduates & Student Borrowers

The federal government provides support to graduates and student borrowers in several ways, including Public Service Loan Forgiveness (PSLF), Income-Based Repayment (IBR) plans, and specific programs such as TEACH Grants. In addition, the Department of Education protects students against fraud and restores Title IV student aid eligibility through “borrower defense” regulations, which allow students to appeal the repayment of their loans if they were defrauded by an institution.

The House PROSPER Act

The PROSPER Act would have eliminated several important programs in an attempt to streamline repayment and forgiveness options for student borrowers, including:

Public Service Loan Forgiveness

Established in 2007, PSLF provides forgiveness of federal student loans for borrowers who make on-time payments and work in qualifying public service employment for 10 years such as qualifying medical schools and teaching hospitals, employment with AmeriCorps or Peace Corps, military service, public health, public safety, and other similar types of employment. By forgiving remaining student loan debt, PSLF creates incentives for motivated and committed individuals to pursue careers in public service.

Most Income-Based Repayment Programs

The bill would have replaced the current IBR programs with one program that did not include any forgiveness provisions. Currently, a borrower who enters an IBR program can have the balance of that loan forgiven after 10, 20, or 25 years of qualified repayments, depending on their plan and career.

TEACH Grants

TEACH Grants provide $4,000 per year to students who agree to teach for four years at a qualifying elementary or secondary school that serves low-income students. If a student does not qualify, the grants convert to federal loans and must be repaid.
The bill also rewrote the rules on borrower defense to repayment. Under current law, federal student loan borrowers may be eligible for forgiveness of their federal student loans if their college or university misled them or violated certain laws. The PROSPER Act would have made it much harder for borrowers to receive this type of forgiveness.

Developments in the Senate

As part of the series of hearings on HEA reauthorization, Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing on “Accountability and Risk to Taxpayers” on Jan. 30, 2018. During his opening statement, Chairman Lamar Alexander (R-TN) noted that the current Income Based Repayment (IBR) programs were designed to act as a “temporary safety net” but had “become a standard where students expect their debt to be forgiven after a certain amount of time. This may be good for students, but it is not so good for the taxpayers.” Alexander will likely seek to make significant changes to the current IBR programs in the upcoming reauthorization.

Resources for Graduates & Student Borrowers

Resources

Summary of the House PROSPER Act
American Council on Education

Talking Points on the PROSPER Act
American Council on Education

A Description of the Likely Effects of the Significant Changes to the Federal Student Loan Program Proposed by the House Committee on Education and the Workforce
American Council on Education

Repayment Scenarios for Graduate Students Under PROSPER
AccessLex

Department of Education Resources

Public Service Loan Forgiveness

Income-Based Repayment Plans

TEACH Grants

Colleges & Universities

HEA is the primary legislation overseeing the relationship between campuses and the federal government. The legislation directs grant and loan programs that support institutional efforts to expand access, encourage completion, and support research and education in international programs.

HEA also includes accountability provisions and safeguards against fraud and abuse of the aid programs. In addition, it provides the statutory basis for regulations that colleges and universities must abide by in order to accept Title IV funding, including campus safety rules, accreditation standards, and reporting requirements on various issues such as textbook prices.

The House PROSPER Act

The PROSPER Act would have reduced and eliminated funding for many of the institutional grant programs, including:

Eliminating the Title IIIA Strengthening Institutions program and amending the long-standing Title IV return-of-funds process by adding a risk-sharing component that would have had an especially negative impact on community colleges.
Making changes to the formula to determine an institution’s Federal Work-Study (FWS) allocation, while not guaranteeing that funding for FWS would be increased. This proposed change, along with the elimination of federal Supplemental Educational Opportunity Grants (SEOG), could have resulted in significant cuts in campus-based aid for institutions participating in the program.
Capping authorization levels for most programs at FY 2017 funding levels, which limits funding growth for important programs like Graduate Assistance in Areas of National Need (GAANN) and Title VI international programs.
Reducing the authorization level for TRIO programs below FY 2017 levels (from $900 million to $850 million), while mandating a new institutional match of funds and also creating new criteria for awarding grants that would penalize existing programs.
Eliminating several of the Title IV international programs including American Overseas Research Centers and Undergraduate International Studies and Foreign Language programs.

While the House PROSPER Act took many of the recommendations from the 2015 Report of the Task Force on Federal Regulation of Higher Education, it also created new and burdensome complicated and mandated rules and regulations, including:

New restrictive mandates about what can and cannot be included in a campus free speech policy; new provisions that restrict how a college or university can respond to issues with single-sex organizations on campus; and restrictions surrounding how a university can respond to student organizations with a religious affiliation.
New requirements surrounding sexual assault on campus, including the creation of a mandatory survivor’s counselor; a requirement that institutions carry out a campus climate survey every three years; and restrictions on campus administrators' ability to adjudicate on these cases.
Despite reducing accountability measures across the overwhelming majority of programs and institutions, the PROSPER Act would have imposed a new accountability metric (based on completion rate) solely on certain categories of minority-serving institutions’ eligibility for institutional (Title III and Title V) support.
Despite efforts to reduce the regulatory burden on colleges and universities, this bill would have imposed new and complicated mandates on institutions. Significant changes to the law, such as requiring weekly or monthly financial aid disbursements, public disclosures, and programmatic repayment rates (among others), would have substantially increased the time and funding needed to comply and further undermine the ability of institutions to serve students and accomplish their missions.
The legislation reduced the number of standards required of accreditors to assess institutions by, from ten to one. The remaining standard was solely focused on student outcomes and the legislation eliminates institutional participation in the process accreditors use to establish student outcome measures.

Finally, while the House PROSPER Act greatly expanded the number of programs and providers able to access federal funds, it simultaneously relaxed the requirements that keep unscrupulous actors out of the system. This combination of greatly expanded eligibility with lax oversight would have necessarily led to large increases in fraud and abuse in the Title IV federal aid programs.

Developments in the Senate

Unlike in the House, a comprehensive legislative proposal has not yet been introduced in the Senate. While numerous proposals for changing HEA have been introduced in the Senate over the last few years, the Senate Health, Education, Labor and Pensions (HELP) Committee does not currently appear close to introducing a comprehensive bill.

In February 2018, HELP Chairman Lamar Alexander (R-TN) circulated a white paper on accountability and asked for comments from stakeholders. The paper questioned the efficacy of current accountability measures such as the 90/10 rule or the cohort loan default rate. The paper also examined the idea of programmatic repayment rates, arguing that programmatic measurements are a better indicator for prospective students. Senator Alexander is likely to propose these ideas in HEA reauthorization legislation.