Key points:
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Higher education might be faced with proposals that will negatively impact students, their families, and institutions nationwide as the 119th Congress prepares to pass a partisan reconciliation bill to achieve policy goals.
A new analysis from the nonpartisan Center for American Progress points to proposals contained in the College Cost Reduction Act that, if included in a budget reconciliation bill, would increase costs, decrease protections for student groups, and restrict pathways to opportunities for underrepresented students to gain access to higher education.
The analysis highlights seven possible policies that may negatively impact higher ed:
1. Reopening the 90/10 loophole, which would incentivize predatory practices targeting student veterans. “The long-standing 90/10 rule requires that private, for-profit colleges derive at least 10 percent of their revenue from nonfederal funding. However, a loophole in the 90/10 rule incentivized for-profit colleges to target veterans and their families who receive GI Bill and other veterans’ education benefits, which were excluded from the 10 percent nonfederal fund requirement.”
2. A new income-driven repayment plan that would raise costs for student loan borrowers and trap some borrowers in lifelong debt payments. “The CCRA purports to address college affordability by introducing a new income-driven student loan repayment (IDR) plan. However, this plan would raise costs for borrowers who need the most repayment assistance. Compared with existing IDR plans, the CCRA plan would decrease the amount undergraduate borrowers and certificate earners would eventually see canceled while increasing the amount canceled for the typical graduate school borrower.”
3. New borrowing limits that would force underserved borrowers into an under-regulated private loan market. “The CCRA also reduces access to education financing by eliminating the Parent PLUS and Graduate PLUS loan programs and introducing new student loan annual and aggregate borrowing limits. A recent analysis found significant shares of borrowers require financing beyond the CCRA’s proposed limits. This includes nearly 1 in 5 dependent, certificate-earning students who would exceed the annual limits and 1 in 5 bachelor’s degree earners who would exceed the aggregate limits.”
4. New risk-sharing policies that could disincentivize institutions from enrolling low-income students. “The risk-sharing policy included in the CCRA would shift some of the risks of higher education financing to institutions in a way that could create financial challenges for these institutions and penalize schools that serve students with the most need.”
5. Eliminating student consumer protections, which could put students at greater risk of attending low-quality higher education programs. “The 119th Congress may further weaken consumer protections for students and borrowers by proposing to eliminate the gainful employment rule and the borrower defense to repayment rule. The gainful employment rule creates standards for the debt and earnings of students who attend career training programs and prevents institutions that fail these standards from accessing federal student aid. The borrower defense to repayment rule, meanwhile, creates a process for defrauded borrowers to seek relief from the loans that they took out to attend an institution that mistreated them. Repealing these two key consumer protection measures would reverse significant bipartisan progress in preventing fraud and would make it more difficult to ensure accountability among colleges, returning students to a time when borrowers were denied the very relief to which they were entitled.”
6. New policies that could increase barriers to careers in healthcare and other public service fields. “The risk-sharing proposal included in the CCRA would disincentivize institutions from enrolling low-income students and increase barriers to public service work. Under this plan, colleges would share the financial risk with borrowers if their students struggle with repaying loans. Such a provision would greatly affect institutions that enroll students from disadvantaged and underrepresented backgrounds, who generally face more challenges in repaying their loans due in part to structural factors such as the racial wage gap. Because institutions would have to pay a higher share of these students’ loans, this could disincentivize them from enrolling these students.”
7. Repealing central pieces of the student loan safety net, which would leave borrowers who attended schools that closed or misled them without options for debt relief. “Also under consideration are two key programs that offer debt relief to borrowers who attended institutions that misled students: borrower defense to repayment and closed school discharge. Borrower defense allows borrowers who attended schools that misled them–for example, with misinformation about graduation rates, job placements, or whether credits would transfer–to apply for student loan debt relief. Closed school discharges offer debt relief to students who attended institutions that abruptly closed while or shortly after they were enrolled. These sudden closures disrupt students’ educational careers and frequently leave them without other paths to a degree.”
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