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House Lawmakers Rush Higher Education Act Reauthorization

December 11, 2017

House Education and Workforce Committee Chair Virginia Foxx (R-NC) commenced the process to reauthorize the Higher Education Act (HEA) on December 1, releasing a 542-page proposal that would make significant changes to federal student aid programs.

Notably, HR. 4508, the Promoting Real Opportunity, Success and Prosperity Through Education Reform (PROSPER) Act, would phase out the Federal Direct Loan program, replacing it with a new Federal ONE Loan program. The new loan program would eliminate interest subsidies and origination fees, establish just two repayment plans (a standard 10-year plan and an income-based plan), and eliminate loan forgiveness for borrowers who made payments for a certain number of years.  

Upon release of the legislation, Foxx stated, "With six million unfilled jobs and over a trillion dollars in student debt, simply reauthorizing the Higher Education Act will help no one. A hard truth that students, families, and institutions must face is that the promise of a postsecondary education is broken. We need a higher education system that is designed to meet the needs of today's students and has the flexibility to innovate for tomorrow's workforce opportunities. The PROSPER Act is higher education's long overdue reform."

Other notable provisions in the bill include:

  • Repeal of the Federal Supplemental Educational Opportunity Grant, the TEACH Grant, and the LEAP programs.
  • Changes to the funding formula for the Federal Work-Study program to focus less on historical allocations.
  •  A new schedule for return of Title IV funds (R2T4) when students withdraw that will significantly curtail aid disbursements and leave institutions to cover shortfalls.
  • Requirement that Title IV aid be disbursed "like a paycheck" in substantially equal weekly or monthly payments throughout the term, although larger upfront disbursements would be allowed to cover unequal costs. 
  • Replacement of the cohort default rate measure of institutional effectiveness with a loan repayment rate by program (rather than for the institution as a whole). 
  • Significant changes to the financial responsibility standards for institutions, including alternatives to the current ratio analysis such as bond ratings or expendable net assets equal to or greater than one half of the institution's Title IV funds.

The House legislation and the committee summary can be found here.

The full committee will mark up the legislation on Tuesday, December 12 at 10 am ET; a live webcast will be available. The Senate committee responsible for higher education policy, the Health, Education, Labor, and Pensions Committee (HELP), has indicated that it is planning to take action on HEA reauthorization early in 2018.

NACUBO joined with the American Council on Education and number of other higher educations in an initial response, urging the House committee to delay action to allow time for more informed input. Further analysis is forthcoming.

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