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On February 1, Sen. Lamar Alexander (R-TN) released a white paper examining federal accountability measures for higher education. Alexander, chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, is exploring these concepts in an effort to reauthorize the Higher Education Act (HEA), which was last reauthorized in 2008. Institutions are encouraged to provide comments on HEA reauthorization proposals by February 23.

The HELP Committee is keenly interested in designing a new framework for allocating taxpayer-backed loans and offers several proposals for consideration. The white paper includes many additional details, but in brief, suggests these potential options:

  • Based on a bipartisan proposal that emerged in the last Congress, the federal government could move from a cohort default rate system to a loan repayment rate system whereby an institution's eligibility for Title IV would be based on the percentage of students who fail to pay down at least $1 of their principal loan balance within three years.
  • As seen in H.R. 4508, the Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act, the federal government could create a loan repayment rate calculated separately for each program offered by the institution. A program with a loan repayment rate of less than 45 percent for three years would lose Title IV eligibility.
  • Another option could look at the dollars students are repaying by creating a new cohort repayment rate. The federal government would calculate the percentage of federal student loan dollars that have been repaid by borrowers five years after they leave school. Then, "if any college had a cohort repayment rate below 20 percent, the college would be required to pay part of the difference to the federal government."

Alexander's white paper puts a very strong emphasis on setting standards at the program level, not only in relationship to the PROSPER Act proposal.

The Senate Democratic Caucus released its "Higher Education Act Reauthorization Principles" immediately following Alexander's white paper. While the Democrat's paper does not go into specific details, it states, "The HEA reauthorization must include increased accountability standards for universities and postsecondary education programs that close loopholes in the law, correct market failures, stop predatory behavior, and hold all schools accountable for how they are performing and serving all students when they receive significant taxpayer subsidies."

NACUBO has a number of concerns with the proposals. For example, such systems to establish new risk-sharing schemes which would require colleges and universities to face new liabilities on loans that institutions do not own or make credit decisions on. Further, they do not actually incentivize reducing student borrowing or improving student outcomes. Will the new financial risks lead some institutions to limit access to students with financial needs-working against efforts to improve accessibility? These concepts could create a system that, counterproductively, increases costs to institutions, and thus students and families.

Weigh in on the Issues

Last week, the HELP Committee announced that it wants comments and suggestions on what the reauthorization of the Higher Education Act should include. Alexander and Patty Murray (D-Wash.), the ranking member of the committee, set up an email account to collect those ideas: Comments are due February 23.

Working together with other higher education associations, as well as with NACUBO council members, NACUBO will weigh in with lawmakers as work on the HEA reauthorization progresses. Both House and Senate lawmakers have renewed efforts to write a reauthorization bill, however, given the intense partisanship on Capitol Hill it is difficult to see an easy pathway for agreement and enactment.



Liz Clark

Vice President, Policy and Research


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