WASHINGTON, D.C. - The House Committee on Education and the Workforce is expected to begin deliberations next week on a proposal for reauthorization of the Higher Education Act of 1965. The prior reauthorization expired in 2013 and was extended. The Congressional Budget Office is also expected to score the bill over the next few days.
In an initial review of the major changes in the legislation, Ashley Harrington, a policy counsel with the Center for Responsible Lending made the following statement:
The proposed legislation is yet another boost for the private sector instead of consumers and taxpayers. At a time when college affordability is increasingly beyond the financial reach of most Americans, the future of higher education and student lending will affect both consumers and our nation’s ability to effectively compete in a global economy. With over 44 million Americans in debt for $1.4 trillion in loans, the PROSPER Act sidesteps actions that would effectively address this unsustainable debt and increase college access to create a financial climate that further benefits for-profit colleges, private lenders and servicers.
For example, the Gainful Employment Rule was finalized in 2014 and took effect in 2015. In 2017, its suspension was ordered by the Department of Education. Now, even as a new, negotiated rulemaking session begins December 4, the PROSPER Act would erase the rule and prevent any future federal action to do so.”
Similarly, a current '90-10 'rule that requires for-profit colleges to have at least 10 percent of revenues from sources other than the federal government is also set to be axed. This rule was already being circumvented by bad actors such as the now-defunct Corinthian College system through its additional use of federally-backed GI Bill grants awarded by the Department of Veterans Affairs.
Income-based repayment plans, also known as IBRs, would be retained as a single standard program, but loan forgiveness of debts remaining after working for 20 or 25 years would be eliminated as well as the Public Service Loan Forgiveness program. With stagnant incomes for many moderate-income workers, a mandatory 15 percent repayment rate, as required under the proposed single IBR option will strain already tight household budgets. A more modest rate, as low as 8 percent, would be much more affordable and avoid more student loan defaults.
As the legislative process unfolds, the Center for Responsible Lending will remain watchful of developments and continue to call for access, affordability and financial fairness for all consumers.
For more information, or to arrange an interview with a CRL spokesperson, please email charlene.crowell@responsiblelending.org.