Last month, President Joe Biden signed into law the Fiscal Responsibility Act, the bipartisan deal to raise the debt ceiling. Along with significant constraints on domestic spending, the bill requires the secretary of education to terminate the student loan repayment pause in August and resume payments and interest accumulation by the fall.
Ahead of this juncture, and as students and borrowers await the Supreme Court’s decision on Biden’s student debt cancellation plan, policymakers on both sides of the aisle have offered their visions for promoting college affordability, reducing student debt burdens and facilitating repayment.
Senate Republicans
Most notable of these efforts is the Lowering Education Costs and Debt Act, introduced last week by Senate Committee on Health, Education, Labor, & Pensions (HELP) Ranking Member Bill Cassidy (R-Louisiana) and Sens. Chuck Grassley (R-Iowa), John Cornyn (R-Texas), Tommy Tuberville (R-Alabama) and Tim Scott (R-South Carolina). The package includes five bills aimed at lowering college costs through transparency, reducing rates of borrowing, and simplifying repayment. The bills include:
College Transparency Act (CTA): The bipartisan bill — a longtime priority for AACC — would create a secure, privacy-protected, federal student-level data system that would count all students, decrease reporting burdens on institutions and deliver accurate and timely information on student outcomes.
Understanding the True Cost of College Act: Introduced in the past few legislative sessions by Grassley, this bipartisan bill would require uniform financial aid offers. This has been a recent area of interest for policymakers and advocates.
Informing Student Borrowing Act: This bill would amend existing requirements around loan counseling to increase transparency around loan terms, expected monthly payments, and expected earnings based on school and program. It also requires borrowers to receive annual loan counseling, rather than just one-time loan counseling.
Graduate Opportunity and Affordable Loans (GOAL) Act: This bill would terminate the Graduate PLUS loan program, instead allowing graduate students to more fully participate in the unsubsidized Stafford loan program, which caps borrowing amounts. Notably for community colleges, the bill would also let institutions set lower loan limits for students at the program level, so long as those limits are applied equally to all students in the program.
Streamlining Accountability and Value in Education (SAVE) for Students Act: Itstreamlines existing repayment plans into two options: a standard 10-year repayment plan and “REPAYE+,” a new income-driven repayment plan providing more targeted and earlier forgiveness for low-income, low-balance borrowers. The bill also would constrain the education secretary’s authority to create new repayment plans or alter existing repayment plans in a way that increases costs.
However, the most significant item in the bill relates to accountability. The SAVE Act creates an earnings premium for participating in the student loan program. For undergraduate programs, at least half of former students must earn a higher salary than the median high school graduate, and graduate programs must show earnings that exceed that of a graduate with a bachelor’s degree.
A similar earnings premium has been proposed in the U.S. Department of Education’s recent Notice of Proposed Rulemaking on Gainful Employment (GE).
The American Association of Community Colleges opposes the use of an earnings premium standard for GE career programs, noting that the economic, demographic and even educational backgrounds of community college students may not match those of typical high school graduates, the ages of those completing a program may be lower than the earnings of the comparison high school graduate group, and the local economy into which program completers will enter may vary significantly from other parts of the state. Also, many community college programs may have low earnings but provide high social value, may be in-demand in the community, or may provide an on-ramp for other programs at the institution that lead to greater earnings.
While the proposed GE regulations would only apply to applicable career programs, the SAVE Act would apply to all programs. This would represent a significant change in higher education accountability policy and one that AACC would oppose.
The Lowering Costs and Debt Act package is Senate Republicans’ response to the public moment surrounding the repayment resumption deal and the forthcoming ruling on student debt relief. However, it is also the most significant offering put forward in a number of years by Senate Republicans to begin talks around reauthorizing the long-expired Higher Education Act (HEA).
Notably, the package of bills did not contain any legislative proposals around hot-button issues, like Title IX, foreign influence on college campuses, affirmative action or critical race theory. For example, the Fairness in Higher Education Accreditation Act, introduced earlier this month by Republican Sens. Marco Rubio (R-Florida), Rick Scott (R-Florida), and Mike Lee (R-Utah), was not included. The bill would prohibit higher education accreditors from considering measures related to diversity, equity, and inclusion (DEI) in their accreditation determinations.
House Republicans
Last week, House Republicans, led by the House Committee on Education & The Workforce Chair Virginia Foxx (R-North Carolina), Higher Education and Workforce Development Subcommittee Chair Burgess Owens (R-Utah), and Rep. Lisa McClain (R-Michigan), introduced the Federal Assistance to Initiate Repayment (FAIR) Act.
The FAIR Act builds on Foxx’s previous student loan proposals, with slight changes to reflect the repayment resumption agreement. The FAIR Act:
- Requires the Department of Education to provide multiple notices and communications to both borrowers and loan servicers to facilitate a smooth transition back into repayment.
- Streamlines existing repayment plans into two options: a standard 10-year repayment plan and a new income-driven repayment plan, capping the total loan amount at the principal plus the interest a borrower would have paid under the 10-year repayment plan.
- Allows borrowers to rehabilitate their loans twice, rather than just once.
- Prohibits the education secretary from creating new repayment plans, modifying existing repayment plans in a manner that increases costs, authorizing new deferment options, or proposing any new regulations related to the student loan program that would increase costs.
The FAIR Act presents a more limited version of Foxx’s REAL Reforms Act, introduced last year. The previous bill also included expanding Pell Grant eligibility to short-term workforce programs (this proposal now exists in this year’s PELL Act), altering borrowing limits, allowing institutions to limit borrowing, eliminating Public Service Loan Forgiveness for new borrowers, and eliminating the Grad PLUS loan program.
Senate Democrats
Senate Democrats also are advancing their version of affordability and financing priorities. HELP Committee Chair Bernie Sanders (I-Vermont) has now reintroduced his key higher education bill, the College for All Act. First introduced in 2015, the bill has changed and expanded significantly with each iteration. It now captures many of the features advanced by more “progressive” higher education groups, in addition to the bill’s original free college model. The College for All Act of 2023 would:
- Eliminate tuition and fees for all student attending community colleges and eliminates tuition for students attending public universities if their family income is less than $125,000 ($250,000 if married) through a national free college program. This program would be structured as a federal-state partnership.
- Create a new $10 billion grant program for participating states to scale evidence-based practices aimed at boosting access, retention, and completion.
- Double the maximum Pell Grant to $14,790 for the 2024-25 award year for students enrolled at public and non-profit colleges.
- Triple funding for the Federal TRIO program, double funding for GEAR UP, and double mandatory funding for Historically Black Colleges and Universities, Tribal Colleges and Universities, and other Minority-Serving Institutions.
- Be paid for by the creation of a new Wall Street speculation tax.
It is uncertain whether the bill will become the caucus’s preferred federal-state partnership or national free college legislation. In past years, Sen. Tammy Baldwin’s (D-Wisconsin) America’s College Promise Act has been the chosen marker legislation, was included in House Democrats’ original Build Back Better Act and generated more Democratic cosponsors.
If HEA reauthorization activity gets underway in earnest, Senate Democrats will have to negotiate the various free college proposals, with an eye towards workability, political feasibility and cost.
