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House GOP higher ed bill moves ahead, despite cries to slow down

House Republicans are proceeding with an overhaul of the law governing higher education, despite calls by some advocates to slow down. (Carolyn Kaster/AP)
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House Republicans are pressing ahead with a sweeping overhaul of the federal law that governs almost every aspect of higher education, without hearings and despite mounting pressure to provide more time for analysis and input.

GOP higher ed plan would end student loan forgiveness in repayment program, overhaul federal financial aid

On Tuesday, the House Committee on Education and the Workforce considered amendments to the Promoting Real Opportunity, Success and Prosperity through Education Reform Act, introduced by Chairman Virginia Foxx (R-N.C.) and Rep. Brett Guthrie (R-Ky.). The process known as “markup” was expected to take two days as Democrats and Republicans plan to introduce nearly 60 amendments, according to congressional staffers.

The legislation is the first significant step in the reauthorization of the Higher Education Act of 1965, which has remained largely untouched for nearly a decade. As a result, university, student and consumer groups are pleading with the committee to slow down. Barely two weeks have passed since Foxx released the 542-page bill, a tome that would change everything from the way families finance education to the way colleges are held accountable for their performance.

On the eve of the markup, Republicans tucked in more provisions, including giving the education secretary greater flexibility to cut off federal grants to students and barring campuses from regulating fraternities and sororities.

“Despite the fact that reauthorization is already several years behind schedule, this bill is suddenly being rushed through committee,” Ted Mitchell, president of the American Council on Education, wrote to committee leaders Monday in a letter signed by 36 other organizations. “This expedited time-frame limits the ability to analyze the bill and consult with affected parties, leaving the committee in the position of asking its members and the public to support legislation before knowing its full impact.”

Mitchell, who served as undersecretary of education during the Obama administration, said the organizations have significant reservations about the legislation, although there are elements they support — a position echoed throughout the higher education community.

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Many have praised the legislation for simplifying the financial aid application, using grants to provide incentives for students to graduate in four years, eliminating student loan origination fees and expanding work-study opportunities for low-income students. But some worry the bill could raise the cost of college for those who can least afford it by ending the Federal Supplemental Educational Opportunity Grant and no longer paying the interest on low-income students’ loans while they are in school. The grant provided $732 million in aid to 1.6 million students in the 2014-2015 academic year, according to the Education Department.

“Eliminating the supplemental grant without channeling the funds directly into another need-based grant program, like the Pell Grant, is simply a cut to students trying to pay for college,” said Michelle Asha Cooper, president of the nonprofit Institute for Higher Education Policy, in a review of the legislation. And ending the interest subsidy, she said, “ultimately means that students will pay more for college.”

A preliminary analysis by the American Council on Education, which represents colleges and universities, supports Cooper’s observation about abolishing the subsidy. The council said an undergraduate who borrows $19,000 over four years and makes all payments on time would see a 44 percent increase in the cost of the loan, if subsidized loans go away. A student who attends for five years and borrows $23,000 would see a 56 percent increase. By most estimates, nearly 6 million students would be affected.

Mary Clare Amselem, an education policy analyst at the conservative Heritage Foundation think tank, argues that taxpayers will benefit if the federal government reduces its role in financing higher education.

“Students and taxpayers win in the scenario where you have private lenders actually competing in the market, and ultimately we would hope that puts more pressure on inflated tuition prices,” Amselem said. “The federal role in education should only be to lend to students that the private markets wouldn’t.”

She applauded provisions to end subsidized loans and Public Service Loan Forgiveness, a program that wipes away federal student debt for people in the public sector after they have made 10 years’ worth of payments. But instead of House Republicans imposing borrowing caps for parents and graduate students, Amselem said she hoped lawmakers would end all government lending to both groups. Banks and other private lenders, she said, are well-equipped to meet their needs. Advocacy groups have argued that private loans lack adequate consumer protections.

Critics of the federal Parent and Graduate Plus loan programs say they are in part responsible for the rising cost of college. They contend colleges and universities have little incentive to keep costs down as long as people can access unlimited amounts of money from both programs, a claim that has been disputed by some education researchers.

The graduate program, in particular, has been blamed for the explosion in student debt, with roughly 40 percent of student loans held by people with advanced degrees. Conservatives have also called for caps on the amount of graduate student debt eligible for loan forgiveness in a federal income-based repayment program that is designed to lower the skyrocketing costs of discharging debt. As it stands, borrowers can restrict their monthly student loan payments to 10 percent of their discretionary earnings, with the remaining balance of the debt forgiven after 20 to 25 years.

Instead of limiting eligibility, House Republicans would limit loan forgiveness, raise monthly payments to 15 percent of income and eliminate the fixed number of years for repayment. But in exchange, the government would discharge any debt remaining after borrowers repay the total principal and interest they would have paid under a standard 10-year plan.

Preston Cooper, an education analyst at the conservative American Enterprise Institute think tank, said he has mixed feelings about the controversial provision.

“Some of the loan forgiveness programs are shaping up to be really expensive and having a cap on interest will give students peace of mind,” Cooper said. “But one of the negatives is getting rid of loan forgiveness, which is a big subsidy. But you’re kind of introducing this new subsidy for people who take a long time to pay off their loans.”

House Republicans would also require people in an income-based plan to pay at least $25 a month, ending a practice that allows struggling borrowers to pay nothing. An analysis released Tuesday by the Center for American Progress, a liberal think tank, said restructuring the repayment plan could increase monthly debt bills for borrowers — and the amount they pay overall — without a fixed number of years for repayment.

House Democrats are introducing nearly 40 amendments to combat changes to loan forgiveness, financial aid and accountability measures for colleges. Democrats say they were not consulted on any aspect of the legislation, despite drafting bipartisan bills addressing elements of the Higher Education Act in the last Congress. Members plan to paint the GOP bill as a continued attack on American families, much like the tax overhaul, according to a Democratic committee aide.

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Democrats are especially concerned about the repeal of regulations targeting for-profit colleges. The legislation would end the 90/10 rule, which bars for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid.

It would also get rid of the gainful employment regulation that threatens to withhold student aid from vocational programs that have graduates who consistently end up with more debt than they can repay.

And House Republicans are proposing to limit loan discharges afforded to students defrauded by their colleges, through a statute known as borrower defense to repayment.

“The House GOP proposal guts key safeguards designed to protect students and taxpayers from predatory schools, like the gainful employment rule and the 90/10 provision — and then to make matters worse, it eliminates protections around the borrower defense process, making it far more difficult for students to get relief on their debt when they get scammed by those schools,” said Jen Mishory, a senior fellow at the Century Foundation, a Washington-based nonprofit organization.