Tag: Higher Education Act

Twenty-Two Thoughts on House Democrats’ Higher Education Act Reauthorization Bill

House Democrats released the framework for the College Affordability Act today, which is their effort for a comprehensive reauthorization of the long-overdue Higher Education Act. This follows the release of Senator Lamar Alexander’s (R-TN) more targeted version last month. As I like to do when time allows, I live-tweeted my way through the 16-page summary document. Below are my 22 thoughts on certain parts of the bill (annotating some of my initial tweets with references) and what the bill means going forward.

(1) Gainful employment would go back in effect for the same programs covered in the Obama-era effort. (Did that policy induce programs to close? Stay tuned for a new paper on that…I’m getting back to work on it right after putting up this blog post!)

(2) In addition to lifting the student unit record ban, the bill would require data to be disaggregated based on the American Community Survey definitions of race (hopefully with a crosswalk for a couple of years).

(3) Federal Student Aid’s office would have updated performance goals, but there is no mention of a much-needed replacement of the National Student Loan Data System (decidedly unsexy and not cheap, though).

(4) Regarding the federal-state partnership, states would have access to funds to “support the adoption and expansion of evidence-based reforms and practices.” I would love to see a definition of “evidence”—is it What Works Clearinghouse standards or something less?

(5) The antiquated SEOG allocation formula would be phased out and replaced with a new formula based on unmet need and percent low-income. Without new money, this may work as well as the 1980 effort (which flopped). Here is my research on the topic.

(6) Same story for federal work-study. Grad students would still be allowed to participate, which doesn’t seem like the best use of money to me.

(7) Students would start repaying loans at 250% of the federal poverty line, up from 150%. Automatically recertifying income makes a lot of sense.

(8) There are relatively small changes to Public Service Loan Forgiveness, mainly regarding old FFEL loans and consolidation (they would benefit quite a few people). But people still have to wait ten years and hope for the best.

(9) I’m in a Halloween mood after seeing the awesome Pumpkin Blaze festival in the Hudson Valley last night. So, on that note, Zombie Perkins returns!

The Statue of Liberty, made entirely out of pumpkins. Let HEA reauthorization ring???

(10) ED would take a key role in cost of attendance calculations, with a requirement that they create at least one method for colleges to use. Here is my research on the topic, along with a recent blog post showing colleges with very low and very high living allowances.

(11) And if that doesn’t annoy colleges, a requirement about developing particular substance abuse safety programs will. Campus safety and civil rights requirements may also irk some colleges, but will be GOP nonstarters.

(12) The bill places a larger role on accreditors and state authorizers for accountability while not really providing any support. Expect colleges to sue accreditors/states…and involve their members of Congress.

(13) Improving the cohort default rate metric is long-overdue, and a tiered approach could be promising. (More details needed.)

(14) There would be a new on-time loan repayment metric, defined as the share of borrowers who made 33 of 36 payments on time. $0 payments and educational deferments count as payments, and ED would set the threshold with waivers possible.

(15) This is an interesting metric, and I would love to see it alongside the Scorecard repayment rate broken down by IDR and non-IDR students. But if the bill improves IDR, expect the on-time rate to (hopefully!) be high.

(16) It would be great to see new IPEDS data on marketing, recruitment, advertising, and lobbying expenses. Definitions matter a lot here, and the Secretary gets to create them. These are the types of metrics that the field showed interest in when the IPEDS folks asked Tammy Kolbe and me to do a landscape analysis of higher ed finance metrics.

(17) Most of higher ed wants financial responsibility scores to be updated (see my research on this), and this would set up a negotiated rulemaking panel to work on it.

(18) There is also language about “rebalancing” who participates in neg reg. The legislative text will be fun to parse.

(19) Teach for America will be reauthorized, but it’s in a list of programs with potential changes. Democrats will watch that closely.

(20) And pour one out for the programs that were authorized in the last Higher Education Act back in 2008, but never funded. This bill wants to get rid of some of them.

(21) So what’s next? Expect this to get a committee vote fairly quickly, but other events might swamp it (pun intended) in the House. I doubt the Senate will take it up as Alexander has his preferred bill.

(22) Then why do this? It’s a good messaging tool that can keep higher ed in the spotlight. Both parties are positioning for 2021, and this bill (which is moderate by Dem primary standards) is a good starting place for Democrats.

Thanks for reading!

A Possible For-Profit Accountability Compromise?

In the midst of an absolutely bonkers week in the world of higher education (highlighted by a FBI investigation into an elite college admissions scandal, although the sudden closure of Argosy University deserves far more attention than rich families doing stupid things), the U.S. House Appropriations Committee held a hearing on for-profit colleges. Not surprisingly, the hearing quickly developed familiar fault lines: Democrats pushed for tighter oversight over “predatory” colleges, while Republicans repeatedly called for applying the same regulations to both for-profit and nonprofit colleges.

One of the key sticking points in Higher Education Act (HEA) reauthorization is likely to be around the so-called “90/10” rule, which requires for-profit colleges to get at least 10% of their revenue from sources other than federal financial aid (excluding veterans’ benefits) in order to qualify for federal financial aid. Democrats want to return the rule to 85/15 (as it was in the past) and count veterans’ benefits in the federal funds portion of the calculation, which would trip up many for-profit colleges. (Because public colleges get state funds and many private colleges have at least modest endowments, this rule is generally not an issue for them.) Republicans have proposed getting rid of 90/10 in their vision for HEA reauthorization.

I have a fair amount of skepticism about the effectiveness of the 90/10 rule in the for-profit sector, particularly as tuition prices need to be above federal aid limits and for-profit colleges tend to serve students with relatively little ability to pay for their own education. But I also worry about colleges with poor student outcomes sucking up large amounts of federal funds with relatively few strings attached. So, while watching the panelists at the House hearing talk about the 90/10 rule, the framework of an idea on for-profit accountability (which may admittedly be crazy) came into my mind.

I am tossing out the idea of tying the percentage of revenue that colleges can receive from federal funds (including veterans’ benefits as federal funds) to the institution’s performance on a number of metrics. For the sake of simplicity, let’s assume the three outcomes are graduation rates, earnings after attending college, and student loan repayment rates—although other measures are certainly possible. Then I will break each of these outcomes into thirds based on the predominant type of credential awarded (certificate, associate degree, or bachelor’s degree), restricting the sample to broad-access college to reflect the realities of the for-profit sector.

A college that performed in the top third on all three measures would qualify for the maximum share of revenue from federal funds—let’s say 100%. A college in the top third on two measures and in the middle third on the other one could get 95%, and the percentage would drop by 5% (or some set amount) as the college’s performance dropped. Colleges in the bottom third on all three measures would only get 60% of revenue from federal funds.

This type of system would effectively remove the limit on federal funds for high-performing for-profit colleges, while severely tightening it for low performers. Could this idea gain bipartisan support (after a fair amount of model testing)? Possibly. Is it worth at least thinking through? I would love your thoughts on that.

Key Takeaways from the House Higher Education Act Reauthorization Bill

Majority Republicans on the U.S. House Committee on Education and the Workforce unveiled their draft legislation today to reauthorize the Higher Education Act—the most important piece of legislation affecting American higher education. The Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act checks in at a hefty 542 pages and touches many important aspects of higher education. I live-tweeted my first read through the bill (read the thread here), and in this blog post I am sharing some thoughts on the key themes of the legislation.

Takeaway 1: This bill would undo many Obama-era regulations and salt the earth on future regulations. It’s no secret that Republicans didn’t care for regulations such as gainful employment, borrower defense to repayment, or providing a federal definition of the credit hour. The PROSPER Act would not only undo the regulations, but prohibit the Secretary of Education from promulgating any future regulations (meaning that Congress would have to pass legislation to create any new rules). The Secretary of Education would also be prohibited from creating a federal college ratings system, even though the Obama-era effort to do so was unsuccessful.

Takeaway 2: The federal student loan system would be radically overhauled. Instead of the array of loans that are now available, there would be three flavors of a federal ONE Loan—for undergraduates, parents, and graduate students. The key details are below.

 

  Undergrad (dependent) Undergrad (independent) Parent Grad student
Annual limit (current) $5,500-$7,500 $9,500-$12,500 Cost of attendance Cost of attendance
Annual limit (PROSPER) $7,500-$11,500 $11,500-$14,500 $12,500 $28,500
Lifetime limit (current) $31,000 $57,500 Cost of attendance Cost of attendance
Lifetime limit (PROSPER) $39,000 $60,250 $56,250 $150,000

Note: Medical students have higher loan limits than what is listed above.

Undergraduate students actually have higher loan limits, but the PROSPER Act would also allow colleges to limit borrowing by student major if they feel students are unlikely to repay their obligations. Financial aid administrators have sought this authority for years, which means that students could actually see lower loan limits. Graduate students, on the other hand, would be limited to $28,500 per year and $150,000 overall in federal loans. Given that tuition alone often exceeds this number, expect students to turn to the private market (when possible) to finance their education.

The PROSPER Act also drastically changes income-driven repayment programs. Instead of the range of programs available now, future borrowers could choose between the standard ten-year payment plan or an income-driven plan that would allow them to pay 15% of their discretionary income (over 150% of the federal poverty line) for as long as necessary to repay the loan. There would be no ending date to payments, and payments for married couples would be based on both spouses’ incomes even if they file their taxes separately. (Both of these provisions differ from current law.) The Public Service Loan Forgiveness program, which was only mentioned once in passing in the entire bill, would also end. However, people in the program now would be grandfathered in.

Takeaway 3: Colleges would be held accountable for their outcomes in new ways. The cohort default rate metric (which I’m no fan of) would be replaced by a repayment rate metric. If a program (not a college) had more than 45% of its borrowers at least 90 days delinquent or in certain types of deferment for three consecutive years, it would lose access to all federal financial aid. This is a more generous definition of repayment for colleges than the College Scorecard’s definition (repaying at least $1 in principal), so I can’t say how many colleges would actually be affected.

Another interesting piece is that colleges would have to repay at least a portion of federal financial aid dollars given to students who left college during a semester. Right now, colleges can try to claw back those funds, but this proposal would limit colleges to trying to collect 10% of the amount owed back from students. This is similar to what Matt Chingos and Kristin Blagg have proposed in a policy brief.

There are so many other interesting points in this legislation, but I think these are the three most important ones that I can speak to based on my experience and research. Keep in mind that the Senate will also introduce a Higher Education Act reauthorization bill sometime in 2018, and that the two bills may differ significantly from each other.