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Advocacy and Action

Key Senator Offers Plan for HEA Reauthorization

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In remarks shared at the American Enterprise Institute on February 4, Sen. Lamar Alexander (R-TN), chair of the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP), shared an ambitious schedule for the reauthorization of the Higher Education Act of 1965. Last comprehensively reauthorized in 2008, the HEA authorizes federal student aid programs, provides institutional aid and support, and includes general provisions pertaining to higher education on anti-discrimination, program integrity, and other issues.

Alexander aims to deliver a bill in the spring for the full Senate to consider in the summer. That schedule, he said, would allow for time to work out differences between the Senate’s bill and a House bill in the fall, so President Trump could sign it into law and “produce a present for 20 million college students and their families by Christmas.”

Three Priorities

Citing the collective $1.5 trillion in student loan debt among U.S. citizens, the chairman explained three questions he hears most about college: “Can I afford it?” “Is it worth it?” and “Can you make applying for aid and repaying loans simpler?” He then described his three major proposals for HEA reauthorization.

The first proposal is to simplify the Free Application for Federal Student Aid, a required form for receiving federal grants or loans. Alexander’s proposal reduces from 108 to 25 the number of questions on the FAFSA about the student, his/her family, and his/her plans for college, while retaining key information that states and institutions use to calculate additional aid. Another component of Alexander’s FAFSA simplification involves reintroducing language from a bill the Senate passed in 2018 that establishes better communication between the IRS and the Department of Education. Currently, families have to provide certain information to ED that they had previously submitted to the IRS. Alexander’s proposal would allow students to autopopulate responses to 22 FAFSA questions. He explained that this change would also simplify the process for the 40 percent of aid applicants who do not file federal income taxes, but who likely qualify for Pell Grants. He estimates this change would eliminate the annual $6 billion of mistakes in over- or under-awards.

Secondly, Alexander proposes simplifying the nine current repayment plans into two: the standard 10-year plan, and an income-based plan that would automatically withhold payments from a borrower’s paycheck. While the logistics are unclear, Alexander’s proposal would cap loan payments at 10 percent of a borrower’s discretionary income. If a borrower had no earnings or lost a job, he/she would not be required to make a payment, and there would be no negative impact on the borrower’s credit score. If a loan was not repaid within 20 years, the remaining balance would be forgiven.

Alexander’s third proposal addresses institutional accountability, or “skin in the game,” another topic he has been interested in over the years. This proposal would “simplify and expand” the 2014 gainful employment rules, which would make certain programs ineligible for federal aid if their graduates consistently had too much debt relative to their incomes. His proposition would make the rule apply to every program at all institutions—public, private nonprofit, and for-profit—and would measure whether borrowers repay their student loans. Alexander stated that this would incentivize institutions to “lower tuition and help their students finish their degrees and find a job so they can repay their loans.”

The Democrats’ 2018 Proposal

In July 2018, House Democrats released their version of HEA reauthorization, the Aim Higher Act, largely designed in response to the House Republicans’ PROSPER Act, which advanced through committee on a party-line vote at the end of 2017 but never made it to the House floor for a full vote of the chamber. The Aim Higher Act focuses on three major themes: improving access to quality degrees, affordability, and increasing completion rates.

Like Alexander’s recent proposal, it calls for simplifying the FAFSA but would place applicants into one of three tracks based on the complexity of the student’s finances. Democrats also proposed strengthening each entity responsible for oversight of higher education: accreditors, states, and the federal government. The proposal would also change the 90/10 rule—which limits the amount of revenue a for-profit institution can receive from federal aid to 90 percent—to a 85/15 ratio. It would also close loopholes that currently allow for-profit institutions to rely on funding from other federal programs, such as the Post-9/11 GI Bill. Additionally, the Democrats’ bill would eliminate the ban on a student unit record, a system that would track employment and graduation outcomes of students.

Regarding affordability, the Democrats’ proposal would create a federal-state partnership, incentivizing states to reinvest in higher education and, in return, requiring states to provide students with two years of tuition-free community college. It would index the maximum Pell Grant award to inflation and also provide for short-term Pell Grants. The Aim Higher Act would reinstate the Perkins Loan Program that expired in 2017, improve loan counseling, and eliminate origination fees on all federal loans. Finally, the bill calls for two repayment plans: one fixed and one income-based. Borrowers earning below 250 percent of the poverty line would not have to repay their loans each month until their earnings improved.

The Aim Higher Act includes several proposals for increasing college completion, including supporting multiple pathways to graduation and providing grants to institutions to implement evidence-based, remedial education reform strategies to better serve students. It would also invest in campus-based child care for student parents, as well as programs to help veterans transition to civilian life.

Moving Forward

With a divided Congress, it is unclear which proposals might make it into a comprehensive reauthorization bill, though both political parties will likely need to compromise. Sen. Patty Murray (D-WA), ranking member of the Senate HELP committee, commented that she was looking forward to working with Alexander on HEA reauthorization, and during his remarks at the American Enterprise Institute, Alexander highlighted several bipartisan higher education bills, hinting that there might be an appetite on Capitol Hill to pass a reauthorization bill in 2019. Additionally, Alexander’s plans to retire in 2020 may be an extra incentive for him to leave his mark on higher education policy this year.

NACUBO will continue to monitor HEA reauthorization and any additional proposals offered by Republicans, Democrats, and Washington think tanks. To stay informed about HEA reauthorization, visit the NACUBO website and click on the “Advocacy” tab.

NACUBO CONTACT Bryan Dickson, assistant director, advocacy and student financial services

Sen. Lamar Alexander (R-TN) proposes simplifying the nine current repayment plans into two: the standard 10-year plan, and an income-based plan that would automatically withhold payments from a borrower’s paycheck.