House Democrats on Tuesday unveiled a sweeping overhaul of the federal higher education law, aiming to cut the cost of college and increase access to college for low-income and minority students. The College Affordability Act would update the Higher Education Act for the first time in more than a decade at an estimated cost of $400 billion over 10 years.
The legislation shares some key provisions with a recently released package of bipartisan bills introduced in the Senate by Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN). Both proposals would streamline the Federal Application for Student Aid (FAFSA), simplify financial aid award letters, expand Pell Grant eligibility for incarcerated students, and allow Pell to be used for short-term programs—although the House bill excludes for-profit colleges.
The House measure could move quickly through the chamber, albeit with revisions, but is is unlikely to gain any traction in the Republican-controlled Senate or from the Trump administration.
Below is a broad overview of proposals included in the College Affordability Act.
Financial Aid
FAFSA Simplification - Free Application for Federal Student Aid simplification efforts, including an automatic zero EFC for recipients of means-tested benefits
- requires dependent and independent students who receive Pell Grants to file the FAFSA only one time.
- provides the FAFSA in multiple languages
- extends a provision from the FY 2019 spending bill which allows institutions to share information from a student's FAFSA with scholarship granting organizations if the student provides explicit written permission
Financial Aid Award Letters - requires institutions to use a standard set of terms, and include a quick reference box with no more than eight elements
Loan Origination Fees - eliminates loan origination fees
Loan Counseling - institutions are required to annually disclose to students the expected borrowing amount and what their monthly payment could look like during repayment
Cost of Attendance Estimates - requires the U.S. Education Department to prescribe at least one methodology that institutions must use in determining the cost of room and board for students living off campus for the purpose of calculating the projected cost of attendance
Access and Affordability
Tuition-Free Community College - creates a federal-state partnership model where the federal government contributes a per student amount at least 75 percent of the average resident tuition for public community colleges and states contribute 25 percent
Pell Grants - increases the maximum Pell Grant award by $500, permanently indexes the award to inflation, and extends grant eligibility to 14 semesters
- repeals ban on incarcerated individuals from accessing Pell Grants
- allows high-quality short-term programs that partner with local industry to participate in the Pell Grant program
- allows students to exhaust full Pell eligibility on graduate studies
- provides bonus Pell funds to institutions that are dedicated to enrolling low-income students and ensuring that they succeed
Campus-Based Title IV Aid Programs - allows eligible public and non-profit institutions participating in the Federal Supplemental Educational Opportunity Grant (SEOG) program to provide emergency grant aid to students
- phases out the current allocation formula of SEOG, replacing it with a formula based on the level of unmet need at an institution and the percentage of low-income students present on campus
Creates the Federal Direct Perkins Loan Program to provide an additional source of borrowing for undergraduates and graduates by allocating a portion of Direct Loan volume to be distributed to institutions
- removes the provision that limits current students from originating subsidized loans once in school for more than 150 percent of their program length
Federal Work-Study - phases out current Federal Work-Study formula and replaces it with one that allocates funds based on the number of low-income students at an institution and the unmet need of students at such institution.
- includes a bonus allocation for campuses in the top 20 percent of institutions based on rates of Pell student enrollment and success
- preserves graduate participation in the program
TRIO and GEAR UP - increases funding for TRIO and GEAR UP
Income-Based Repayment Plans - simplifies existing student loan repayment plans with one fixed repayment plan and one income-based repayment (IBR) plan and maintains loan forgiveness benefits
Removes interest capitalization after a borrower leaves forbearance and deferment
Automatically places borrowers who are more than 120 days delinquent into IBR
- previously defaulted borrowers who have made nine payments required to rehabilitate their loan will be automatically placed into IBR to help smoothly transition from rehabilitation to repayment
- removes the burdensome paperwork requirements for borrowers who are totally and permanently disabled by requiring the Secretary of Education to establish procedures to obtain income information during the three-year monitoring period without further action by the borrower
- allows a servicer to remove default from a borrower's credit report after they have consolidated their loans or paid them off in full. This is currently only available to borrowers that rehabilitate their loans.
Public Service Loan Forgiveness (PSLF) Program - requires the Department to create an online PSLF portal with information such as the number of a borrower's loans that are in the Direct Loan program, the number of qualifying payments a borrower made toward forgiveness, and, if applicable, why a borrower's loans are ineligible, as well as how to make them eligible
- changes the qualifications for forgiveness under the program to be dependent on an applicant's occupation, not their employer.
Other Federal Aid Provisions - allows Deferred Action for Childhood Arrivals (DACA) and certain other undocumented students access to federal student aid
Includes funding to eliminate or significantly reduce tuition at historically black colleges and universities (HBCUs) and other minority serving institutions (MSIs)
- permanently reauthorizes the mandatory funds provided under Part F of Title III (which expired at the end of FY 2019), increases the total amount from $255 million per year to $300 million, and adjusts the allocation amounts for each institutional designation
- makes changes to allow Title III grantees (HBCUs, TCUs, MSIs) to have more flexibility to develop endowments and allows institutions to use earnings from endowments to support student scholarships
- reduces the non-federal match institutions must provide from 100 to 50 percent
- restricted gifts made to endowment funds can be applied toward the non-federal match
- increases the authorized discretionary amounts for Title III grant programs to account for inflation and growth in the number of eligible institutions
Dual Enrollment - creates a matching grant program for institutions to establish partnerships with K-12 school districts to support the development of dual enrollment and early college high schools
- provides states with funding to increase student access to early credit pathways, including dual enrollment, early college high schools, and Advanced Placement and International Baccalaureate programs
Education Records and Student Privacy
Federal Unit Record System - repeals the "student unit record" ban – a provision that prohibits the Department from collecting student-level data – and requires the development of a secure system that uses student-level data to evaluate postsecondary outcomes including transfer, employment, and earnings
Reverse Transfer - includes the Reverse Transfer Efficiency Act, which AACRAO strongly supports and has advocated for over the past several years
- the legislation would create a new exemption under FERPA and facilitate a four-year institution's ability to share an education record with the two-year institution that the student was previously enrolled at for the purpose of evaluating if collectively between the two institutions the student has enough credits for a credential from the community college
- in order to maintain FERPA standards, the student must still consent that they would want the credential
Accountability and Transparency
90-10 Rule - changes the 90-10 rule ratio (the percentage cap of Title IV aid an institution may receive) to 85-15 and expand it to include all educational programs
Borrower Defense to Repayment - requires the Department to establish a Borrower Defense to Repayment process to discharge the federal loans of students who were defrauded by their colleges
- allows all federal student loans to be discharged – not just Direct Loans—and restores Pell eligibility for recipients who qualify for a loan discharge
Gainful Employment - requires the Department to establish a compliance standard that includes a debt-to-earnings threshold for training programs that are statutorily required to lead to gainful employment
Accreditation - focuses accreditation on academic quality and makes the accreditation process more transparent
- heightens state authorizers' role
Cohort Default Rate - alters the cohort default rate (CDR) metric by adjusting for the share of borrowers at an institution and the number of borrowers who are in long-term 12 forbearance (18 months or longer)
Program Integrity - strengthens the incentive compensation ban
- establishes a transparent process for approving for-profit to non-profit school conversions at the Department
- limits marketing expenditures for institutions that spend little on instruction
- directs the Department to go through a negotiated rulemaking to update the criteria used to determine an institution's financial health and includes certain automatic, mandatory, and discretionary triggering events that would allow the Department to re-revaluate an institution's financial circumstances in order to protect students and taxpayers
- bans mandatory pre-dispute arbitration and class action ban agreements
- establishes a new on-time loan repayment metric for accountability
- adds new requirements for loan eligibility for certificate programs lasting 300 to 600 clock hours
- improves transparency and accountability for institutions that partner with third-party providers and prohibits institutions from outsourcing both admissions and educational content to the same provider
Title IX - prohibits the Department from issuing or enforcing the proposed Title IX rules that the Trump administration published in November 2018
Campus Safety - requires colleges to develop and disseminate policies on hazing and harassment and adds hazing and harassment as reportable offenses under the Clery Act
- institutions are also required to provide an educational program on hazing for enrolled students
- creates new biannual standardized online survey tool regarding student experiences with domestic violence, dating violence, sexual assault, sexual harassment, and stalking
- amends the Clery Act to provide greater transparency to students and parents concerning student safety in study-abroad programs
Civil Rights Enforcement - institutions must designate at least one employee to coordinate efforts to comply with Title VI of the Civil Rights Act
Competency-Based Education (CBE)
Establishes a demonstration project that allows participating CBE programs to request flexibility from some current statutory and regulatory requirements seen as barriers to implementation
- requires an institution's accrediting agency to set standards specific to CBE