The College Cost and Reduction Act focuses on three objectives: providing students with clearer and personalized information about the cost of college, holding colleges accountable for degrees that yield poor returns on investment, and reallocating funding for universities based on student outcomes.
Virginia Foxx (R-N.C.), Chair of the House Education Committee, introduced a bill on Jan. 11 with the goal of reducing the cost of college and restructuring the student loan process.
The College Cost and Reduction Act focuses on three objectives: providing students with clearer and personalized information about the cost of college, holding colleges accountable for degrees that yield poor returns on investment, and reallocating funding for universities based on student outcomes.
Foxx emphasized the bipartisan acknowledgment of the soaring levels of student loan debt in the U.S., attributing the issue to the inflated cost of college education. She highlighted the need for substantial reforms to address the challenges faced by students pursuing higher education.
Amending HEA
The proposed legislation aims to amend the Higher Education Act by collaborating with federal agencies and industry representatives to establish standardized financial aid offer forms for educational institutions.
These forms would comprehensively detail the costs associated with attending the school, the students’ financial responsibilities, and the types of financial aid they are receiving.
Additionally, the legislation would mandate the Education secretary to maintain the College Scorecard website. This requirement aims to provide parents and students with easy access to essential information about universities they are considering for application.
The proposed legislation introduces two new programs: the “Pell Plus” program and the “PROMISE” grant program.
The Pell Plus program is designed to offer increased Pell Grants to students pursuing specific degrees, while the PROMISE program ties funding for schools to factors such as student performance, graduation rates, and low tuition.
Eligibility for these programs is contingent on colleges providing prospective students with the maximum cost of obtaining a degree before enrollment, with no subsequent changes.
Schools would assume financial responsibility for unpaid loans under this legislation, requiring them to annually reimburse the government for a share of unpaid interest and loans from students they had in the past.
Finally, the bill introduces changes to student loans, imposing an aggregate limit of $50,000 for undergraduate students and $100,000 for graduate students. It simplifies student loan repayment into two plans: an income-driven repayment plan and a 10-year “mortgage-style” plan.
This bill is one of several introduced in the House aimed at reforming the HEA and addressing issues related to college costs and student loan debt.
Repayment challenges
In October 2023, the pandemic-era moratorium on student loan payments ended, and bills resumed for around 22 million people. Yet, according to new data from the US Department of Education, only 60 percent of those borrowers had made a payment by mid-November.
In a recent blog post discussing the findings, US Department of Education Undersecretary James Kvaal suggested that the repayment challenges predated the COVID-19 pandemic.
Kvaal said: “Millions more were not making payments prior to the payment pause because they were delinquent or obtained a deferment or forbearance.”
The undersecretary also mentioned that “some are confused or overwhelmed about their options.”
It’s important to note that the figures exclude borrowers who didn’t have a payment due in October, such as those who returned to school or are covered by the Department of Education’s recent actions to address servicing errors.
