Senators Introduce Thoughtful Higher Education Package
Members of the Senate HELP Committee, led by Ranking Member Bill Cassidy (R-LA), along with Chuck Grassley (R-IA), John Cornyn (R-TX), Tim Scott (R-SC), and Tommy Tuberville (R-AL), recently released the Lowering Education Cost and Debt Act. This legislative package is designed to lower college costs; reform lending and repayment rules; and improve transparency in higher education cost, quality, and financial aid.
The Lowering Education Cost and Debt Act is meant to replace the President’s Income-Driven Repayment (IDR) plan, which – along with his unilateral student debt cancellation program – we’ve shown to be costly, inflationary, and poorly targeted. These parts of the President’s higher education agenda, if allowed to move forward, would also drive up the cost of higher education, encourage growth in more low-quality programs, and transform student loans into what CRFB Senior Vice President Marc Goldwein describes as “tuition roulette.”
By contrast, the Lowering Education Cost and Debt Act would strengthen accountability and put downward pressure on costs. Although it has not been officially scored, we believe it would be close to budget neutral relative to the policies currently in place; it would generate substantial savings compared to the Congressional Budget Office’s current baseline – which incorporates half the cost of the President’s IDR plan.
The Lowering Education Cost and Debt Act incorporates five different pieces of legislation – some with bipartisan support – including:
- College Transparency Act – A bipartisan bill to improve data collection and reporting to increase transparency around student outcomes such as completion rates, enrollment, and post-college success, including through a new user-friendly website for policymakers, employers, and prospective students and their families.
- Understanding the True Cost of College Act – A bipartisan bill that requires clear and uniform college financial aid offer presentations so that prospective students can effectively understand and compare the cost of their options.
- The Informed Borrowing Act – A bill to provide prospective students with information on the costs of borrowing for school and information regarding school quality while requiring students to read loan material or participate in active student loan counseling.
- Streamlining Accountability and Value in Education (SAVE) for Students Act – A bill that would replace the President’s IDR plan and streamline existing repayment options to one standard ten-year repayment plan and one reformed IDR plan. The new IDR plan would generally limit payments to 10 percent of discretionary income for no more than 20 years (25 years for graduate debt) while reducing the number of years for low balances and prohibiting loan disbursals for the lowest performing institutions. This bill would also prohibit new loans for which half of graduates from the program are unable to earn more than individuals with a high school diploma. It also prohibits new graduate school loans for which half of graduates from the program do not make more than individuals with a bachelor's degree.
- Graduate Opportunity and Affordable Loans (GOAL) Act – A bill to end graduate student PLUS loans and limit federal lending to $65,000 (and $20,500 per year) for ordinary graduate school degrees and $130,000 (and $40,500 per year) for professional degrees. Recent research has found that eliminating the lending cap in 2006 led to a massive increase in net tuition without any meaningful impact on access. Under the GOAL Act, borrowers could take out private loans in excess of the public caps.
The Lowering Education Cost and Debt Act is of course not perfect, and much more could be done to lower the cost of higher education for students and the federal government. But it is a thoughtful and fiscally responsible step in the right direction toward lowering costs, improving quality, and enhancing transparency.
In response to the Lowering Education Cost and Debt Act, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, commented:
With student debt repayments finally slated to resume, higher education reforms are long overdue. The Lowering Education Costs and Debt Act includes a thoughtful package of reforms to increase transparency, improve the student loan program, and strengthen accountability measures in a fiscally responsible way. The President should withdraw his costly unilateral student debt cancellation schemes and instead work with Congress on a plan to truly improve college affordability and outcomes.
The Administration should engage with the Senate and negotiate reforms such as those in the Lowering Education Cost and Debt Act rather than pursuing costly unilateral actions that would make things worse.