Congressional Digest

    Pros & Cons of Student Loan Reform

January 17, 2020

Legislation on College Affordability and Student Debt

More than half of young adults in the U.S. who have attended college took on some debt, including student loans, to pay for their education, according to a 2019 Federal Reserve Board study. The Fed also estimates that the current amount of student loan debt in the United States is more than $1.6 trillion and that 20% of those who still owe money are behind in their payments.

Congress recently took up the issue of student loan reform with both Democrats and Republicans introducing legislation aimed at lowering the cost of college and making it easier to access higher education. The bills would overhaul the Higher Education Act of 1965, which hasn’t been updated in more than 10 years.

In October, the House Education and Labor Committee voted 28-22 to approve the College Affordability Act (H.R. 4674), which aims to lower the cost of attending college and improve the quality of higher education by holding institutions accountable for students’ success. The bill’s provisions include increasing the value of Pell Grants, updating the Federal Work Study Program, directing more aid money to institutions that serve minorities and incentivizing states to offer tuition-free education at community colleges.

The bill would also block access to taxpayer money for schools that cause a large portion of student loan defaults or spend too much on marketing and lobbying as opposed to educating students. Other provisions would crack down on for-profit colleges that leave students with a heavy burden of debt and largely useless degrees.

House Democrats voiced support for the measure, which they say would address students’ growing loan debt. “The College Affordability Act is a responsible, comprehensive overhaul of our higher education system that would mean students can spend less and earn more,” House Education Committee Chairman Bobby Scott (DVa.) said in a statement. “This proposal immediately cuts the cost of college for students and families and provides relief for existing borrowers.”

House Republicans, meanwhile, largely opposed the measure, arguing that it would sink money into programs that don’t help students and would stifle institutions with too many federal regulations. “The so-called College Affordability Act will cost hundreds of billions of dollars, limit educational freedom, increase the cost of college for students and ignore the needs of those pursuing the American Dream,” Rep. Virginia Foxx (R-N.C.), the top Republican on the committee, said at a markup of the bill.

In the Senate, Republicans are pushing for student loan reform with the Student Aid Improvement Act (S. 2557). The bill from Sen. Lamar Alexander (R-Tenn.), chairman of the Committee on Health, Education, Labor and Pensions (HELP), would increase the number of students eligible for Pell Grants, extend short-term Pell Grants to programs like vocational education and streamline the process of applying for federal aid by reducing the number of questions on the Free Application for Federal Student Aid (FAFSA).

“As a father with three children who went to college, I know firsthand how difficult and frustrating this form can be,” Sen. Doug Jones (D-Ala.), who co-sponsored the bill with Alexander, said of the FAFSA. “It’s no wonder so many students who might qualify for aid are intimidated from even applying.”

While the Student Aid Improvement Act has bipartisan support, some Senate Democrats are calling for a more comprehensive reauthorization of the Higher Education Act. “We’ve got so many students today who are struggling with the burdensome cost of getting a degree, who find themselves cheated by bad actors … and they are stuck with mounting debt,” said Sen. Patty Murray (D-Wash.), ranking member of the HELP committee. She called for committee members to “stay at the table and keep working together” on a bill that would address four core priorities—affordability, accessibility, accountability and campus safety—rather than passing what she described as a “smaller package.”

Murray and other Senate Democrats also argue that Alexander is using the issue of minority-serving institution funding, which expired in September, as leverage to move his bill. While Alexander’s bill would make funding for these institutions permanent, Senate Democrats say that a solution needs to be passed now rather than entangling it in what could be a long debate over student aid reform.

Given members’ polarized positions and the prominence of the issue in the presidential campaign, with some Democratic candidates proposing to cancel all or a majority of student debt, both the Senate and House bills face an uphill battle in Congress.

For more, see the November 2009 Congressional Digest issue on “Federal Student Loans.”

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