Despite these concerns, proponents of the bill argue that the risk-sharing provision is necessary to hold colleges accountable for the outcomes of their students and to ensure that taxpayer dollars are being spent wisely. They believe that colleges should have a financial incentive to ensure that their students are successful and able to repay their loans after graduation.
As the House prepares to vote on the College Cost Reduction Act, the future of the legislation remains uncertain. With just two weeks left in the current Congress, it is unclear whether there will be enough time to pass the bill and send it to the Senate for consideration. However, even if the bill does not pass this year, it is likely to resurface in the next Congress, as Republicans continue to prioritize higher education reform.
For now, all eyes are on the House as they consider this ambitious legislation that seeks to address the rising cost of college and improve accountability in higher education. Only time will tell whether the College Cost Reduction Act will become law and bring about the changes that its supporters hope to see.
“That’s a net loss to the institutions, and that money could be used to help students.”
Some argue that risk-sharing could disincentivize colleges from enrolling low-income students who might struggle to repay their loans or recruiting students for high-demand public-service majors that could lead to low earnings postgraduation.
“At its core, [risk-sharing] completely runs counter to what the goal should be for higher education, which is admitting and successfully providing ladders of economic opportunity and access for those historically left behind,” said Lindwarm from APLU.
Proponents, on the other hand, say risk-sharing is a necessary tool to address the student loan crisis and lower tuition prices by shuttering costly programs that have a low return on investment. They also argue that the PROMISE program offers incentives for supporting minority students that should outweigh any concerns that colleges will cut off access to low-income or underrepresented groups.
The Foundation for Research on Equal Opportunity, a market-friendly think tank, found that community colleges, which often serve minority, low-income and nontraditional students, would be the biggest “net winners,” collecting $1.6 billion under the bill. Four-year private nonprofit colleges and universities, by contrast, which tend to operate largely on tuition revenue, would have to pay $3.2 billion in risk-sharing liabilities.
“There are certainly some programs and some colleges which are not going to fare well under the College Cost Reduction Act. But I think that’s a feature, not a bug,” said Preston Cooper, who conducted the study and is now a senior fellow at the American Enterprise Institute. “The programs that don’t have good outcomes have very high prices and very low earnings. I’m not necessarily sure we want students to have access to those programs.”
‘More Harm Than Good’?
As Republicans make their last-ditch effort to whip House votes, higher education lobbyists are urging lawmakers to vote against the bill or prevent it from reaching the floor until the next session.
Some advocates, including Michelle Shepard Zampini, senior director of college affordability at the Institute for College Access and Success, argue that “whether intentional or not … the CCRA would actually do more harm than good” for students.
Zampini and others point to provisions that would end the Grad PLUS and Parent PLUS loan programs, cap student lending, and cut off a pathway to debt relief through income-driven repayment plans.
Zampini believes these measures will lead to higher monthly student loan payments and make relief more difficult to access.
“Some students could be indebted for basically their whole lives,” she said. “We feel like that’s a big red alert.”
Justin Monk, director of student and institutional aid policy for the National Association of Independent Colleges and Universities, described the bill as “about half-good, half-bad.” While he generally agrees with a carrot-and-stick approach to accountability, he thinks the proposed risk-sharing model is unfeasible for many institutions.
“The bill itself, due to being so broad, does do quite a few really positive things, but on the other hand, it also does some really harmful things, and in our view, many of them are targeted directly at private nonprofits,” Monk said.
Colleges can’t steer the labor market, so even pre-professional colleges with rather direct pathways would often be penalized for variables outside of their control, Monk said. Small liberal arts institutions that provide degrees for which the payoff may not be immediate, even in the best economy, would fare even worse.
“If you look at any sort of earnings timeline, it takes a little bit of time for it to ramp up. But earnings over a lifetime are substantial,” he said.
Jason Altmire, president of Career Education Colleges and Universities, a national trade association representing for-profit technical institutions, said he disagrees with anyone who argues the CCRA will drive up costs for students. But that doesn’t mean the legislation is perfect.
“This is a marker for next year,” he said, “and we’re hopeful that when we get into the 119th Congress a month from now, we’ll be able to modify their approach.”