PROSPER Act: House HEA Reauthorization Bill's Impact on Consumer Information and Student Eligibility

By Karen McCarthy, NASFAA Policy and Federal Relations Staff

Editor’s Note: This article is the fourth in a series that delves into Title IV-related issues contained in the Promoting Real Opportunity, Success and Prosperity Through Education Reform (PROSPER) Act released by House Republicans on Dec. 1, 2017. These articles follow up on a brief overview of the bill provided in Today's News on December 4.

The PROSPER Act would replace the College Navigator with a similar tool called the College Dashboard. Like the College Navigator, the Dashboard would also present institutional information that can be compared, but there are many changes to the specific information that is presented. The Dashboard must be consumer-tested and the bill specifically removes the Department of Education's (ED) authority to issue associated regulations.

Specific changes that would be in the Dashboard include:

  • Addition of data presented about full-time students would include all full-time students, not only first-time, full-time students
  • Addition of new disclosures about debt and earnings by program
  • Removal of the publication of schools with the highest and lowest tuition and fees, highest and lowest increases in tuition and fees, and highest and lowest net price
  • Removal of the state higher education spending chart that was required of ED
  • Removal of the multi-year tuition calculator
  • Removal of reports required to be submitted by schools to ED

The bill retains the net price calculator generally in its current form, and adds more specific requirements, including:

  • Clear labeling as a net price calculator and prominent posting on the school's web site
  • Size and font that is the same as other prominent links on the webpage
  • Clear indication of required versus optional questions
  • Data that is no more than two years old
  • Prohibition on sharing any personally identifiable information with third parties

Results of the net price calculator must include the following:

  • The net price as the “most visually prominent figure”
  • Cost of attendance (COA), delineated by tuition and fees, average room and board, average books and supplies, and estimated costs for other expenses in the COA.
  • Estimated total need-based and merit-based grant aid from federal, state, and institutional sources that may be available
  • Percentage of full-time undergraduates that received any type of grant aid described above

The bill would utilize the new College Dashboard as a vehicle for schools to provide annual consumer information disclosures to enrolled and prospective students. Information on the following items would be removed from required annual disclosures, and replaced with a link to the Dashboard (which would contain most, but not all, of the same information):

  • Student body diversity
  • Placement and types of employment obtained by graduates
  • Graduate and professional education pursued by graduates
  • Fire safety
  • Retention rates
  • Vaccination policies

The bill would require that annual consumer information be made readily available on the institution's web site or in other formats upon request. It is unclear if the annual notification to students would still be required.

Other consumer information requirements that are unrelated to financial aid would also see changes under the PROSPER Act. These changes include:

  • Permission for the institution to delay issuing a timely warning related to crimes in certain circumstances
  • Permission for the institution to delay a sexual assault investigation or proceeding at the request of law enforcement or a prosecutor
  • To ensure maximum reporting consistency, a requirement that institutions report crime statistics using definitions from the Uniform Crime Reporting Program of the Department of Justice and a requirement that ED provide definitions if no definition exists in the Uniform Crime Reporting Program
  • A requirement that the institution's campus security report include a statement of procedure on domestic violence, dating violence, and sexual assault
  • A loosening of statutory requirements for the institution's fire safety report and missing persons procedures.
  • A requirement that policies and procedures related to hazing are clearly posted for students, faculty, and administrators and that all student organizations are aware of the hazing policies, including all prohibited activities and the dangers of hazing.

The PROSPER Act would significantly expand counseling requirements by implementing annual counseling for all recipients of Federal Pell Grants and federal loans, including parent loans. ED would be required to provide an online counseling tool that would meet the requirement, or the institution may choose to conduct counseling itself, either in person or online, with the individual acknowledging receipt of the information. Schools would be required to annual affirm to ED that students are receiving the annual counseling.

Information conveyed in annual counseling for both Pell Grant and loan recipients would include:

  • An explanation of how to budget and a sample budget based on the school's COA
  • An explanation of the individual's right to request information collected by consumer reporting agencies
  • The estimated average income and employment rates based on varying levels of education based on the borrower's state of residence.
  • An introduction to the financial management resources provided by the Financial Literacy and Education Commission.

Information conveyed in annual counseling for Pell Grant recipients would include explanations of the:

  • Terms and conditions of the Federal Pell Grant
  • Approved educational expenses for which the student may use the Federal Pell Grant
  • Reasons a student may have to repay the Federal Pell Grant
  • Maximum number of semesters or equivalent for which the student may be eligible to receive a Federal Pell Grant
  • Amount of time remaining for which the student may be eligible to receive a Federal Pell Grant
  • Impact on Federal Pell Grant eligibility if the student transfers to another institution
  • Methods to seek additional financial aid due to a change in financial circumstances and the contact information for the financial aid office

Information conveyed in annual counseling for loan borrowers except parent borrowers would include explanations of the:

  • Effect of accepting the loan on the student's eligibility for other financial assistance
  • Use of the Master Promissory Note (MPN)
  • Ability to accept less than the full loan amount offered
  • Encouragement to consider accepting grant, scholarship, or work-study aid prior to accepting student loans
  • Treatment of federal and private loans in bankruptcy
  • Private loan borrower rights and impact of private loan borrowing on financial aid eligibility
  • Approved educational expenses for which the borrower may use a federal student loan
  • Annual and aggregate loan limits
  • Interest, including the annual percentage rate, and how it accrues and capitalizes
  • Option for the borrower to pay interest while in school
  • Definition and significance of half-time enrollment
  • Importance of contacting the institution if the borrower withdraws
  • Detailed repayment figures individualized to the borrower, including future projected borrowing
  • Obligation to repay the full amount of the loan
  • Likely consequences of default
  • Information on the National Student Loan Data System
  • Contact information for the financial aid office.

Parent borrowers must also complete annual counseling, which includes much of the same information that is provided to student borrowers.

In conjunction with the required annual counseling, the borrower must accept the loan by signing the Master Promissory Note (MPN), or by signing a separate written statement to accept the loan. The written statement may be signed electronically.

In addition, borrowers would be required to acknowledge in writing that they have read a Plain Language Disclosure Form before receiving a new federal loan. Currently, ED sends a fairly complicated and dense six-page Plain Language Disclosure Form to borrowers when each new loan is made under an existing MPN. It is not clear whether ED could continue to send the proposed form to the borrower, or if the institution would be required to generate a personalized form, collect the student's signature, and maintain a record of the signed forms for each new loan.

During exit counseling, new information that must be provided under the PROSPER Act includes:

  • A summary of outstanding loan balance for each individual borrower
  • An explanation of the grace period and expected date that repayment will begin
  • An explanation of interest capitalization and options to pay interest when not required
  • Monthly payments under the standard 10-year repayment plan and income-based repayment plans based on the borrower's loan balance
  • Additional impacts of failure to repay, including decreased credit score, potential reduced ability to rent or purchase a home or car, and potential difficulty in securing employment
  • Contact information and the web site for the borrower's loan servicer.

Institutions would be allowed to provide additional information or counseling beyond these requirements.

In the area of student eligibility, the PROSPER Act adds statutory language that establishes loan eligibility for students enrolled in competency-based education for coursework attributable only to two academic years within the award year.

Related to satisfactory academic progress, the PROSPER Act would incorporate the current regulatory definition of maximum time frame into the statute. It would also require that eligible students have a cumulative C average or its equivalent, or academic standing consistent with the requirements for graduation, at the end of each academic year. Current statute requires the C average at the end of the second academic year only.

For students without a high school diploma or equivalent, current ability to benefit provisions restrict student aid eligibility to students enrolled in eligible career pathways programs. The PROSPER Act would eliminate the career pathways enrollment component and would grant aid eligibility to any otherwise eligible student upon satisfactory completion of six credit hours or the equivalent that are applicable toward a degree or certificate.

Students who completed secondary education provided by a school operating as a nonprofit corporation are Title IV-eligible if the secondary education is acceptable for admission by the postsecondary institution.

Although Selective Service registration would still be required under the PROSPER Act, a student who was required to register but did not, and is 26 years old or older, would no longer be  deemed ineligible for Title IV assistance solely for that reason. This would eliminate the need for financial aid administrators to determine if a student willingly and knowingly failed to register in order to determine the student's Title IV eligibility.


Publication Date: 12/20/2017

Theodore M | 1/5/2018 12:4:50 PM

There needs to be a like button for comments. David S, I like your comment.

David S | 12/20/2017 12:3:07 PM

And this is the work of people who say they're trying to "simplify" federal student aid...and think that by eliminating SEOG and Perkins, they've accomplished that. If we're weighing the good vs the bad in the PROSPER Act, everything listed in this article is a huge price to pay for doing away with origination fees and giving schools the authority to set reduced loan limits, if you ask me. I especially can't wait for age 20-something financial aid counselors to sit down with 50-year-old parent borrowers to teach them how interest on a loan works.

I previously said that I oppose 75% of this bill. My new estimate is 85%.

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