Updated Nov. 6, 2019: A markup of this bill took place over three days from Oct. 29-31, 2019 — after the article below was written. An amendment in the nature of a substitute replaced the original bill text, and multiple amendments were adopted during the markup process. The substitute amendment and additional amendments made several minor changes, and this article has been updated to reflect those updates.
Democratic members of the House education committee Tuesday introduced a comprehensive bill to reauthorize the Higher Education Act (HEA) that would make significant changes to the way students access federal financial aid. The bill — dubbed the College Affordability Act (CAA) — opens federal aid to new populations of students, tweaks pivotal grant and loan forgiveness programs, and establishes a new institutional accountability metric, among other changes.
In addition to instituting important changes to aid programs, such as expanding the number of students who qualify for Pell Grants, the bill also assigns the Department of Education (ED) new roles, such as the authority to regulate how institutions calculate the costs of room and board and would codify in statute the student aid enforcement unit created during the Obama Administration.
“The bill strengthens and expands the existing federal student aid programs and adds new programs targeted toward vulnerable populations” and “makes significant strides toward simplification throughout the student aid lifecycle,” said NAFAA President Justin Draeger in a statement released today. “NASFAA is closely studying language in the bill that would codify the enforcement unit within the office of Federal Student Aid, with our priority being to ensure that [ED] is equally focused on regulatory enforcement and institutional partnership. We are also examining provisions in the bill that would allow ED to regulate how schools estimate a portion of students’ cost of attendance. We are pleased that such authority appears to be narrow and limited, but have concerns about granting new authority to a federal agency where none has existed previously.”
Congress is tasked with reauthorizing — or updating — HEA every five years. But a major review and revision is long overdue, as the last reauthorization took place in 2008, and the current version of the law, which authorizes federal student aid programs for higher education, expired in 2013. Lawmakers have delayed another major overhaul by passing an extension of the current law. The process has also been pushed aside over the years as lawmakers turned their attention to other pressing issues, such as health care, tax reform, an overhaul of the Elementary and Secondary Education Act (ESEA), and the debt ceiling.
While the release of the CAA does signal movement on a reauthorization bill, there are many more steps that need to be taken before the bill would be signed into law — such as action from the Senate and a conferencing of bills from both chambers.
“The College Affordability Act is a responsible, comprehensive overhaul of our higher education system that would mean students can spend less and earn more,” said Rep. Bobby Scott (D-VA), chairman of the House Committee on Education and Labor, in a statement. “This proposal immediately cuts the cost of college for students and families and provides relief for existing borrowers. At the same time, it improves the quality of education by holding schools accountable for their students’ success, and it meets students’ individual needs by expanding access to more flexible college options and stronger support – helping students graduate on time and move into the workforce.”
Below is a high-level breakdown of the proposals within the bill. Stay tuned to Today’s News for more information on the CAA.
Expanded Student Eligibility
The bill increases the maximum Pell Grant award by $625, and extends the Pell Grant Lifetime Eligibility Used (LEU) to 14 semesters, with the opportunity for students still within their LEU to use remaining funds for post-baccalaureate studies. The bill also extends Pell Grant eligibility to incarcerated students and to those in short-term programs that are between 150 and 600 clock hours over eight to 15 weeks, an issue which has garnered bipartisan support.
While the bill maintains the requirement that men register with the Selective Service before applying for financial aid, it ensures that anyone who fails to do so is not ineligible for aid. The bill also opens financial aid to “Dreamers,” and repeals the prohibition that blocked students with drug convictions from accessing aid.
The bill creates a “one-time FAFSA,” allowing Pell-eligible students to complete the FAFSA a single time, and takes steps to improve institutions' aid offers. The bill requires institutions to use a standard set of terms in their offers, and include a quick reference box with no more than eight elements. NASFAA recently supported a bill that included a version of this proposal, which aligned closely with its Code of Conduct.
Streamlined Repayment Plans
To simplify student loan repayment, the bill streamlines the number of plans available to students so they may only choose between enrolling in an income-based repayment plan (IBR) and a fixed repayment plan. Under the IBR plan, students would receive forgiveness after 20 years (down from 25 years), and monthly payments would be lowered so students would pay 10% of their adjusted gross income that is 200% above the national poverty level. The fixed repayment plan requires borrowers to remain enrolled for 10 to 25 years, based on the balance they owed. The bill also requires ED to establish automatic income monitoring for those enrolled in IBR plans, and for borrowers seeking loan cancelation for total and permanent disability.
The bill repeals loan origination fees, a change NASFAA has long advocated for, changes the title of the Master Promissory Note (MPN) to Student Loan Contract, and requires that students undergo entrance counseling before they sign it. The bill creates a one-time refinancing program for federal and private loans, and reinstates a six-year statute of limitations for the federal government and institutions to take action to collect from students for overpayments on grants, work, or loans in default.
TEACH Grant/PSLF Program Fixes
The bill makes several technical changes to the Teacher Education Assistance for College and Higher Education (TEACH) Grant program that address many of the issues raised during a recent series of negotiated rulemaking sessions dedicated to rewriting the program. For example, the bill mandates that grants cannot be converted into loans until a point in time when it would be impossible for students to fulfill their service obligations, and adds the ability for students to appeal grant-to-loan conversion decisions. The bill also adds that students will not be considered ineligible for the TEACH Grant program after they began working if their school’s designation changes, teaching duties change, or teaching field changes from high-need.
Additionally, the bill makes changes to the Public Service Loan Forgiveness (PSLF) program to help borrowers struggling to qualify for forgiveness. The bill requires ED to create an online PSLF portal with information such as the number of a borrower’s loans that are in the Direct Loan program, the number of qualifying payments a borrower made toward forgiveness, and, if applicable, why a borrower’s loans are ineligible, as well as how to make them eligible. The bill also changes the qualifications for forgiveness under the program to be dependent on an applicant’s occupation, not their employer.
Redefined Institutional Accountability
The bill replaces institutions’ cohort default rates (CDR) with an adjusted CDR that takes into account the percentage of students at the institution who borrow, and considers loans to be in default if they are in long-term forbearance (for more than 18 months). The bill also establishes another metric by which to measure institutions’ success at preparing students for the workforce — on-time repayment rates. Additionally, the bill changes the ratio of the “90/10 rule,” which prohibits for-profit schools from deriving more than 90% of their revenue from federal financial aid, to “85/15,” and expands it to include all educational programs. The bill also bans mandatory arbitration agreements.
New Federal Student Aid Programs
The bill creates two new federal student student aid programs: the Direct Perkins Loan program and the Emergency Financial Aid Grant program. The Direct Perkins Loan program, according to the bill, would be supported by funds from the Direct Loan fund and would follow the same terms and conditions as unsubsidized loans. The Emergency Financial Aid Grant Program would be equally funded by both the federal government and institutions. It would cap awards at $750 (or $2,000 aggregate) and would require institutions to apply to ED to participate.
The CAA would also allow graduate and professional students at non-profit and public colleges to access federal direct subsidized student loans.
In the coming weeks, NASFAA’s policy & federal relations staff will be providing a series of more detailed analyses into Title IV issues contained in the bill. Stay tuned to Today’s News for more information.
Publication Date: 10/15/2019