A new bill introduced by Sen. Rick Scott (R-Fla.) would make institutions responsible to pay back a percentage of borrowers’ loans if they defaulted on payments and require the Department of Education (ED) to post data from public institutions, such as six-year graduation rates, cost to graduate, and job or advanced degree placement.
The COLLEGE Act — Changing Our Learning, Loans, Endowments, and Graduation Expectations — was introduced by Scott earlier this month as an effort to put higher education institutions “on the hook” for student debt and to implement reporting requirements for ED.
Scott said in a statement that state and federal leaders have “failed managing” public institutions of higher education, which has resulted in “decades of failed policy,” including many borrowers having “mountains of student debt.”
“Now, these same ‘leaders’ are claiming that the answer to our higher education problems is massive and unconditional student loan debt forgiveness,” Scott said. “It’s choosing to treat a symptom when we can cure the disease. If we want real results that improve student performance, boost post-graduation job placement and keep tuition affordable, we need to do the hard work of actually holding colleges and universities responsible for the outcomes of their students and accountable to the American taxpayer.”
Under the COLLEGE Act, institutions would be responsible for paying 1% of the loan balance of any borrowers in default within the first three years of their loans entering repayment. As time passes, the rate jumps to 2% in the second year of default and ultimately increases to 10% of that balance at the end of 10 years.
“Forcing universities to have accountability for student debt provides a powerful incentive to actually prepare students for careers — instead of encouraging mountains of debt and degrees that don’t lead to jobs after graduation,” a press release from Scott states.
Additionally, the bill would require ED to publish what Scott calls “common-sense metrics” from public institutions, including the six-year graduation rate for each academic program, the percentage of graduates who are employed full-time or continuing their education full-time after graduation, and the cost to graduate with a degree for each academic program. Scott notes that metrics create accountability for institutions to prepare students to get a job following graduation.
Institutions would also be required to create an annual cost and endowment report to submit to ED, which would include information on an institution’s’ current cost of attendance, increases in cost of attendance from the previous year with an explanation why, the size of the institution’s endowment, and the total increase of the endowment fund over the previous four fiscal quarters.
The bill would require institutions to create cost-match financial aid awards based on the size and growth of their endowment funds. For example, the bill states Title IV participating institutions with endowments greater than $1 billion, but less than $5 billion, would be required to cover 25% of the cost of attendance for each full-time student enrolled. For institutions with endowments greater than $5 billion, but less than $10 billion, there would be a 50% university cost-match and for those with over $10 billion, 75%.
The legislation was referred to the Senate Committee on Health, Education, Labor, and Pensions (HELP) in early August, though Scott does not currently serve on the committee. Since Democrats currently make up the majority in both the House and Senate, it’s unlikely this measure will be approved during the 117th Congress.
However, with control of both chambers up for grabs in the upcoming term elections, the proposal could be considered when the 118th Congress comes into session next year should Republicans win back the majority. NASFAA will continue monitoring this bill as it moves through the legislative process.
Publication Date: 9/1/2022