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Education groups scrambled Friday to dissect a massive bill from Republicans in the U.S. House of Representatives to reauthorize the federal law that governs higher education, with proposals that have serious implications for how students pay for their degrees and how colleges are evaluated.
The bill also delivers on long-held GOP priorities to roll back regulations on the for-profit and online education sectors and steers new federal money to apprenticeships and career training.
Broad outlines of the 542-page proposal emerged earlier in the week. And well ahead of the bill’s release, it was clear that Representative Virginia Foxx, the North Carolina Republican who chairs the House education committee, would look to simplify the federal student aid program (partly by ending many loan repayment benefits), eliminate the gainful-employment rule and other regulations long opposed by for-profits, and more broadly seek to link federal aid eligibility to students' ability to repay loans.
The details in the full bill did not win much support from college lobbyists and student aid advocates. While most were still examining the full implications of the bill, groups said the legislation would increase the cost of college for students while doing significantly less to protect them from low-quality programs.
Ted Mitchell, president of the American Council on Education, said the group is “deeply concerned that the proposal would undermine decades of federal policy aimed at helping students at the undergraduate and graduate levels afford a high-quality higher education.”
Among the most significant developments in the bill is how it would reshape the way colleges and universities are held accountable for their students’ success graduating and repaying loans.
The bill eliminates an Obama administration rule designed to weed out career education programs that graduate too many students with debt they can’t repay. Another provision, meanwhile, adds new graduation benchmarks for minority-serving institutions seeking dedicated federal grant funding. And colleges across the board would be on the hook for student progress on loan repayment.
While Foxx didn’t get much support from higher education for the bill, the White House on Friday afternoon released a set of priorities for reauthorization of the Higher Education Act that broadly reflected the goals of the House proposal. And Betsy DeVos, the education secretary, issued a statement backing the framework, saying the “status quo” is not working for millions of students and that tinkering around the edges isn’t enough.
“I’m glad that Chairwoman Foxx has put forward a bill that addresses the many challenges with a holistic, reform-minded approach,” she said. “I look forward to working with Congress to help ensure students have access to lifelong learning opportunities that prepare them for success in the 21st century.”
The introduction of the House bill, which was crafted with virtually no input from Democrats, is the first act in a reauthorization saga that will likely span much of the next year -- if it doesn’t drag into 2019.
Senator Lamar Alexander, the Tennessee Republican who chairs the Senate education committee, has signaled that he hopes to pursue a bipartisan process to update the higher education law for the first time since 2008, meaning many of the most controversial provisions of the House bill likely won’t become law. But Foxx’s legislation provides a clear vision of GOP priorities in a higher education bill and shares much of Alexander’s own stated conception of a new law.
For-Profits See a Win
Perhaps the biggest beneficiaries of the House Republican bill are for-profit colleges. The bill eliminates the gainful-employment rule -- among the Obama-era regulations most hated by the sector -- and bars the secretary from issuing a new rule.
The legislation also ends the so-called 90-10 rule, which prevents for-profits from getting more than 90 percent of their total revenue from federal student aid programs.
Steve Gunderson, president and CEO of Career Education Colleges and Universities, said in a statement that the House proposal directly connects the higher education law with jobs and career training.
“This proposal offers important reforms that emphasize good jobs and quality careers for our nation’s students,” he said. “The Higher Education Act has become our nation’s work-force investment strategy. It is imperative to update in ways that produce future skilled workers enhancing U.S. competitiveness and, ultimately, our nation’s economy.”
Most observers expected the end of the existing gainful-employment rule when Republicans took the White House and both houses of Congress last fall. And the U.S. Department of Education this week is launching an overhaul of the regulation through the negotiated rule-making process. The House legislation would importantly end the separate definition of nonprofit and for-profit institutions under federal law that allowed the Obama administration to craft a gainful-employment rule targeting for-profits.
Kevin Kinser, a professor of education policy studies at Pennsylvania State University, said a single definition for all higher ed programs would be the best outcome for for-profits and, potentially, the worst for the rest of higher ed.
"This is more than just saying don’t regulate gainful employment," he said. "It is saying there is no reason to look at for profits differently than the rest of higher ed. Combine this with opening up Title IV to alternative providers of higher education, and allowing full curricular partnerships with for-profit providers, and you’ve created a whole new competitive environment with enormous implications for the current system. Don’t expect institutions to take this lying down."
Student and consumer advocates, meanwhile, blasted the bill's assistance to for-profits. Debbie Cochrane, vice president of the Institute for College Access and Success, said students are losers under the House proposal, while for-profits are the clear winners.
"By gutting regulations designed to ensure that schools provide the education students have paid for, this bill would have the taxpayers write a blank check to colleges that overcharge and underdeliver," she said.
On top of those regulatory changes, she said the bill makes it harder for students who have been defrauded or misled by their college to seek and obtain discharge of their loans.
While the bill would loosen major restrictions on for-profits, it adds new accountability measures for colleges that receive $600 million in annual dedicated grants for minority-serving institutions. To qualify for those funds, colleges must meet a benchmark that they graduate or transfer at least 25 percent of students.
That’s a significant development at the federal level, where colleges have yet to see completion-oriented performance-based measures attached to funding, even after years of experimentation at the state level. The language drew criticism from advocates for college access who said the funds are intended to strengthen and develop historically black colleges and Hispanic-serving institutions that have traditionally gotten by with much less support.
Michelle Asha Cooper, president of the Institute for Higher Education Policy, said the bill singles out and threatens to undermine institutions that have historically given underrepresented student groups access to higher education.
“While policy makers’ efforts to enrich these institutions must be informed by reliable evidence, we must also remember that when serving underrepresented students -- which these institutions do -- more resources are needed, not less,” she said.
Introduction of similar performance-based measures has been trending at the state level for years -- as far back as 1979 in Tennessee. Research indicates those measures do have an impact on the behavior of colleges, said Rebecca Natow, an assistant professor of educational leadership at Hofstra University.
“It gets institutions’ attention and it does prompt changes in their campus programming with regard to students to get them more focused on completion,” she said.
But some colleges have seen unanticipated consequences, such as increasing standards for admissions or lowering academic standards, Natow said.
Critics of such measures in the past have complained that they reward institutions that are doing well while making it harder for colleges most in need of help to make strides on improving student success.
Marybeth Gasman, director of the Penn Center for Minority-Serving Institutions, said the provision doesn’t recognize the mission of those colleges or the challenges of their student populations.
"These are institutions that are doing a huge share of the work of educating low-income students," she said. "That also means they are not going to have consistent graduation rates."
Deborah Santiago, chief operating officer and vice president for policy at Excelencia in Education, said she doesn’t necessarily oppose setting a baseline for institutions that receive competitive federal grants. But she questioned whether graduation rates are the best metric to measure those colleges’ impact, even if they account for transfer students.
Many students attending minority-serving institutions attend part-time, stop out and return later, Santiago said. Those students are not included in the federal graduation rate as currently calculated.
“Graduation rates are wonderful metrics when you’ve got traditional students,” she said. “For a community college or an open-access institution, that’s more challenging.”
New Risk-Sharing Scheme
Experts said one of the most important proposals in the mammoth bill is the plan to elevate federal loan repayment rates as a "risk-sharing" metric for colleges.
The House GOP would drop the use of borrower cohort default rates at the institutional level, which most experts agree are a flawed measure, and replace them with programmatic repayment rates. Under the bill, any academic program where, for three consecutive years, more than 45 percent of borrowers are least 90 days delinquent in repaying their loans would be knocked out of the federal loan program (after a possible appeal process). And programs that exceed the 45 percent threshold for a year would be required to create a "repayment improvement task force" that the department would review.
The committee said in a fact sheet released Friday that the goal of the repayment-rate approach to risk sharing is to "target federal aid to only those programs where graduates have the ability to repay their student loans."
Julie Peller, executive director of Higher Learning Advocates, a recently formed group that focuses on policy, said she appreciated Foxx's effort to ensure that colleges have some "skin in the game" under the $150 billion annual federal aid program.
"However, the proposal’s definition of ‘positive repayment’ as any student who is less than 90 days delinquent is far too lax a standard for holding institutions accountable for the outcomes they produce," Peller said in a written statement. "Additionally, the PROSPER Act still leaves important questions unanswered, including how the measure will treat students who don’t neatly fit into any particular program of study and what role the ‘repayment improvement task force’ will have for helping low-performing institutions improve."
Community colleges could be hit hard if the feds adopt the repayment-rate metric, said David Baime, senior vice president for government relations and policy analysis at the American Association of Community Colleges. Default rates are less of an issue for two-year colleges. That's because their tuition rates are relatively affordable and low-income students are less likely to cross the 270-day default threshold than a 90-day repayment one.
"It's clearly highly problematic for our institutions," he said, "simply because our students don't borrow much."
-- Paul Fain contributed to this article.