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On July 24, House Democrats released their version of a Higher Education Act (HEA) reauthorization bill. The bill focuses on three major topics: improving access to quality degrees, making college more affordable, and increasing completion rates.

In response to the PROSPER Act introduced by House Republicans, the Democrats’ bill consists of proposals introduced through the Aim Higher (the House Democratic legislative campaign), amendments offered by Democrats during the December 2017 markup of the Republicans’ bill, and “research-based reforms developed in consultation with higher education practitioners and thought leaders,” according to the bill summary.

It is very likely neither the Democrat nor Republican bills will advance in the House this year; however, business officers should take note of the proposed reforms, as they may appear in future conversations and legislation addressing HEA.

Improving Access

The Aim Higher Act takes a number of steps to increase access to higher education. It calls for simplifying the Free Application for Federal Student Aid (FAFSA) by reducing the number of questions and placing applicants into one of three tracks based on the complexity of a student’s finances.

To protect students and taxpayers, the Aim Higher Act proposes strengthening each entity responsible for oversight in higher education¬≠, including accreditors, states, and the federal government. One of the proposals would change the 90/10 rule—which limits the amount of revenue a for-profit institution can receive from federal aid to 90 percent—to 85/15 and would close loopholes that currently allow for-profit institutions to rely on funding from other federal programs, such as the Post-9/11 GI Bill. Additionally, the Democrats’ bill would eliminate the ban on a student unit record and create a secure system to evaluate student-level data.

Making College More Affordable

Most notably, the proposal would create a federal-state partnership that would incentivize states to reinvest in higher education, and in return, would require states to provide students with two years of tuition-free community college.

Additionally, the Aim Higher Act would increase the maximum Pell Grant award by $500 each award year, index the Pell award to inflation, and provide for short-term Pell Grants. Further, the bill would phase out the current formula that allocates FSEOG dollars to institutions, which is based on how long the school had participated in the program, and would replace it with a formula based on the level of unmet need.

Regarding TEACH Grants, the Democrats’ bill would protect recipients from inadvertently having their grants converted to loans. The Act also preserves graduate student participation in the Federal Work-Study Program and changes the allocation formula to improve equity among institutions.

The proposed reauthorization bill addresses federal student loans by reinstating the Perkins Loan Program, improving loan counseling, and eliminating the origination fees on all federal loans. The bill also would allow borrowers to refinance old debt at current rates and would expand the Public Services Loan Forgiveness Program to include farmers and those working for Veterans Service Organizations.

This bill—like the PROSPER Act—calls for one fixed repayment plan and one income-based repayment plan. Unlike the PROSPER Act, the Aim Higher Act would allow borrowers earning below 250 percent of the poverty line to not repay their loans each month until their earnings improve.

Increasing Completion

The Aim Higher Act includes a number of proposals to increase completion, including supporting multiple pathways to graduation and providing grants to institutions to implement evidence-based remedial education reform strategies to better serve students and reduce the number who drop out.

The bill would provide additional funding to community colleges, with priority given to under-resourced institutions with high percentages of low-income and minority students. That proposal aims to help institutions develop and implement “evidence-based programs that boost degree completion through academic and financial advising” and other student supports.

Additionally, the Act would strengthen teacher and school leader preparation programs and would authorize a new funding stream to support innovation at historically black colleges and universities and minority-serving institutions.

Finally, the Aim Higher Act calls for investing in campus-based childcare for student parents, and housing for homeless and foster youth, as well as programs to help veterans transition into civilian life.

Contact

Bryan Dickson

Director, Student Financial Services and Educational Programs

202.861.2505


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