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Breaking News: College Cost Reduction Act Advances to House

Breaking News: College Cost Reduction Act Advances to House


Highlights of Markup

  • The College Cost and Reduction Act passed the Committee by a vote of 22-19, and now advances to House floor;
  • Democrats introduced a number of Amendments to strike a majority of the regulatory relief provisions included in the legislation, all of which were rejected;
  • The legislation may pass the House, but is unlikely to pass the Senate. However, the bill provides a foundation for future efforts to reauthorize the Higher Education Act.

Yesterday, the House Education and Workforce Committee marked up the College Cost and Reduction Act (H.R. 6951) and passed the legislation by a vote of 22-19, which will now advance to the House floor for consideration. It is not likely that the legislation will garner enough support to pass the Senate once that time arrives, however, it lays out the foundational elements that the Republican Party will incorporate into its future efforts to reauthorize the Higher Education Act.

The markup demonstrated the partisan nature of this legislation, and consisted mostly of Democratic Members voicing their opposition to the legislation and introducing Amendments to more closely align the College Cost and Reduction Act with the Democrats’ recently introduced “Roadmap to College Student Success.” Of particular note, Democrats introduced Amendments striking the repeal of the Gainful Employment Rule, the Borrower Defense to Repayment (“BDR”) Rule, the 90/10 Rule, and the Closed School Discharge Rule. None of those Amendments were agreed to by the Committee. The lone Republican Amendment was advanced by Rep. Burgess Owens (R-UT) which eliminated the Pell Plus program–a program that provides Pell Grant bonuses for students in the third and fourth years of college who are on track to graduate on time–from the legislation.

As a reminder, the College Cost and Reduction Act is aimed at fixing the current student loan debt crisis. The legislation includes measures related to increased transparency, policies focused on access and affordability, and additionally provides accountability provisions focused on student success. The accountability measures included in the College Cost Reduction Act are of particular importance to AACS members. Many of the accountability measures will repeal current regulations that are harmful to our membership, such as:

Gainful Employment and Financial Value Transparency: Repeals current regulations by the Secretary and eliminates authority for any future regulations.

90/10 Rule: Repeals current regulations and eliminates authority for any future regulations.

Financial Responsibility: Repeals current regulations and clarifies circumstances in which the Department of Education (ED) determines whether an institution is financially responsible; requires ED to undergo a new rulemaking process to update the financial responsibility ratios no later than 18 months after enactment.

Changes in Ownership: Includes the Change of Ownership and Conversion Improvement Act (Rep. Owens and Rep. Miller Meeks), which repeals current regulations and reforms the process to require IHEs to pay an administrative fee when submitting change of control and conversion applications; these fees will be used by ED and the IRS to hire staff and reduce the application processing time as well as conduct oversight.

Other Repeals: Repeals new regulations issued by ED related to closed school discharges, borrowers defense to repayment, pre-dispute arbitration, false certification, administrative capability, certification procedures, and ability to benefit, as well as guidance related to personal liability for owners of proprietary institutions. Prohibits any substantially similar regulation on these topics from being issued by ED.

The College Cost Reduction Act would also significantly revise the current accreditation system. It proposes to provide States with the authority to designate industry-specific accreditors, and additionally directs accreditors to focus on student achievement outcomes standards in its review of institutional and program quality.

Finally, we note that the College Cost Reduction Act includes certain accountability provisions. One provision provides that institutions will be held financially responsible when borrowers are unable to pay their student loans. The proposed language states that institutions “will be required to compensate the government annually for a portion of the unpaid interest and principal on the loans associated with their former students based on the total price the institution charges students for a program of study and the value-added earnings of students after they graduate or, in the case of students who do not graduate, the institution’s completion rate.” The provision will develop two risk-sharing metrics for institutions–(1) for completing student cohorts–that will calculate the median value-added earnings of students who completed the program minus the total price charged to students multiplied by one hundred; and (2) for non-completing student cohorts–that will compare the percentage of students who received Federal financial assistance who did not complete the program within 150% of the program length or did not complete the program within six years after enrollment in a two-year institution. The institution will then be responsible for a portion of the unpaid interest and principal based on these metrics.

We will continue to update AACS Membership on any developments with the College Cost and Reduction Act.

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