Pictured above is Capitol Hill in Washington DC.
Congressional GOP leaders are planning to introduce pivotal new legislation concerning the federal student loans system and overall higher education policy. The primary goal of the new measures is to equip college students with more practical skills to prepare them adequately for the workforce. In addition to that, it would also cancel several current higher education and financial aid programs to control student loan borrowing.
The new legislation, called the PROSPER Act (Promoting Real Opportunity, Success, and Prosperity Through Education Reform) stipulates several new provisions:
For starters, student loan debt would no longer be forgiven for people employed for ten years in the public sector; in other words, public service student loan forgiveness would be gone. However, the new bill would exempt borrowers who borrowed and enrolled in PSLF before the bill was enacted.
Additionally, the new legislation would also limit the eligible borrowing amount that students and parents could apply for to pay for college. So it sets a cap on financial aid.
Some critics assert that new measure will positively impact for-profit colleges the most. If the bill passes, the Department of Education would supposedly no longer be able to apply the so-called gainful employment regulation in scrutiny over these colleges.
The reasoning involves overall changes to the average student’s debt-to-income ratio. The gainful employment rule takes into account this ratio among graduates from schools to determine if a school is eligible for financial aid. If a student has too much debt compared to income, then the school is less likely to receive aid.
These critics believe that capping financial aid from the start will help keep these colleges in business by reducing debt-to-income ratios. However, there is a counter argument to this.
Here’s the other side of the equation. The rule was implemented to mainly help combat for-profit colleges that would establish misleading career expectations to students, prompting them to borrower. However, borrowers still needed to borrow money from the government in the first place, and this bill would stop that from happening.
Of course, it can’t be ignored that a financial aid borrowing cap would block students from getting the education they need, but there’s also the possibility that it could help some students from borrowing way too much for the wrong education. On the flip side, student could start relying on private student loans which could open the door to new, potentially worse possibilities.
At any rate, there is one fact that hasn’t been addressed. This is legislation in Congress, and it needs to go through the proper procedure before it can have any impact at all. Such a pivotal change in higher education should presumably be met with opposition, so nothing is set in stone yet.
image copyright © Thomas Hawk