The PROSPER Act cuts financial assistance for undergraduates, a move that will hurt many, the National Association of Student Financial Aid Administrators said Jan. 24.
Backers of the bill, including U.S. Rep. Virginia Foxx, R-5th District, say it simply cuts red tape and makes lending easier.
The Promoting Real Opportunity, Success, and Prosperity through Education Reform Act was introduced in December 2017 to overhaul the Higher Education Act of 1965. It changes structures for college aid and accountability.
When Congress passed the HEA, colleges and universities were swept into a paradigm shift. The act moved many funding responsibilities for universities from private endowments or state taxpayers to the federal government. Government loans and scholarship programs materialized. Pell Grants and Stafford Loans were a direct result of the legislation.
College students now pick from six types of federal loans, nine repayment plans, eight forgiveness programs, and 32 deferment and forbearance options.
The HEA is overdue for a makeover, Foxx told Carolina Journal in an exclusive interview.
The PROSPER Act would gut Stafford and PLUS loans from the system, replacing them with an unsubsidized Federal ONE Loan. Additionally, all federal grants — except for the Pell Grant — would be thrown out.
Some, like proponents of the NASFAA, think that makeover is a bit extreme.
The bill scores high marks when it comes to college access, simplification, and flexibility, the NASFAA said in a policy brief. But fewer loans could mean fewer students.
“The PROSPER Act would eliminate a number of federal student aid programs in favor of simplification; however, there is no significant attempt to backfill the loss in aid elsewhere, which would leave students worse off,” NASFAA said.
It’s time to rein loans in, Foxx said.
“We have been promising for a long time that we want to go to one grant, one loan, and one work/study program. [I]t’s a major innovation and a major reform because it will fix many of the issues that plague our financial aid system,” Foxx said.
Under the ONE Loan, dependents could borrow no more than $39,000 over their college careers. Independent undergraduates could borrow a total $60,250.
The ONE Loan offers only two repayment plans.
Students would not be limited by the changes, Foxx said. Community colleges and non-traditional education options — such as apprenticeships — exist for those who want to dodge debt.
“People are making choices in this area. It is not as though somebody is forcing loans on [students]. I graduated from college with not a dime of debt. I worked part time. I then worked full time. Now it took me longer than four years to get my degree. But again, nothing forced me to borrow money,” Foxx said.
Students who struggle to repay loans are generally those who never finish their degree, she said.
Federal aid is never a good thing, and all reductions in loans are to be applauded, said George Leef, director of research at the Martin Center for Academic Renewal.
America’s student debt topped $1.3 trillion in 2017, show data from the Pew Research Center. In 2011, roughly two-thirds of college seniors between the ages of 18-24 took out loans.
Median student loan debt in the U.S. is about $20,000.
The full interview with Foxx will appear in CJ’s February print edition.