Seven Questions About the PROSPER Act Answered
The bill passed out of committee in late 2017, and may be considered by the full House in 2018.
Q1. What is
the Higher Education Act?
A. The original Higher Education Act (HEA) was signed into law in 1965. Its purpose was to strengthen the federal government’s commitment to higher education. The HEA is the law that covers a broad swath of issues that we deal with, everything from federal financial aid to regulations and campus sexual assault. The Promoting Real Opportunity, Success and Prosperity Through Education Reform (PROSPER) Act is a reauthorization that modifies the current law, not a total replacement of the HEA. The bill (HR 4580) was introduced in 2017 and could be considered by the full House of Representatives in 2018. Congress often focuses on Title IV, the part of the HEA that concerns federal financial aid. This is where we expect to see the most change.
Q2. Community colleges are open-access institutions that serve a diverse student population – including many students from low-income and underserved communities. Does the PROSPER Act affect these communities’ access to higher education?
A. Fundamentally, community colleges will remain open-access institutions by virtue of their missions; the federal government does not legislate our institutions’ missions. However, one issue that broadly affects access is student financial aid. The PROSPER act expands the Pell grant program to include short-term training and competency-based education programs, and it would reinstate eligibility for students in Ability-to-Benefit programs. Unfortunately, it also eliminates some current benefits that students receive such as Federal Supplemental Educational Opportunity Grants (FSEOG) for undergraduate students with exceptional financial need in the amount of $100 - $4,000.
Q3. There has been talk lately about simplifying the federal student loan programs. What do community college leaders need to know about how the bill addresses the complexity of these programs?
A. The PROSPER act reduces the number of loan programs that federal government offers. The bill proposes to create a single loan program, the One Loan Program, that all current loan programs would be consolidated under. One major point of consideration for presidents and trustees is that this would eliminate subsidized loans. Subsidized loans are loans that a student does not begin accruing interest on while they are in school, or while the loan is in deferment. The bill also proposes to reduce the number of income-contingent repayment plans to one, and keeps standard 10-year repayment in place. Under the new income-contingent repayment plan, there would be no loan forgiveness, but total interest paid would be capped.
Q4. What happens to cohort default rates under this bill?
A. The PROSPER act would eliminate the cohort default rate as an accountability metric for institutions. It its place would be a new programmatic level repayment rate. Programs that fail to meet a repayment rate of 45 percent or higher for three years will lose access to Title IV aid. The Department of Education’s Inspector General released a report on various provisions in the PROSPER Act. The programmatic repayment rate was identified as potentially problematic due to the massive increase in data collection and handling. This would also create a greater reporting burden for community colleges.
Q5. The bill includes language that would implement institutional risk sharing, a process through which colleges would share additional financial liability tied to federal financial aid. How would this work?
A. Risk-sharing is the concept that institutions should have a greater financial liability for federal aid dollars that are given out to students. For example, some risk-sharing proposals would require institutions to pay back a percentage of student loan dollars in default. The PROSPER Act’s application of risk sharing is tied to a current provision within the HEA called Return to Title IV (R2T4). Under R2T4, students who do not complete their coursework are responsible for paying back a certain percentage of Pell Grant and federal loan funds based on when they withdrew or dropped out. The PROSPER Act would shift 90% of the financial responsibility of repayment to the institution and create new tiers of penalties. For example, under current law if a student withdraws at the 20 percent mark of the semester then 80 percent of financial aid must be returned to the federal government. Under the same scenario, 100 percent of funds would have to be returned if the PROSPER Act became law. The amount owed back to the federal government under R2T4 would double or triple for many community colleges.
Q6. Considering the recent spotlight the Trump administration has put on apprenticeships, can we expect the bill to address apprenticeships and the role colleges would play in expanding them?
A. The bill creates a new $138 million-a-year apprenticeship program. Those funds would be dispersed to institutions to foster industry partnerships. There would be a financial match requirement for the partners, and the money could be used for books and supplies, student wages, developing programing around the apprenticeship, etc. It is ACCT’s position that the focus on apprenticeships is positive; however, there is room for some improvements to this provision. We’d like to see funding available to support instruction, language to designate the institution of higher education as the great lead, and a lower match requirement.
Q7. What is one change community college leaders should be advocating for in this bill?
A. Be sure to discuss risk-sharing with your representatives. The proposal has bi-partisan support and it may sound appealing to many members of Congress. Your representative may not be familiar with how it would impact your institution, so clearly communicate how implementing risk sharing may unduly penalize your students. Ideally, we would also like to see all of our institutions schedule a campus visit for their representatives to provide an opportunity for students, faculty, and administrators to communicate why expanding programs like Pell grants and SEOG, and maintaining subsidized loans are critical to ensuring as many students as possible can afford an education that will propel them into the middle class.