House Republicans Aim to Pass Higher Ed Overhaul

By Jessica Blake

House Republicans are making a final attempt to pass sweeping legislation in this Congress that aims to lower the cost of college and hold institutions accountable.

The House has considered few bills related to higher education in the last two years, so a floor vote on the College Cost Reduction Act would mark a significant achievement for its sponsor, Representative Virginia Foxx, a North Carolina Republican and chair of the House Education and Workforce Committee.

Foxx has long sought to pass comprehensive legislation to overhaul higher education, and she’s worked for the last two years on a piecemeal effort to update the Higher Education Act of 1965. So far, Foxx, who is giving up her gavel on the committee at the end of the year, has managed to get a handful of higher ed–related bills through the House.

Now, with just two weeks left in the 118th Congress, the full House could vote on the College Cost Reduction Act as soon as next week, according to a source familiar with the process.

Although it is unlikely the legislation will also gain traction in the currently Democratic-controlled Senate, policy experts see this lame-duck push as yet another sign that Republicans will prioritize efficiency and accountability in higher education when the GOP fully controls Congress next year. That means that while this month could be the last stand for Foxx’s bill, the ideas in the legislation aren’t going away.

The wide-ranging College Cost Reduction Act, introduced in January, aims to provide students with more information about the cost of college and how they would fare in programs, alongside other measures geared toward accountability and reducing the student loan program. For instance, the bill would put colleges on the hook for unpaid student loans, add a universal net price calculator to the College Scoreboard and require accreditors to create standards that measure student achievement.

The legislation would save $185.5 billion over the next 10 years, according to the Congressional Budget Office, primarily due to the provisions that eliminate some student loan programs, restrict debt relief and reduce student borrowing.

Republicans advanced the bill out of committee earlier this year despite staunch opposition from Democrats, who said it was “not ready for prime time” and a “recipe for disaster.”

“It’s a highly problematic bill and somewhat stunning in terms of its level of federal overreach,” said Craig Lindwarm, the Association of Public and Land-grant Universities’ senior vice president for governmental affairs. “The policy creates disincentives for institutions to admit the kinds of students that policymakers actually want institutions to better serve.”

But Republican lawmakers and conservative policy analysts, among other supporters, say the legislation would peel back ineffective regulations and add new measures to incentivize colleges and universities to make their programs more affordable.

“The structure we are building ensures universities are open and transparent about foreign funding, focused on increasing student outcomes and lowering costs, improving speech policies on campus, and other contributing factors to the decline in public faith in universities,” Foxx wrote in an opinion piece earlier this year.

Lobbyists say the bill has some potential, despite their numerous concerns. They hope that if lawmakers move forward with the bill in 2025, they will be open to modifications and include more college presidents in the discussion.

“We understand the intent behind the bill, and affordability and accountability are things that we’re not afraid of,” said Emmanual Guillory, senior director of government relations at the American Council on Education. “I hear directly from our [members] that they want to be a part of these conversations … But with this bill that’s currently written, unfortunately, we were not given an opportunity to really weigh in [in] the ways that we would have hoped.”

Risk-Sharing Raises Concern

The behemoth 224-page College Cost Reduction Act touches on a range of conservative policy priorities—such as barring accrediting agencies from requiring institutions to adhere to diversity, equity and inclusion standards—as well as some bipartisan provisions such as transparency standards for financial aid offer letters.

But at the heart of the legislation is a new system designed to incentivize institutions to lower their costs and to rein in an unwieldy student loan portfolio.

To lower the cost of college, lawmakers propose offering colleges more money in the form of a new performance-based grant. The PROMISE program would give grants to institutions that have low tuition, that enroll and graduate low-income students, and that produce strong earnings outcomes after graduation. The specific amount of funding directed to an institution would depend on a complex formula. Colleges and universities would also have to tell students up front how much a degree program will cost and freeze that amount for at least six years.

To pay for the grant and further incentivize colleges, the bill would require colleges to pay an annual penalty for any students whose loans go unpaid, a practice known as risk-sharing. The policy has gained bipartisan support in recent years, as lawmakers say colleges and universities should have a greater stake in the outcomes of student borrowers. If large numbers of alumni are unable to pay back their loans, they argue, that shows the program isn’t effective or a good investment.

But critics worry that the costs will be debilitating to colleges—many of which are already running on razor-thin budget margins.

An analysis released Thursday by the American Council on Education shows that 98 percent of institutions would be required to make annual risk-sharing payments, while only 28 percent would be eligible to receive allocations from the PROMISE grant. As a result, an overwhelming majority of institutions (75 percent) would experience a net loss. This analysis was based on the House committee’s data. (This paragraph was updated to reflect newly released data.)

The CBO estimated in its own report that colleges would lose $18 billion over the next decade.

“We have to keep in mind that when we are thinking of policies that increase accountability on institutions of higher education, there could be a downward impact,” Guillory said. “That’s a net loss to the institutions, and that money could be used to help students.”

Some argue that risk-sharing could disincentivize colleges from enrolling low-income students who might struggle to repay their loans or recruiting students for high-demand public-service majors that could lead to low earnings postgraduation.

“At its core, [risk-sharing] completely runs counter to what the goal should be for higher education, which is admitting and successfully providing ladders of economic opportunity and access for those historically left behind,” said Lindwarm from APLU.

Proponents, on the other hand, say risk-sharing is a necessary tool to address the student loan crisis and lower tuition prices by shuttering costly programs that have a low return on investment. They also argue that the PROMISE program offers incentives for supporting minority students that should outweigh any concerns that colleges will cut off access to low-income or underrepresented groups.

The Foundation for Research on Equal Opportunity, a market-friendly think tank, found that community colleges, which often serve minority, low-income and nontraditional students, would be the biggest “net winners,” collecting $1.6 billion under the bill. Four-year private nonprofit colleges and universities, by contrast, which tend to operate largely on tuition revenue, would have to pay $3.2 billion in risk-sharing liabilities.

“There are certainly some programs and some colleges which are not going to fare well under the College Cost Reduction Act. But I think that’s a feature, not a bug,” said Preston Cooper, who conducted the study and is now a senior fellow at the American Enterprise Institute. “The programs that don’t have good outcomes have very high prices and very low earnings. I’m not necessarily sure we want students to have access to those programs.”

‘More Harm Than Good’?

As Republicans make their last-ditch effort to whip House votes, higher education lobbyists are urging lawmakers to vote against the bill or prevent it from reaching the floor until the next session.

Some advocates, including Michelle Shepard Zampini, senior director of college affordability at the Institute for College Access and Success, argue that “whether intentional or not … the CCRA would actually do more harm than good” for students.

Zampini and others point to provisions that would end the Grad PLUS and Parent PLUS loan programs, cap student lending, and cut off a pathway to debt relief through income-driven repayment plans.

Zampini believes these measures will lead to higher monthly student loan payments and make relief more difficult to access.

“Some students could be indebted for basically their whole lives,” she said. “We feel like that’s a big red alert.”

Justin Monk, director of student and institutional aid policy for the National Association of Independent Colleges and Universities, described the bill as “about half-good, half-bad.” While he generally agrees with a carrot-and-stick approach to accountability, he thinks the proposed risk-sharing model is unfeasible for many institutions.

“The bill itself, due to being so broad, does do quite a few really positive things, but on the other hand, it also does some really harmful things, and in our view, many of them are targeted directly at private nonprofits,” Monk said.

Colleges can’t steer the labor market, so even pre-professional colleges with rather direct pathways would often be penalized for variables outside of their control, Monk said. Small liberal arts institutions that provide degrees for which the payoff may not be immediate, even in the best economy, would fare even worse.

“If you look at any sort of earnings timeline, it takes a little bit of time for it to ramp up. But earnings over a lifetime are substantial,” he said.

Jason Altmire, president of Career Education Colleges and Universities, a national trade association representing for-profit technical institutions, said he disagrees with anyone who argues the CCRA will drive up costs for students. But that doesn’t mean the legislation is perfect.

“This is a marker for next year,” he said, “and we’re hopeful that when we get into the 119th Congress a month from now, we’ll be able to modify their approach.”