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The College Cost Reduction Act (CCRA) would significantly change the Higher Education Act of 1965.


College Debt in American Higher Education
College Debt in American Higher Education

The College Cost Reduction Act (CCRA), H.R. 6951, would significantly change the Higher Education Act of 1965 (HEA). The House Education and the Workforce Committee approved the bill. It has also received the “10-year cost estimate” from The Congressional Budget Office, indicating Virginia Foxx may be bringing the bill to the House floor for a vote.


H.R. 6951 legislation would amend the Higher Education Act, explicitly changing federal student aid programs. This HEA legislation has provided students with federal funds to attend undergraduate and graduate programs in Higher Education, where they otherwise could not afford postsecondary schooling. However, some congressional leaders believe the Federal Student Loan program needs significant changes and begins with eliminating financial cushion mechanisms for student loan borrowers.


The Congressional Budget Office estimates that enacting H.R. 6951 would reduce federal spending by $91.7 billion over the 2024-2028 period and by $185.5 billion over the 2024-2033 period. This seems attractive to the Republican congressional leaders as they attempt to crack down on government spending. Democratic leaders seem to oppose the bill, noting the significant drawbacks and possible negative impact the changes would have on borrowers. At any rate, the state investments in higher education increased over 3% in 2023, which demonstrates continued commitment to postsecondary institutions, and may continue even with the proposed drawbacks from the federal budget.


What is the impact on student borrowers?


If the legislation passes both the House and Senate, the bill will modify the Federal Direct Loan Program by changing repayment terms, loan limits, and requirements for institutional eligibility. It would limit the administrative authority of the Department of Education, repeal specific regulations, create a new institutional grant program funded through payments from postsecondary institutions, and increase data collection and reporting requirements for postsecondary institutions that receive federal aid.


Excerpt from the bill which would implement the following:


  • Replace existing income-driven repayment (IDR) plans with a new IDR plan for federal student loans originated after June 30, 2024

  • Prohibit the adoption of new regulations that would increase costs for the student loan program or markedly affect the economy.

  • Eliminate PLUS loans to parents and graduate students and amend annual and aggregate borrowing limits on other types of loans.

  • Require postsecondary institutions to make payments to the federal government based on the repayment of student loans by students at each institution.

  • Repeal specific regulations concerning student loans and postsecondary institutions.

  • Impose intergovernmental mandates by preempting state and local laws on federal student loan servicers.


The estimated budgetary effects:


  • Eliminating existing IDR plans

  • Eliminating PLUS loans to parents and graduate students and instituting new limits on student loan borrowing

  • Repealing specific regulations and preventing future administrative actions related to student loans.

  • Reduced borrowing in response to payments required of postsecondary institutions.


Some of the alternatives that higher education institutions have begun to implement include freezing tuition, capitalizing on performance-based funding, and reimagining their funding models for the incoming classes. Suppose colleges and universities begin to freeze tuition. In that case, it creates consistency for students and allows them to plan over four years instead of year-to-year anticipating a 1-3% yearly increase in tuition. Some critics have also said freezing tuition would allow the federal government to distribute less funding.


The bill will undoubtedly have unintended consequences upon implementation if completed, and it still needs to be made clear which stakeholders will be most impacted. However, the cyclical nature of colleges charging more tuition, so state and federal governments provide more student loan funding, is not the solution as we continue to see the cost skyrocket. If schools begin to freeze tuition, the government can stabilize the funding strategy.


Additionally, the borrowers should not be penalized by removing IDR plans, which currently allow students to repay their loans based on their income. Colleges and Universities have traditionally left the loan program management to financial aid, the student borrower, and the federal government. So, it is time they take a more vested interest in the loan activity of their students and the repayment process and offer some level of accountability for the student's success and social mobility.


It is a complete robbery to court a student for admission and yield purposes, only to gain their borrowed money, their trust, and potentially the next four to six years of their life. Schools should create a holistic financial cycle for the student borrower that mirrors responsibility in repayment, manageability in the financial undertaking, and 4-year planning processes in advisement instead of year-to-year attempts at covering costs. Overall, the bill still needs to be viable in order to pass the House and the Senate. This should serve as a proactive insight for schools to begin thinking about even less federal funding, and potentially drumming up more state support, and diversifying portfolios for maintaining the financial health of their institution.


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Rebuttals are always welcome,


Jade M. Felder, Ed.D.

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