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Young U.S. senators seek to lower college costs

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The two youngest members of the U.S. Senate are co-sponsoring legislation aimed at lowering college costs by withholding federal funds from schools that fail to meet new national affordability and quality standards—a proposal likely to draw strong opposition from higher education institutions.

Democratic Sens. Chris Murphy of Connecticut and Brian Schatz of Hawaii plan to submit the legislation this week. Both are still paying off their college loans.

Murphy, 40, and Schatz, 41, say skyrocketing tuition has put higher education out of reach for many Americans, with college costs having tripled over the past 30 years. And they say too many people are leaving college with high loan debt.

"College administrators need to wake up every morning thinking about how they can make school cheaper, and that is not happening today," Murphy said.

Pay back for sub-par performance

Many specifics of the Murphy-Schatz bill still need to be worked out, including the new affordability and quality standards. The legislation would create a commission of students, education experts and others to recommend minimum standards for colleges to meet to remain eligible for federal funding for student aid, including Pell grants and Stafford loans.

Murphy wants to require colleges to pay back 10 percent of federal funding for student aid they received the previous year if they don't meet the new standards for two years. Colleges would have to repay 20 percent of the annual federal aid if they still don't meet the standards for a third year, and they would be deemed ineligible for federal student aid funding if they didn't meet the standards for a fourth year.

"If a school is raising tuition at 8 percent a year and 50 percent of their students are defaulting on their loans, they probably shouldn't continue to get Stafford loans and Pell grants," Murphy said.

The carrot approach

The legislation also would fund a competitive pilot program that would encourage schools to lower costs and reduce the time needed to complete degrees to soften the financial burden on students.

Rather than ratings, AACC wants better data​

The bill is similar to President Barack Obama's new government rating system​ for colleges that would judge schools on affordability and possibly be used to allocate federal funding—a system drawing skepticism from higher education officials.

Debra Humphreys, vice president for policy at the Association of American Colleges and Universities, said college officials would have several concerns about Murphy and Schatz's bill, including how the standards would be set. Humphreys said, for example, that if standards for loan default rates were the same for every school, colleges that serve low-income students would be at a disadvantage compared with Ivy League schools.

"You run a real risk of building into the system an incentive to only serve the easiest to educate," Humphreys said. "We have to do a better job educating poor kids. ... The last thing you want to do is to incentivize an institution to not serve those students."

 

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