Alexander outlines plan for HEA bill

Sen. Lamar Alexander (R-Tennessee) displays the lengthy FAFSA form which he wants to reduce to about two dozen questions. (Photo: AACC)

Offering only two federal student loan repayment options — one based on discretionary income — and creating a new accountability system that extends “gainful employment” rules to all public and private higher education institutions are among the main pillars in the Senate education committee chairman’s plan to revamp the nation’s main higher education law.

Speaking at an event Monday in Washington, D.C., Sen. Lamar Alexander (R-Tennessee), chair of the Senate Health, Education, Labor and Pensions Committee, outlined his target areas to reauthorize the Higher Education Act. He noted he hopes to have a bipartisan bill out by spring, with a full Senate vote by summer and a compromise bill with the House ready by Christmas.

First up: FAFSA

The first of the three pillars is to streamline the Free Application for Federal Student Aid (FAFSA) form, something he has championed for years.

“The cumbersome FAFSA is the major impediment to low-income students going to college in the United States today,” Alexander said. “They and their parents are intimidated by the complexity or wary of the government form, and don’t see why they have to give the Department of Education information they have already given to the Internal Revenue Services.”

Aside from shortening the form from 108 questions to no more than two dozen — in fact, Alexander used a favorite visual prop of his where he unfolds the long form — Alexander noted that his proposed changes also should reduce the student aid verification process, which is often unnecessarily burdensome and stressful on families.

Streamline loan repayments

The second part of the senator’s plan is to compress the current nine federal student loan repayment options into just two, both of which could be automatically deducted from paychecks. The first option would retain the 10-year loan repayment plan while the second would be based on a borrower’s income. It would not exceed 10 percent of a borrower’s discretionary income (based on a government formula), but a person with no income would not be required to make a payment, and it would not affect their credit score, Alexander said.

He gave this example: A single parent with an associate degree, $10,000 in federal student loans and annual income of $39,000 would pay $114 a month for 10 years (based on discretionary income of $13,000).

A person not able to make payments could potentially have their loan excused after 20 years. Alexander gave an example using a single community college student with $7,500 in federal loans who dropped out after one year. Based on the student’s annual income of $20,000 and discretionary income of $1,265, he would owe $120 a month. Under Alexander’s proposal, the student would not be able to pay off his loan over 20 years. But under current law the loan would be forgiven.

“Which seems like a policy we should keep,” he added.

GE for all

The final pillar — and perhaps the most controversial — would be to revisit the gainful employment rule (which compares the cost of a college’s program to earnings) and extend it to all public and private colleges and universities. Alexander said it should encourage colleges to keep tuition and other costs in check.

“What is different about this proposal is that it would apply to every program, and it would apply to every college — public, private and nonprofit,” he said.

The Education Department last summer announced its proposal to rescind the GE regulations, which were originally promulgated by the Obama administration. The department has been working to revamp them.

The original GE proposal was largely designed to ensure that for-profit institutions were not burdening students with loans that they could not repay, as well as make available to students more data about GE programs. Programs that exceeded an average debt-to-earnings ratio faced losing federal funding.

The rules also extended to all Title IV-eligible certificate programs at community colleges, and some public two-year colleges had encountered considerable burdens complying with the reporting requirements.

The American Association of Community Colleges had sought to make the regulation less costly and proposed alternative ways to gather needed data on all college programs as part of its recommendations to reauthorize the Higher Education Act. It includes creating a unit record data system linked to graduate earnings.

AACC also supports institutional flexibility to reduce student loan amounts in defined circumstances.

Watch Sen. Lamar Alexander outline his higher education plan.

About the Author

Matthew Dembicki
is editor of Community College Daily and serves as publications director for the American Association of Community Colleges.