October 28, 2019

College Affordability Act Summary

Policy and Advocacy

House Democrat's Proposal of Reauthorization of the Higher Education Act

On October 15, House Democrats unveiled their version of a comprehensive reauthorization of the Higher Education Act (HEA). The College Affordability Act seeks to overhaul the higher education system by lowering the cost of a postsecondary education, enhancing the quality of higher education through tougher accountability measures, and providing students with more flexibility and support in order to achieve their academic goals. 

Senate Republicans also released their version of HEA reauthorization known as the Student Aid Improvement Act. However, we expressed our concerns with the piecemeal approach that did not address inter-related policy issues and programs. Below are where the College Affordability Act aligns with AccessLex Institute’s policy priorities. (You can read our statement of support applauding these efforts to increase access and affordability of higher education here).

Increased Funding and Repayment Improvements

First, the legislation increases the size of the maximum Pell Grant award by $500, permanently indexes the award to inflation, extends Pell Grant eligibility to 14 semesters and allows students to exhaust their full Pell eligibility on graduate studies. It also makes borrowing less expensive by eliminating origination fees on all federal loans (which currently can be as high as 4.264 percent of loan amounts) and allows borrowers of federal and private loans to refinance their old debt at the same rates as new borrowers. 

The College Affordability Act also attempts to help struggling borrowers by simplifying the repayment process and replacing the existing repayment structure with one fixed repayment plan and one income-based repayment (IBR) plan. The fixed repayment plan schedule would be tiered and depend on the amount borrowed. Those who borrowed $20,000 or less could choose a 10-year repayment period while those who borrowed more would have an additional five years to repay per additional $10,000 borrowed, up to 25 years.

The new IBR plan would allow borrowers earning below 250 percent of the federal poverty line to repay at $0 per month, forgive any remaining debt after 20 years of repayment, remove the hardship requirement, and allow for verbal IBR enrollment and annual automatic recertification of income. Borrowers more than 120 days delinquent would also be automatically enrolled into the IBR plan and previously defaulted borrowers in a loan rehabilitation program with the required nine payments made would also be automatically placed into the IBR plan.

Understanding the tremendous weight that student debt has on borrowers, particularly those who are public servants, the legislation attempts to strengthen and expand the PSLF program. Specifically, the bill allows individuals who were in the wrong repayment plan to count those monthly payments toward PSLF, allows qualifying payments made prior to the consolidation of loans (after enactment of the bill) to be counted toward loan forgiveness, and establishes a database that lists eligible public service jobs.

In addition to the above improvements, the College Affordability Act builds on its efforts to overhaul higher education with changes to the common servicing manual, Federal Work Study (FWS), the Free Application for Federal Student Aid (FAFSA), and Perkins Loans. These changes include:

  • Directing the Department of Education (ED) to produce a common manual for loan servicing so that there is a standard quality of practice;
  • Restoring the Perkins Loan program;
  • Reducing the number of questions on the FAFSA by placing applicants into one of three pathways based on the complexity of the student’s finances; and
  • Preserving graduate and professional students’ participation in FWS and allocating work-study funds based on the number of low-income students at an institution and their unmet need.

Transparency and Financial Education

Another notable proposal included in the College Affordability Act is the overturning of the student unit record ban that has prohibited the collection of student-level data since 2008. This addition is an acknowledgement that Congress appreciates the importance of providing students and families with information that is crucial to making higher education-related decisions. The bill also requires the development of a secure system to evaluate student-level data and requires postsecondary data to be disaggregated by race.

We also see an attempt at providing students with better up-front and ongoing information about college financing through an annual loan counseling requirement. Under the bill, institutions would have to annually disclose to students their expected borrowing amounts and their expected monthly payments.  ED would also be required to conduct a longitudinal study on the impact and effectiveness of student loan counseling.

Institutional Accountability and Quality

With the aim of strengthening the role of the entities responsible for oversight in higher education, the College Affordability Act takes a stab at improving institutional accountability. Specifically, the bill requires accreditors to focus on two student achievement outcomes: program completion and workforce participation. It also authorizes ED to reject accreditor-set standards it deems too low and requires disclosures that make the accreditation process and institutions’ accreditation status more transparent.

Lastly, the legislation would make changes to accountability metrics. On the Cohort Default Rate (CDR) the bill would adjust the CDR metric for the share of borrowers at an institution, classify long-term forbearance (18 months or longer) as a default, and establish multiple thresholds that encourage institutions to make improvements. The bill would also create a repayment rate that would evaluate the percentage of borrowers at an institution that repay at least 90 percent of their monthly payment amount for three years. ED would set the threshold at which an institution would lose Title IV dollars based on their repayment rate.


Read our full set of Higher Education Act policy recommendations.

Read our proposed guiding principles for Higher Education Act reauthorization.