This Week In Washington
On Thursday, the Government Accountability Office (GAO) released a report that found that some higher ed institutions hired third-party consultants to encourage recent graduates to put their student loans in forbearance (in lieu of potentially more beneficial repayment plans) as a way for those schools to avoid a poor cohort default rate. The GAO noted that this practice “increases [students’] costs over time and reduces the usefulness of the 3-year default rate as a tool to hold schools accountable.” GAO recommended that the Department of Education increase the transparency of reporting on cohort default rate sanctions and that a legislative remedy be implemented that requires the information that schools and third-parties provide to borrowers regarding loan repayment and postponement be accurate and more robust.
Last Friday, Democrats on the House Budget Committee released a brief analysis of the PROSPER Act. They slammed the bill saying it will increase student debt overall, and the policies contained within “will force students to borrow more, pay more to borrow, and face higher monthly student-loan repayment bills after graduation.” Their report also summarizes the student loan and grants portion of the Congressional Budget Office’s fiscal analysis of PROSPER, concluding that enacting the bill would result in a substantial loss of over $14 billion to students via federal aid.
In a memo recently made public, the Department of Defense (DoD) stated its opposition to the PROSPER Act due to the elimination of the Public Service Loan Forgiveness (PSLF) program. DoD called PSLF “an important recruitment and retention tool for the military to compete with the civilian sector, predominantly in specialty fields, such as the Judge Advocates General Corps, for whom graduate degrees are required.” Elimination of the program will make recruitment and retention for specialized military positions more difficult.
Recall that the House passed the PROSPER Act, its version of a reauthorization of the Higher Education Act, out of committee late last year. This bill proposed a cap on graduate student loans at $28,500, terminated time-based loan forgiveness, and eliminated the PSLF program. Read our full summary of the bill and our statement calling for substantial improvements to be made. You can get resources to help stop these policies from becoming law by visiting our #MakeTheCase advocacy campaign site.
News You Can Use
This week AccessLex Institute released a policy brief and accompanying student-focused blog post about a potential, but likely common, repayment scenario under PROSPER. Due to the annual loan limits placed on graduate borrowing and other policies that negatively impact graduate students, repayment will likely get more complex and expensive than under current federal policy. Please feel free to share the post with students and read the brief to have a potential real world example of repayment under PROSPER.
The President of the Federal Reserve Bank of Philadelphia expressed concern that student loan debt, combined with uncertainty about the future of federal repayment and forgiveness options, may limit access to college for low- and middle-income students.
An alumna of the University of Tennessee College of Law shares how the Public Service Loan Forgiveness (PSLF) program has allowed her to pursue a career where she leverages technology to bring free legal resources to families across Tennessee and she urges legislators to protect PSLF.
No student aid-related bills were introduced this week for consideration by the 115th Congress.