This Week In Washington
This week, Senator Elizabeth Warren (D-MA), along with two House Democrats, sent a letter to the U.S. Department of Education (ED) to express concerns over the possibility that ED may be piloting income share agreements (ISA), a higher education financing mechanism, in the future. ED floated the idea at a conference in April, but no details about its plans have emerged since then. The letter requests that ED provide answers to a series of questions, generally related to program implementation, and determine which, if any, type of borrower protections would be in place if ED moves forward with ISAs. The lawmakers requested a response by June 25, 2019.
Last Friday, the Congressional Budget Office (CBO) released a report estimating the lifetime costs of new loans (not just student loans) and loan guarantees that are projected to be issued in 2020 using an accounting methodology known as fair-value. Under the law, CBO must estimate bills’ or government programs’ costs using a methodology outlined in the Federal Credit Reform Act of 1990 (FCRA). There is disagreement among economists and scholars about which methodology is more accurate. In its analysis, CBO found that for loans expected to be issued in 2020, the “Department of Education’s student loan programs are projected to save $4.1 billion on a FCRA basis but to cost $17.6 billion on a fair-value basis.” This means the federal government could either make money on the student loan portfolio or lose money, depending on which accounting methodology is used.
POLITICO reported that the Office of Management and Budget (OMB) has been meeting with organizations about a potential repeal of the Gainful Employment regulations. These rules, which currently apply mostly to for-profit institutions, can strip Title IV federal aid eligibility from a school if the institution does not meet certain outcomes. Recall, ED is expected to repeal these regulations and has sent its proposed final rule to OMB for review. According to POLITICO, OMB has been meeting with mostly organizations who oppose repeal. OMB’s review is the final step before publishing new rules, which would take effect July 1, 2020.
News You Can Use
In light of ED’s recent release of new College Scorecard data, which includes student debt at the graduate program-level, experts are skeptical that more information alone will impact students’ enrollment decisions.
Kevin Carey of the think tank New America analyzes the program-level data released by ED, and says that the debt levels in the master’s degree market “make little sense.”
CNN reports on the personal stories of student loan borrowers—including lawyers, scientists and health care professionals—who are struggling to pay off their student loans.
The following bill(s) have been recently introduced for consideration by the 116th Congress (2019-2020):
S. 1696 – Student Loan Tax Elimination Act of 2019 [Sen. Mike Braun (R-IN), et al.] would eliminate origination fees on new federal student loans disbursed on or after July 1, 2019. Read AccessLex Institute’s letter of support here.
H.R. 3095 – Know Your Repayment Options Act [Rep. Eric Swalwell (D-CA-15), et al.] would direct ED to inform federal student loan borrowers of all their repayment options on a yearly basis, as well as borrower-specific information.
H.R. 3096 – Strengthening Loan Forgiveness for Public Servants Act [Rep. Eric Swalwell (D-CA-15), et al.] would allow borrowers to receive forgiveness under the Public Service Loan Forgiveness program in proportion to their years of public service.
H.R. 3098 – Student Loan Interest Deduction Act [Rep. Eric Swalwell (D-CA-15), et al.] would double tax deductions for student loan interest (from $2,500 to $5,000) and eliminate income phase-outs.