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News and Policy

AGB Alert: Issues for Consideration by Trustees and Presidents on the PROSPER Act

Jan 30, 2018

On December 13, 2017, the House Committee on Education and the Workforce passed the Promoting Real Opportunity, Success, and Prosperity Through Education Reform (PROSPER) Act, a comprehensive bill to reauthorize the Higher Education Act (HEA).

While only the initial step in a long process that will eventually involve both chambers of Congress, the PROSPER Act would make higher education more expensive for millions of students and families and enact significant changes in federal higher education policy without a clear understanding of the likely consequences for institutions. In a letter to committee members, AGB President Rick Legon expressed concern over several provisions that should be of particular importance to institutional fiduciaries.

Despite this early action in the House, the overall debate on HEA will likely carry far into 2018, as the Senate has yet to establish firm ideas on reauthorization. However, the PROSPER Act could impact the final bill, so it is important to weigh in at this stage on provisions that would be harmful to institutions and students—influencing the outcome of a vote in the House and signaling to the Senate which provisions should be reconsidered or removed.

Helpful Provisions

Simplifying and Streamlining Federal Regulations

Governing board members, as fiduciaries of their institutions, will be pleased that the PROSPER Act contains provisions that will simplify and streamline federal mandates and regulations. Based on recommendations from the 2015 Task Force on Federal Regulation of Higher Education, the bill will lower administrative costs that can be passed on to students by reducing unnecessary and duplicative regulations.

Our members will also be pleased with provisions that incentivize Pell recipients to complete their degrees in a timely manner, simplify the federal aid application process, eliminate origination fees on student loans, and authorize institutions to limit student borrowing.

Areas of Concern

Eliminating Programs Assisting Students and Families

The PROSPER Act would eliminate several federal student aid programs in favor of simplification. However, the bill does not attempt to reallocate lost funds from the programs it eliminates, which would leave students worse off—especially graduate students. The PROSPER Act:

  • eliminates the Supplemental Educational Opportunity Grant (SEOG) program, which serves 1.5 million students—particularly low-income students;
  • eliminates or cuts funding to programs such as TRIO, which have been proven to increase the number of low-income students prepared to enter and succeed in postsecondary education;
  • eliminates the in-school interest subsidy for 6 million low-income student borrowers and reduces the amount families can borrow to pay for college;
  • eliminates the Public Service Loan Forgiveness (PSLF) program, which clears the remaining debt of those who work in qualifying government or nonprofit sectors and make ten years’ worth of payments towards their debt; and
  • eliminates federal PLUS loans for graduate students and makes graduate students ineligible to receive Federal Work Study (FWS).

Introducing Short-sighted Accountability Measures for Institutions

The PROSPER Act weakens several existing statutory provisions that prevent fraud and abuse in the federal aid system. Chief among our concerns is expanding the number of programs and providers able to access federal funds while simultaneously relaxing the requirements that keep unscrupulous actors out of the system.

At the same time, the PROSPER Act introduces stricter accountability measures for minority-serving institutions by instituting provisions that require these institutions to meet a graduation rate threshold in order to be eligible for certain grants, which would disadvantage these schools—who often enroll some of the hardest-to-serve students.

The HEA reauthorization holds major implications for higher education institutions and impacts all stakeholders. Due to its importance, institutional leaders should pay close attention to the process as it unfolds over the next months. AGB will continue to provide updates to our members on this important legislation.

Questions to Consider

  • Has your board adequately discussed how changes in the Higher Education Act might impact your institution, particularly in relation to compliance practices and expenditures?
  • Given that congressional deliberations about reauthorization of the Higher Education Act provide a forum for topics such as college affordability and student debt, access to colleges, institutional quality, regulation of higher education, and student learning and employment outcomes, is your institution positioned to show lawmakers and the public how well it succeeds in each of those areas?
  • Has your board considered its advocacy role around reauthorization of the Higher Education Act?




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