In 1965, President Lyndon Johnson signed the Higher Education Act into law, inserting the federal government irrevocably into the inner workings of America’s colleges and universities. The bill increased federal money given to universities, provided scholarships, and created the federal student loan system—now a $100 billion yearly enterprise. Since then, the Act has been reauthorized eight times. And although it’s amended with each reauthorization, the Act still closely follows the framework created in 1965.
This year’s reauthorization, however, nicknamed the PROSPER Act, could be a welcome reform.
There are many small and large changes on the Act’s agenda that would significantly improve and simplify the federal government’s role in higher education. Three important reforms stand out: repealing outdated and unnecessary federal regulation, simplifying the student loan system, and encouraging innovation. A closer look at those reforms reveals how transformative they would be for higher education.
First, the legislation repeals outdated and burdensome federal regulations by removing barriers to experimentation and reducing costs. Two provisions, in particular, will be especially helpful for colleges and universities.
- The repeal of the credit hour definition will give universities more flexibility to determine their own curriculum and to experiment with alternative education models. For example, competency-based education focuses on tangible evidence of learning and can be a boon to students, as my colleagues and I have written before. For those students, different models allow them to graduate quicker and ensure mastery over their subjects. And prior-learning assessments can improve the transition process from workforce training and the military to higher education.
- The bill’s provisions to repeal or streamline reporting requirements will also bear fruit for universities and families by saving them money. In 2015, the Task Force on Federal Regulation released a report lambasting the Education Department’s regulations as “a jungle of red tape.” Another 2015 study, released by the Boston Consulting Group, estimated that federal compliance amounts to between three and 11 percent of universities’ yearly expenditures. Reducing the regulatory burden on universities will help to control costs for schools and students.
Second, the PROSPER Act improves federal student aid in many important ways, but two stand out: It makes the FAFSA application more accessible and significantly simplifies student loans and repayment options.
- The Act will make the Free Application for Federal Student Aid (FAFSA) available on a new mobile app and will allow more middle-class families to file a simplified version. Under the PROSPER Act, dependent and independent students whose family income is less than $100,000 (up from $50,000) will be eligible to file a simplified form. The proposed mobile app would be available within a year of passage of the legislation and would allow applicants to take advantage of the same IRS data transfer available to other FAFSA filers. Both of these changes would improve access to education for millions of American families.
- It will also streamline student aid programs into one grant program, one loan program, and one work-study program. Repayment options will be limited to two plans: one standard 10-year repayment plan and one income-based repayment plan. These changes would ease confusion for students who are deciding how to pay for college. Under the current system, there are myriad grant, loan, and repayment programs available. This means that many students don’t know what their options are and what would work best for them. Simplification would ensure that students can find the best fit.
Third, the bill balances the need for accountability with the right incentives for innovation. Changes to accreditation and distance education are particularly welcome.
- As Martin Center authors have observed before, the United States’ current system of accreditation fails to ensure quality and protects established institutions from new competition. The Act would change that protectionism by allowing any entity to apply to be an accreditor if it has a voluntary membership and accrediting institutions is its principal purpose. This change would free universities and programs from the stranglehold of change-resistant regional accreditors.
- The act also repeals federal regulations for how states authorize distance education. As we have noted before, states require lengthy and expensive authorization processes for online and distance education courses. That’s because, in 2010, the U.S. Department of Education began applying rules intended for traditional brick-and-mortar institutions to online education, making it more difficult for universities to offer online courses across state lines. The PROSPER Act addresses that problem, leaving authorization in the hands of the states.
The strongest opponents to the PROSPER Act changes have been those who benefit from the status quo. The Act’s critics, including lobbying groups for colleges and universities, have contended that the bill will make higher education less affordable. Points of contention include the Act’s proposed limits on student borrowing and changes to the Pell Grant program that allow it to be used for more short-term programs. In an open letter to Congressional leaders, 35 higher education groups called for increasing grants to low-income students and more focus on issues of equity.
But the bill’s sponsor (who is a member of the Martin Center’s board of directors), Virginia Foxx (R-NC), also shares those concerns. In her opening statement on the markup of the PROSPER Act, she said:
Today, Americans carry more than a trillion dollars in student debt. Somehow, despite the six types of federal student loans, nine repayment plans, eight forgiveness programs, and 32 deferment and forbearance options out there, college costs continue to surge, leaving millions of families paying the price for well-intentioned but poorly executed federal involvement.
The vision of Foxx and her cosponsors for addressing those problems are clear from the legislation: remove federal barriers to innovation, cut costs and red tape, encourage completion, and increase focus on workforce development. That is a stark contrast to the federal government’s role in higher education over the past four decades: an ever-increasing source of both student aid dollars and regulatory hurdles. The status quo has failed to keep costs down and make college affordable for students. The PROSPER Act takes a different approach.
Over the next few months, the House and Senate will choose which vision to embrace: more of the same high costs—or true reform in higher education.