A comprehensive legislative plan to change the financial landscape of higher education, the College Cost Reduction Act (CCRA) was submitted by Representative Virginia Foxx at the beginning of 2024. The proposal received a lot of attention despite failing to pass because of its extensive recommendations, which addressed almost every facet of institutional responsibility, federal funding, and student debt. As the House Committee on Education and the Workforce seeks to reduce $330 billion over the next ten years, many of the bill’s provisions are anticipated to be reinstated given the current political climate that favors education budget cutbacks.
College Cost Reduction Act
Republicans in Congress are looking to reduce federal education spending by hundreds of billions of dollars, which might give a failed 2024 bill a second chance. In January 2024, Representative Virginia Foxx introduced the College Cost Reduction Act (CCRA) in the U.S. House of Representatives with the goal of reforming a large portion of the country’s higher education system. The plan would have, among other things, eliminated monitoring laws for for-profit colleges, supported college completion awards, and completely changed the federal student loan system. Even though 153 Republicans signed on as cosponsors, the bill eventually failed.
However, several aspects of the bill may reappear because Republicans now control both houses of Congress and the White House. A recent budget resolution enacted by the House requires the House Committee on Education and the Workforce to identify at least $330 billion in savings over the next ten years. The CCRA might be used as a model to reduce government expenditure on programs targeted at college students, organizations, and student loan debtors, even if it covers both K–12 and higher education spending.
What is College Cost Reduction Act?
The College Cost Reduction Act would provide direct assistance to schools with affordable tuition and excellent student outcomes while making colleges and universities financially liable for doomed federal student loans. Under the idea, federal funds would be redirected among organizations based on performance and cost, saving taxpayers a total of $1.8 billion annually. With comparatively cheap tuition and a big student body of low-income students, public community colleges would gain a net USD 1.6 billion year under the proposal. The highest net liabilities would be incurred by private four-year colleges, particularly those that charge high tuition and get their income from subpar graduate degree programs.
A complex formula determines each college’s risk-sharing responsibility and performance incentive, with the goal of rewarding organizations for raising graduates’ incomes and maintaining affordable tuition. The first component of the bill directs the Department of Education (ED) to determine the earnings-price ratio (EPR) for every degree or certificate program offered by federally funded schools. The EPR is calculated as the median income of recent graduates less 150 percent of the federal poverty level (300 percent for graduate programs) divided by the total cost of attendance (after state and institution-provided scholarship aid, but before federal Pell Grants).
An extraordinary effort to transform Federal Aid and Student Loans
- By reforming the Higher Education Act of 1965, the CCRA aimed to reduce government expenditures on student loans and college programs. Although the legislation had certain elements that were favorable to borrowers, such as the removal of origination fees and the prevention of interest from capitalizing, it also contained more contentious aspects that may further burden families and students with debt.
- Among the most significant adjustments would have been the termination of the Parent PLUS and Graduate PLUS loan programs, which at the moment let borrowers to take out limitless sums for higher education. Rather, the CCRA suggested stringent lifetime and yearly borrowing limits.
- While undergraduate loan limitations would be based on the Department of Education’s maximum or the national median cost of education, whichever was lower, graduate students, for example, would only be able to borrow amounts based on the average cost of their degree program.
- Repayment was another significant changes. Only two government repayment alternatives- the regular 10-year plan and a single income-driven plan would have remained under the bill, eliminating the existing array of possibilities.
- Repayment may be extended into a lifetime commitment under the new IDR plan, which would allow borrowers to pay back a part of their income beyond a certain level before forgiveness began.
- Under the CCRA, Pell Grants also had to adapt. The grant amounts would be restricted to the median cost of all universities rather than being adjusted to a student’s actual cost of attendance. This change may result in less funding for pupils who attend more costly schools or reside in affluent communities.
- The CCRA also aimed to make educational organizations financially responsible for the results of their students. Funding might be impacted, particularly for universities that serve huge populations of low-income students, if organizations with low graduation earnings in relation to debt are forced to repay the government.
- Although the College Cost Reduction Act was never passed into law, it clearly illustrates the kinds of reforms that lawmakers can consider again in their attempts to reduce education expenditure. While some of these reforms could lower borrower expenses, many of them could increase long-term student debt.
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