US proposals ‘could shut poorest students out of universities’

Proposed changes to the law that governs the US higher education system could undermine universities’ efforts to increase access for low-income students and increase fraud within the sector, experts have warned. 

A new bill, which is a major overhaul of the 1965 Higher Education Act, would end the subsidisation of student loan interest for certain means-tested loans, cut a programme that offers loan forgiveness to borrowers who work in public service jobs, set an unspecified cap on the amount of money that graduate students could borrow to cover tuition and living expenses, and eliminate a provision that allows borrowers to have part of their debt forgiven after making payments for 20 or 25 years.

It would also remove several measures that regulate for-profit colleges. It proposes to repeal, and block from re-adoption, “gainful employment” regulations that require degree programmes to prepare students for employment in order to be eligible for federal student aid, and “borrower defence” rules, which allow loan forgiveness for students who have been defrauded by their university.

The Promoting Real Opportunity, Success, and Prosperity through Education Reform (Prosper) Act also repeals the requirement that for-profit universities receive at least 10 per cent of their revenue from non-financial aid sources, and removes a system that sets minimum requirements for awarding college credits.

Terry Hartle, senior vice-president in the division of government and public affairs at the American Council on Education, said that the current version of the bill, which was passed by the Republican-led House Committee on Education and the Workforce last month, is “remarkably bad for students, very good for for-profit schools and banks and so-so for traditional colleges and universities”.

“The general thrust of the bill is to reduce the availability of student aid or to make it more expensive,” he said, adding that this “could undermine efforts that American society and colleges and universities have made to increase access to post-secondary education for low-income students”.

Amy Laitinen, director for higher education at thinktank New America, added that the legislation would “make it harder for poor students to pay [for university] and easier for them to be ripped off”.

“It could be called the 'for-profits Prosper Act', given the regulatory rollbacks and the opening of new loopholes…This bill would roll back the most basic consumer protections and create new avenues for exploitation,” she said.

She argued that a repeal of the credits system “doesn’t make sense” and would “create huge incentives for abuse, unless we tie funding to outcomes”.

Joni Finney, director of the Institute for Research on Higher Education at the University of Pennsylvania, agreed that this measure, combined with a weakened system of accountability for for-profit institutions, could result in “many scams that will take advantage of students and the federal aid dollars of the federal government”.

She added that while limits on student borrowing “seem necessary”, the federal government will need to “carefully coordinate” with states to make sure that tuition fee increases at public institutions are “reined in – or the likely result is that many students may simply be shut out of higher education”.

ellie.bothwell@timeshighereducation.com