Republican Proposal Would Double Pell Grants, Set Student Loan Caps
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- U.S. Rep. Virginia Foxx, a high-ranking Republican, proposed the College Cost Reduction Act.
- The proposal would double the maximum Pell Grant, but only for students in their third and fourth years of college.
- Foxx's legislation would also gut many Biden-era oversight regulations.
- It aims to overhaul the federal student loan system by removing the Parent PLUS and Grad PLUS loan programs.
A high-ranking Republican lawmaker introduced legislation that would overhaul many aspects of the federal student loan system.
U.S. Rep. Virginia Foxx, a Republican representing North Carolina and chairwoman of the House Education and the Workforce Committee, introduced the College Cost Reduction Act on Jan. 11. The expansive proposal overhauls the federal student loan system, funds college completion and success initiatives, and repeals many Biden-era college oversight regulations.
Foxx framed the legislation as an answer to the student loan debt crisis.
Without question, the root cause of this problem is the inflated cost of obtaining a college degree, and there's considerable room for reforms,
she said in a statement. The College Cost Reduction Act is the vehicle through which much-needed accountability, transparency, and affordability measures can be both realized and implemented to the benefit of students and their families.
The proposal potentially sets many of the Republican Party's higher education proposals for 2024.
Overhauling the Federal Student Loan System
The College Cost Reduction Act would set lifetime limits for the amount students could borrow from the federal government for college.
The proposal sets a $50,000 total borrowing cap for undergraduate loans. Students would have a $100,000 cap for graduate programs and a $150,000 cap for graduate professional programs.
Altogether, no student would be eligible to borrow more than $200,000 in their lifetime.
Moreover, the proposal sets annual borrowing caps.
Annual loan amounts for each student would be based on the student's program, rather than arbitrary standard loan amounts currently in place, according to a summary of the bill. The plan also caps the total federal financial aid a student can receive each year at the median cost of college,
defined as the median cost for students in similar degree programs nationwide.
Colleges and universities would be on the hook for repaying part of a federal loan if their former student misses a payment, according to the proposal.
Foxx's proposal would also eliminate the Grad PLUS and Parent PLUS programs.
Grad PLUS and Parent PLUS loans don't have an annual borrowing cap, allowing students and parents to borrow sizable amounts each year. In the past, Republicans have argued that the cost of a graduate degree has rocketed because colleges know their students aren't limited in how much they can borrow to attend a graduate program.
Lastly, Foxx's proposal would eliminate existing income-driven repayment (IDR) programs, including the recently enacted Saving on a Valuable Education (SAVE) plan. The Biden administration announced last week that some borrowers enrolled in a SAVE plan could qualify for total debt forgiveness as soon as next month.
Foxx's College Cost Reduction Act offers a significantly less generous alternative IDR plan and bars the Department of Education (ED) from ever creating a new IDR plan.
New, Improved Grant Programs
The College Cost Reduction Act would help President Joe Biden deliver on a key policy agenda item of his: Doubling the maximum Pell Grant award.
To a certain extent, anyway.
Foxx's proposal wouldn't blanket double the Pell Grant like Biden wants to. Instead, it would create a Pell Plus program for third- and fourth-year college students enrolled in eligible bachelor's degree programs. Qualifying students can receive a Pell Grant double the standard award, according to the bill's summary.
The College Cost Reduction Act also proposes a new grant program, dubbed PROMISE Grants.
This program would award grants directly to institutions, and the amount of money granted depends on student outcomes at the college or university. The PROMISE Grant formula would consider earnings post-graduation, the charged tuition, and the number of low-income students the school enrolls and graduates.
Lastly, Foxx's proposal would level-fund the existing Postsecondary Student Success Grant program.
According to the bill, it would allocate $45 million annually through 2030. The grant program awards funds directly to colleges and universities to help them retain and graduate students.
This comes as college completion rates stalled for the third consecutive year.
Amending Oversight, Transparency Rules
The College Cost Reduction Act proposes some changes to increase transparency in higher education.
For example, the bill would require colleges to be more upfront in the estimated cost of attendance. A government watchdog found in late 2022 that only 9% of the institutions it examined accurately told students the estimated net price of attendance through financial aid offers.
Foxx's proposal would require ED to create a standardized financial aid offer form to include relevant pricing information students and families need.
The proposal would also require all institutions participating in the Pell Plus and PROMISE Grant programs to set a maximum total price for a degree program.
These ideas may be welcomed on both sides of the aisle, but the College Cost Reduction Act also includes a gutting of many of President Biden's marquee oversight regulations he has enacted. These regulatory changes — often targeted at the for-profit industry — would be undone through Foxx's legislation:
- Fixing the 90/10 loophole at for-profit institutions
- Reinstating the gainful employment rule and formula
- Requiring schools to report when they may be financially unstable
- Creating a new borrower defense to repayment process that is more generous to former students
Foxx's proposal includes accreditation reform, which ED is also working on through negotiated rulemaking. Some of the Republican proposals mirror what ED is trying to accomplish, such as emphasizing student outcomes during the accreditation process.
