Congress is preparing to reauthorize the Higher Education Act (HEA) this summer. The HEA lets higher education institutions and our students know the rules in order to participate in federal financial aid. The federal government spends about $123 billion annually on student financial aid, including $28 billion in grants and $94 billion in loan subsidies.
Since 1965, the HEA has recognized institutions as worthy recipients of federal funds by putting colleges and universities through a rigorous accreditation review process, state authorization, and federal Department of Education approval. A student may then be eligible for federal financial aid by enrolling at an approved institution. The updated HEA, known as the Promoting Real Opportunity, Success, and Prosperity through Education Reform Act or PROSPER Act, looks to change that in at least one way that is likely to be detrimental to students and the public.
{mosads}Driving the change, in part, is the increasing concern about the ability of students to repay loans, as about one in eight federal student loans are in default. Misericordia University, where I serve as president, has a default rate under 5 percent.
One of the suggested improvements in the PROSPER Act to reduce loan defaults is major-by-major eligibility for financial aid. An academic program at a college or university, for instance, would be ineligible for future federal financial aid if less than 45 percent of its graduates were repaying their student loans over three consecutive years. Even one year below the 45 percent threshold would trigger the need for the institution to submit a detailed plan on improving repayment rates. On the surface, it might make sense to stop supporting students in programs that do not provide high paying jobs that facilitate easy repayment of loans. Policymakers, though, need to take a closer look at this goal.
Let us consider who has the most difficulty staying current on student loans. One of the leading causes of default is students who do not complete their degrees. Major-by-major eligibility will not necessarily solve that issue. It could also be a recent graduate working full-time in a career with relatively low pay, such as teaching or social work. In some cases, it takes a few years to establish a career. If federal funding for ALL students enrolled in those majors were to disappear at multiple colleges, it would dramatically reduce the number of qualified professionals in fields that serve the social good.
A great number of students transfer from one institution to another. Some of our current students, for example, have already received an associate degree from a community college. Under the PROSPER Act proposal, opportunities for future students entering community college would be limited because the two-year college would fail the repayment test, as recent alumni work and study part time to advance their educations instead of entering the workforce full time.
The unintended consequence may be that certain majors become inaccessible to all but the wealthiest students due to the lack of financial aid eligibility. Do we want future students selecting their majors based on guaranteed loan options even though the academic program does not fit their interests, capacity and capability?
The proposal could also negatively affect second or third-year undergraduate students, despite good grades and proper progression toward a degree and job. Through no fault of their own, the federal government suddenly cuts off their financial aid because the major is no longer eligible. These students would likely be unable to continue their studies or forced into a new major. Either way, it would negatively affect their ability to repay loans by forcing them from school or burdening them with additional years of study and more debt.
Once students leave an academic program due to the lack of financial aid, the program is in peril. With no students eligible to receive federal aid in a reduced-scope program, there is no way to re-open the door to financial aid. My fellow classmates and I had to read, “Catch – 22,’’ in high school, and now we have proposed federal policy that follows Joseph Heller’s contorted logic.
There are many good aspects of the revised HEA legislation, including further deregulation, a possible Pell Grant bonus for students who stay on a timely track toward a degree, and streamlining the student loan processes. Let us focus on those and other innovations that create more options for students, not less.
Like you, I believe we need the best teachers, nurses and social workers. We also need high-quality programs that provide students great value. I am not convinced that loan repayment rates are the best way to measure that value. Let us encourage our federal legislators to, as the Act’s title says, “promote real opportunity, success, and prosperity through education reform.”
Thomas J. Botzman, Ph.D., is president of Misericordia University in Dallas, Pa., the oldest four-year institution of higher education in Luzerne County. Misericordia University ranks in the top tier of the Best Regional Universities – North category of U.S. News and World Report’s 2018 edition of Best Colleges and was designated a 2018 Best Northeastern College by the Princeton Review.