AP NEWS

White House proposes broad changes to higher-ed loans, aid

March 18, 2019

The White House said Monday it wants to reform higher education by imposing “common-sense” limits on how much parents and graduate students may borrow, saying it will pressure institutions to keep tuition down, while extending Pell Grants and the work-study programs to students who want to get skills outside of the traditional two-year or four-year college track.

Administration officials want to consolidate five income-related, student loan-payment options into a single plan that caps monthly payments at 12.5 percent of a borrower’s income.

And it said any financial aid award letter should identify prior educational credits or experience a student has accrued elsewhere, so they aren’t forced to take repeat classes and get charged for them.

The administration outlined a broad wish list as Congress works to reauthorize and modernize the Higher Education Act, an outgrowth of the Great Society agenda that President Lyndon B. Johnson pushed a half-century ago. Last updated in 2008, the act governs financial assistance programs for college students.

Separately, the White House is working on an executive order to address free speech on campuses.

The White House on Monday said runaway borrowing gives institutions few incentives to control costs, so it should impose limits on what are known as Parent PLUS and Grad PLUS loans. It didn’t outline specific caps, though a senior administration official said it is “open to having a robust conversation about what the appropriate loan limits are.”

Besides the limits, the White House wants institutions to counsel undergrads on how to limit their borrowing.

Monday’s outline also says the White House wants to direct financial aid to prisoners who are eligible for release and will need new skills, and it’s pushing to hold public colleges financially accountable for students’ work outcomes and ability to repay student loans.

“A better system would require postsecondary institutions that accept taxpayer funds to share in the financial responsibility associated with student loans,” the five-page document said. “The administration plans to work with Congress to address this issue.”

Broadly speaking, the White House said postsecondary education and skills attainment may still be linked to higher pay and job security, yet tuition costs and student debt are “eroding” the advantages associated with a degree.

Student-loan debt is approaching $1.5 trillion and exceeds what American owe in credit card debt, auto loans, or home equity loans, so the administration thinks changes are needed to compel more responsible borrowing and make aid available to nontraditional students.

“We think these are absolutely critical reforms,” said White House adviser Ivanka Trump, the president’s daughter.

The proposal was drafted by the National Council for the American Worker, a White House advisory group that is tasked with prepping students and workers for the evolving job market.

Its release coincides with movement on Capitol Hill.

House Democrats this month started to hold hearings on reauthorizing the Higher Education Act, and Senate Health Committee Chairman Lamar Alexander is eager to get moving, too.

Mr. Alexander said he wants to streamline the “FAFSA” financial-aid application from about 108 questions to about two dozen; reform the repayment system to let students choose between a system tied to their income or one set up like a 10-year plan mortgage; and set up a simple accountability system for colleges to ensure students can find gainful employment.

On Monday, Mr. Alexander said he shares the administration’s goals and that their input will make it easier to craft legislation with Sen. Patty Murray, the senior Democrat on the health committee.