Shaheen, Hatch Introduce Bipartisan Bill to Curb Climbing Student Debt and Improve Institutional Accountability
(Washington, DC) — Last week, Senators Jeanne Shaheen (D-NH) and Orrin Hatch (R-UT) reintroduced the Student Protection and Success Act, legislation to curb climbing student debt by improving the federal standard by which colleges are eligible for federal student assistance. This bipartisan bill would remove federal student loan eligibility from all colleges and universities where less than 15 percent of their students are able to begin repaying their loans within three years of graduating or leaving school. The bill would also require schools to pay a fee based on the total loan volume their students are not able to repay, and the bill would then use those funds to support schools that are serving low-income students well. The legislation aims to incentivize institutions to have a vested interest in the success of their students to properly prepare them for the workforce so graduates can secure good-paying jobs and pay down their loans.
“Today’s students will be tomorrow’s innovators, small business owners and teachers, but unless we find a way to ease the financial burden they face in completing their education, they won’t meet their full potential,” said Senator Shaheen. “This bill is about holding institutions accountable for the success they promise students who invest their time, money and future in the hopes of attaining a degree. Student debt is stifling this generation’s talent and contributions to our economy, so it’s imperative that Congress take action to address college affordability -- this bill will help do just that.”
“Investing in higher education shouldn’t force a college student to sacrifice future financial stability,” said Senator Hatch. “Student debt prevents many Americans from buying a home, starting a business, getting married, or saving for retirement. The Student Protection and Success Act ensures that institutions share accountability for providing students with the tools they need to succeed. This bill levels the playing field for institutions of higher learning and ensures that both tuition payments and taxpayer dollars are put to good use by strengthening Title IV standards. It also proposes a merit-based accountability system that rewards colleges for having high repayment rates while providing incentives for low-performing schools to improve. When institutions have a vested interest in student loan repayments, both schools and students benefit.”
The bipartisan bill would reform the eligibility standard for access to Title IV federal student assistance by deeming schools ineligible for receiving future Title IV aid if they have less than 15 percent of graduates repaying loans. Additionally, it would require higher education institutions be held accountable and share responsibility for the success of students by requiring institutions to pay a “risk-sharing fee,” which is a fee equal to a percentage of students’ loan balance that is not being repaid to the Department of Education. The bill would reward institutions that serve a significant number of low-income students by giving bonus payments to qualifying institutions through revenue gained from the risk-sharing provision. These payments would be dispersed based on the number of Pell grant recipients enrolled at the school and their repayment rates.
Americans owe over $1.3 trillion in student loan debt, which surpasses total credit card debt. New Hampshire’s graduating class of 2016 had the highest per capita student loan debt in the nation at an astonishing $36,367. Senator Shaheen has prioritized efforts to improve college affordability and confront the student debt burden affecting more than 40 million Americans across the country. In May, Shaheen helped introduced student loan refinancing legislation, the Bank on Students Emergency Loan Refinancing Act, which would allow those with outstanding student loan debt to refinance at the interest rates offered to new federal borrowers in the 2016-2017 school year.
