House Republicans Aim To Hold Colleges Accountable For Rising Costs

While earning a college degree can pay off in a financially, that doesn’t mean college is affordable. This is evidenced not only by the average costs of higher education but also by the amount of student loan debt the average person has and our deepening student debt crisis.

Around 43 million people with federal student loans owed more than $1.6 trillion in total as of late last year. The average federal student loan balance comes in around $28,950, which can leave borrowers with student loan bills that last for decades.

House Republicans are trying to potentially take some of the sting out of rising college costs by holding the universities themselves accountable. Their plans are hidden within the print of the College Cost Reduction Act (H.R. 6951), which was introduced by Rep. Virginia Foxx (R-NC-5), chair of the House Committee on Education and the Workforce, on January 11, 2024.

How Much Does College Cost?

Part of the problem with higher education stems from how much it costs the average student who has to borrow their way to a degree. According to data from CollegeBoard, the average cost to attend a public four-year in-state institution came in at $11,260 for the 2023-24 academic year, which is $270 higher than in 2022-23. Meanwhile, tuition and fees at a public four-year out-of-state school will set students back an average of $29,150 per year this year, which is $850 higher than last year.

Tuition and fees at private nonprofit four-year schools were much higher at $41,450 for the 2023-24 academic year, which is $1,600 more than in 2022-23.

Are these prices high? Yes. They are also just the published cost of attendance, not the net price, so not all students will pay these “sticker prices”.

Unfortunately, these averages also account for tuition and fees only and not room and board, which is often higher than the average cost of tuition and fees. For example, the average cost of housing and food at public four-year in-state schools will tack on another $12,770 per year in costs for students this year.

The average cost for housing and food (room and board) at private nonprofit four-year schools came in at $14,650 for the 2023-24 academic year. When you add up tuition, fees, and costs for room and board, this means students attending private nonprofit four-year schools will pay an average of $56,190 per year for each year of school.

How The College Cost Reduction Act Attempts To Hold Schools Accountable

The College Cost Reduction Act is 224 pages long, and it has all kinds of provisions included that could help college students pay less for school.

For example, the bill would double the maximum Pell Grant award for college juniors and seniors who are scheduled to graduate on time with a bachelor’s degree, and it would prevent interest from capitalizing on all federal student loans. The bill would also simplify student loan repayment through various measures, establish new aggregate federal student loan limits for undergraduate and graduate students, and cap federal student aid at the median cost for college.

There are also several fairly complex measures that could leave some colleges paying out of pocket if they or their students don’t perform or meet certain thresholds. The bill contains a risk-sharing proposal that would actually have colleges and universities repay student loans when their former students default on their loans. This type of risk-sharing intends to increase accountability for colleges when it comes to how much they charge students and the real-life student outcomes that result.

According to a summary of the bill from the American Council for Education (ACE), student cohorts would be broken into three types if this provision goes into effect — completing, undergraduate non-completing, and graduate non-completing. From there, the bill would set an annual risk-sharing payment for each student cohort based on a “risk-sharing percentage multiplied by the non-repayment loan balance for the cohort for the award year.”

Colleges and universities would actually have to make payments to the U.S. Department of Education based on this calculation, but only after being notified at least 30 days before they are due. Schools would then have 90 days to submit their payments.

More penalties are built in for schools who do not make the required risk-sharing payments from there. For example, schools that don’t make risk-sharing payments for three months would see the balances they owe start accruing interest, and schools will not be able to make Direct Loans to students if they fail to make risk-sharing payment for a year.

Schools will also be barred from offering loans or awarding Federal Pell grants if they fail to make a risk-sharing payment for 18 months. After 24 months without making payments, colleges and universities would be barred from participating in Title IV funding for 10 years.

New “PROMISE” Grant Program

On the flip side of the new risk-sharing arrangement, schools that perform well by offering affordable degree programs with respectable student outcomes stand to benefit. This is based on a new program that’s included on the College Cost Reduction Act known as “PROMISE” Grants, which will replace the Federal Supplemental Education Opportunity Grant program and the Leveraging Education Assistance Program.

Text from the College Cost Reduction Act says that these grants will reward colleges “for strong earnings outcomes, low tuition, and enrolling and graduating low-income students” to the tune of a maximum of $5,000 per federal student aid recipient.

In other words, schools that have to make risk-sharing payments based on the College Cost Reduction Act will be directly rewarding schools that qualify for PROMISE Grants.

Should Colleges And Universities Be Worried?

Some institutions of higher education won’t have much to worry about if this bill becomes law, whereas others could easily face stiff penalties based on where their costs and student outcomes fall right now.

An analysis of the bill conducted by non-profit think tank Foundation for Research on Equal Opportunity (FREOPP) shows that public, two-year community colleges would fare best due to their low costs and large populations of low-income students. Meanwhile, “private four-year universities, especially those that charge excessive tuition and rely on low-quality graduate degree programs for revenue, would face the largest net liabilities.”

Ultimately, the College Cost Reduction Act aims to right one of the many wrongs that is currently plaguing our system of higher education. Many colleges and universities have been able to offer degrees that do not pay off financially for decades, and they have enjoyed unlimited access to federal student funding in the process. FREOPP experts even point out that, based on their research, 28% of bachelor’s degrees and 41% of master’s degrees do not increase the incomes of students enough to justify the cost of tuition.

The College Cost Reduction Act would make schools that offer these degrees pay into a program that redistributes the money to schools that are performing better via the new PROMISE Grants. When all is said and done, this means schools will be accountable for student outcomes where it hurts the most — their pocketbooks.