TRANSPARENCY AND ACCOUNTABILITY WILL MAKE COLLEGE AFFORDABLE AGAIN

H.R. 6951, the College Cost Reduction Act of 2024 (CCRA), was introduced last year by Rep. Virginia Foxx (R-NC) and co-sponsored by over 150 Republican lawmakers. The bill aims to fundamentally reform higher education financing by reducing tuition costs, improving transparency, and holding institutions accountable for directing students toward expensive, low return-on-investment (ROI) degrees. The CCRA would address the root causes of mounting student debt and create a far more effective and accountable higher education system.

House budget negotiators are evaluating CCRA provisions for inclusion in the coming (second) reconciliation package. Under the Byrd Rule, only “fiscal items”—those that directly impact federal revenues, spending, or the debt limit—may be included via a simple majority vote in the Senate.

The following bill analysis addresses several provisions of the CCRA likely to be ruled as “admissible” under budget reconciliation by the Senate parliamentarian.

APPLICABLE PROVISIONS OF THE CCRA:

Loan Repayment Simplification. The CCRA would consolidate federal loan repayment plans into two options: a standard “mortgage-style” plan and one income-driven repayment (IDR) plan. The IDR plan would require payments of 10% of income greater than $21,870; however, unlike the current IDR plans, the bill’s plan would replace time-based forgiveness with a cap on total payments, provide repayment assistance by waving unpaid interest as the borrower makes on-time payments, and ensure at least half of their monthly payment is applied to their loan’s principal. This IDR plan incentivizes repayment by ensuring responsible borrowers make progress toward paying off their debt and discourages excessive borrowing by eliminating the moral hazard of time-based forgiveness.

New Quality Incentives. The CCRA would authorize PROMISE grants to colleges, which are funded directly from university risk-sharing payments. The PROMISE grants would be based on low-income student enrollment, graduation rates, tuition costs, and graduate earnings.

College Accountability and Pricing. Under the CCRA, colleges will share responsibility for unpaid loans, including repayment assistance costs and covering missed payments. Institutions can reduce these liabilities by 50% by closing programs with low ROI. Also, to qualify for PROMISE grants, colleges would have to offer degree programs at an up-front, fixed price, guaranteeing that net tuition remains fixed for a student’s first year throughout enrollment (up to six years).

Loan Limits. The CCRA would cap student loans at $50,000 for undergraduates, $100,000 for graduate students, and $150,000 for professional programs. The total sum of Pell Grants and subsidized loans per student per program would be capped at that type of program’s national median cost of attendance, meaning schools with high tuition would face reduced annual loan limits. Grad PLUS and Parent PLUS loans would be eliminated. The CCRA also allows colleges to further limit borrowing at the program-level to protect students from overborrowing.

If Enacted via Reconciliation this Legislation Would:

Increase Institutional Accountability

• Performance-based PROMISE grants will incentivize institutions to lower tuition, improve retention and graduation rates, and align degree programs with labor market needs. These grants would be fully funded via a “risk-sharing payment” colleges will be responsible for if their graduates cannot pay back their loans. This provision gives colleges “skin in the game,” disincentivizing their continued operation of low-value academic programs.
• Colleges that enroll students in degrees with little economic return will not qualify for the newly introduced PROMISE grants.

Improve Affordability and Access

• Guaranteed pricing is a stipulation of the new federal PROMISE grants. This requirement will prevent the problem of tuition hikes midway through degree programs, encourage colleges to help students complete their programs, and make college shopping more consumer friendly.
• These grants will also be awarded to schools that demonstrate a commitment to enrolling and graduating more low-income students, particularly in fields with strong job placement rates, such as healthcare, engineering, and technology.
• A detailed analysis of the CCRA’s impact found that schools serving lower-income students, especially public two-year community colleges with strong graduation rates, are likely to be the net winners thanks to their lower tuition rates.

Prevent Future Bailouts

• The Department of Education would be prohibited from transferring student loan debt to taxpayers or forgiving debt without congressional approval, as the Biden Administration repeatedly attempted to do.

Reform Student Loan Practices

• Flexible lending limits would cap lifetime and program-specific borrowing at amounts aligned with post-graduation earnings.
• Loan repayment would be simplified. A straightforward income-driven repayment plan would set payments at 10% of a borrower’s income above 150% of the federal poverty line.
• A new repayment-assistance provision for distressed borrowers would prevent unpaid interest from ballooning loan balances and reduce principal balances for those struggling with payments.
• Origination fees would be eliminated and lifetime borrowing limits would be established for undergraduate and graduate lending programs.
• Grad PLUS loans, the primary contributor to large student debt balances that borrowers struggle to repay, would be eliminated.

NEEDS ADDRESSED BY ENACTING THE CCRA THROUGH RECONCILIATION:

• Tackling Student Debt. More than 45 million Americans collectively owe nearly $1.7 trillion in student loan debt, and much of it is concentrated among students who pursued degrees that did not improve their earning potential. The CCRA would create a streamlined, income-driven repayment plan that prevents ballooning balances and caps the total repayment obligation at what a borrower would have been required to repay in principal and interest under the standard 10-year plan.
• Protecting Taxpayers. The Biden Administration’s brazen student loan debt forgiveness schemes attempted to shift the financial burden of college debt onto taxpayers, many of whom did not attend college. This provoked years of litigation and created unnecessary confusion for borrowers. The CCRA would prevent similar abuses of the loan portfolio and focus student lending on improving employment outcomes. According to the Congressional Budget Office, giving colleges “skin in the game” by amending the income-driven repayment plan and eliminating Graduate PLUS loans (many of which are not repaid) will save taxpayers at least $185 billion over 10 years. Outside groups have estimated the bill could save as much as $280 billion.
• Restoring Accountability. Many institutions charge excessive tuition for low-value degrees, leaving students unable to repay their loans. The CCRA would disincentivize universities from offering such degrees by requiring that they, rather than taxpayers, absorb a portion of the costs associated with student loan defaults. Penalties would be linked to the number of payments a school’s graduate is unable to make. Universities could reduce these penalties by eliminating low ROI degree programs. These provisions provide strong incentives for universities to align their degree offerings to labor markets and to keep tuition reasonable.
• Fostering Economic Mobility. Aligning degree programs with labor market needs, particularly through PROMISE grants and risk-sharing, will ensure higher education is a good investment of federal spending that boosts the American economy.