This analysis was prepared by Venable, LLP on behalf of AACOM.
Memorandum
Subject: Markup of H.R. 6951, the “College Cost Reduction Act”
Committee: House of Representatives Committee on Education and the Workforce
Date: January 31, 2024
Summary
On January 31, 2024, the House of Representatives Committee on Education and the Workforce (the “Committee”) held a markup of H.R. 6951, the “College Cost Reduction Act”. In general, there was little agreement during the markup between the majority and the minority. The minority offered 30 amendments to the bill, all of which were rejected along party line votes. The Democrats’ proposals were generally based on Ranking Member Bobby Scott’s (D, VA-03) “Roadmap to College Student Success” legislative blueprint, which was published a day prior to the hearing on January 30th.
Subcommittee on Higher Education and Workforce Development Chairman Burgess Owens (R, UT-04) offered an Amendment in the Nature of a Substitute, which was the only amendment passed during the markup. Representative Burgess’ amendment would eliminate the Pell Plus program in the base bill, which is designed to provide a financial award to students who are on track to graduate college on time by their junior and senior year.
Opening Statements
Chairwoman Virginia Foxx (R, NC-05) described her broad vision for the future of higher education in her opening statement. “What is needed is a complete restructuring of the incentives that drive tuition prices skyward,” she stated. Regarding the “College Cost Reduction Act,” she explained that the “bill is the three-pronged solution.” First, the College Cost Reduction Act will ensure colleges are held responsible for debt held by graduates who didn’t get enough value from their degree to pay down student loans. Second, it will promote student success by directing federal aid to institutions with the best track record of increasing graduate earnings. Lastly, it will increase transparency in the college shopping process so students and families know how much they're expected to pay for college on the front end.”
Ranking Member Scott, in his opening statement, outlined several provisions within the bill that have bipartisan support, including “codifying post-secondary student success grants and eliminating interest capitalization and origination fees on student loans.” Despite his support for certain parts of the bill, he cautioned that “the havoc that this bill would wreak in our higher education system and the pain it would inflict on students and families far outweigh any minor improvements the bill may make.”
Representative Joe Courtney (D, CT-02), like Ranking Member Scott, said in his opening statement that while some aspects of the bill are “laudable,” other provisions would be detrimental to higher education. He cited the removal of interest capitalization and loan origination fees as two positive components, noting that they would follow “Joe Biden’s efforts in the Department of Education to do precisely that, and again, there’s no harm in codifying that and making it a statutory provision.” However, he spoke out against loan limits and the termination of Parent Plus, comparing it to “saying ‘we’re gonna fix the housing affordability problem in this country by basically telling banks you’re gonna cap how much you can actually lend to home buyers.”
Markup Highlights
Owens Amendment in the Nature of a Substitute
Representative Owens introduced an Amendment in the Nature of a Substitute to the bill that he explains would “improve the legislation by clarifying the calculation of reimbursement repayments, improving college transparency provisions, and changing the funding structure of the Promise Program, balancing our continual obligation to students and taxpayers.” The amendment also “no longer includes the Pell PLUS program, but it restores…educational opportunity grants and provide full flexibility for colleges to assist students in need.” Owens continued: “Together these components provide meaningful reform to a post-secondary education system in desperate need of it.”
Ranking Member Scott rose in opposition to the amendment. He explained that the “bill does not meaningfully address the affordability issues of today’s students.” Ranking Member Scott continued: “It does reinstate the FSELG program that was eliminated in the bill, but it then turns around and eliminates the Pell PLUS program, which is the only provision that made a meaningful investment in the Pell Grant program. Now we can see the bill for what it truly is a limitation on higher education access and a decrease in affordability.”
Representative Suzanne Bonamici (D-OR-1) also rose in opposition to the bill because the “deep cuts in Parent PLUS and Grad PLUS loans will shut many students out of higher education.” She added: “Black borrowers in particular [would] be disproportionately affected by the loss of Parent PLUS loans, and without Grad PLUS loans, many prospective students will not be able to enter into professions that require graduate degrees, like many teaching programs and social work.”
Representative Alma Adams (D, NC-12) also expressed her discontent with the elimination of Parent PLUS and Grad PLUS loans under the proposed amendment. She explained that “Parent PLUS loans have become a vital tool for black Americans to access higher education, and without these loans, many would struggle to pay for college because of the cost and the already insufficient financial aid.” Representative Adams also opposed “capping the total amount of federal student aid at the median attendance for students enrolled in the same or similar programs at other schools,” which she said “created a disparity” in what students can borrow. She continued: “Since there are schools with vastly different tuition costs lumped together to make up the median cost, students wouldn’t be able to choose the schools that they want to attend based on the quality of the program or proximity to family. Instead, they’ll have to worry about whether or not the school they want to attend will provide enough financial aid.”
Loan Caps, Changes to GradPLUS, and Other Borrowing Limitations
Omar Amendment (No. 67) was offered en bloc and failed along party lines. When speaking in support of her amendment, Representative Omar said, “My amendment strikes the section in this bill that eliminates Parent PLUS and graduate PLUS loans for all future borrowers. While these loans aren't perfect, they are crucial in providing students access to higher education and sparing parents from predatory private marketplace loans.”
Chairwoman Foxx responded, “PLUS loans with their unlimited caps and high interest rates were designed for high income students and families who could afford to repay the loans. The opposite has happened. They have become a debt trap. After…10 years of standard repayment plan, more than half of the initial balance still remains on average as parent borrowers struggle to repay After 20 years, the average balance still a shocking 38%...On average, many parents spend more years trying to pay off parent PLUS loans than their child spends growing up at home. Grad PLUS is no better. Often fueling grad programs that can even provide a negative return for students. That is students who would be better off if they never enrolled at all. My colleagues talk about access, but PLUS loans provide access to crippling debt, not economic mobility.”
Several other Democratic members also spoke out against the changes to the GradPLUS and ParentPLUS loans by the College Cost Reduction Act.
During her remarks, Representative Bonamici stated, “[O]ne provision I find particularly concerning is the proposed cap on federal student aid, which would automatically prevent about half of all students from accessing the funds needed to complete their degrees. The deep cuts in Parent PLUS and Grad PLUS loans will shut many students out of higher education. Black borrowers in particular, be disproportionately affected by the loss of parent PLUS loans. And without grad PLUS loans, many prospective students will not be able to enter into professions that require graduate degrees, like many teaching programs social work.”
Representative Adams stated, “[T]he parent PLUS loan and…the grad PLUS loan will be eliminated by this bill…parent PLUS loans have become a vital tool for black Americans to access higher education. And without these loans, many would struggle to pay for college because of the cost and the already insufficient financial aid. This is a direct attack on diversity, and our black students and graduate students would also be negatively impacted as increases in loan limits and elimination of this critical funding will further impact their access to graduate programs.”
Representative Kathy Manning (D-NC-6) stated, “[T]he elimination of the parent and graduate PLUS loans would make it extremely difficult for many…NC A&T students to attend graduate school. During the last school year, 1,884 NC A&T students benefited from the PLUS loan program. The elimination of this program will force these students into the private loan market where they will encounter high interest rates and fewer borrower protections. I'm proud to say that NC A&T grads rarely encounter difficulties repaying their PLUS loans because these well-educated graduates often enjoy generous compensation post-graduation.”
Program-by-Program Cost of Attendance Median Formula
Jayapal Amendment (No. 87) was offered en bloc and defeated along party lines. In rising to speak in support of her amendment, Representative Pramila Jayapal (D-WA-7) stated, “This bill includes a damaging provision for students living in high cost of living areas like mine. It limits how much a student can borrow and it could even reduce their Pell Grant. If the award exceeds the median cost of attendance for the country, my amendment would allow the secretary to ease this financial aid reduction for students living in these high cost of living areas.”
Representative Adams also addressed the median formula. “By capping the total amount of federal student aid at the median cost of attendance for students enrolled in the same or similar programs at…other schools. That in itself creates a disparity. Since there are schools with vastly different tuition costs lumped together to make up the median cost, students wouldn't be able to choose the schools that they want to attend based on the quality of the program or proximity to family. Instead, they'll have to worry about whether or not the school they want to attend will provide enough financial aid,” she said.
Ranking Member Scott also provided comments and two other amendments, Stevens Amendment (No. 3) and Desaulnier Amendment (No. 2) were defeated by the Committee.
Amendments Offered Related to Graduate Students
Wilson (FL) Amendment (No. 4) would provide for subsidized loans for graduate and professional students. It was defeated en bloc along party lines.