Last week, House Republicans released the full text of the PROSPER Act, a bill that proposes dramatic changes to the financing of higher education — including the elimination of student loan forgiveness programs.
Here’s a breakdown of the bill and how it could affect you.
What is the PROSPER Act?
The Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act was introduced by Rep. Virginia Foxx (R-N.C.) and Rep. Brett Guthrie (R-Ky.).
“We need a higher education system that is designed to meet the needs of today’s students and has the flexibility to innovate for tomorrow’s workforce opportunities,” tweeted Foxx. “The PROSPER Act is higher education’s long-overdue reform.”
If approved, it would be “the biggest overhaul of education policy in decades,” according to The Wall Street Journal.
Here are some of the most striking provisions of the bill:
- Simplification of the Free Application for Federal Student Aid (FAFSA)
- “Wind-down” of the Federal Perkins Loan Program
- Reduction of available repayment plans
- Changes to the amount students and parents can borrow
- Elimination of federal student loan origination fees
- Increase in funding for community colleges and apprenticeships
- Elimination of rules — such as 90/10 and gainful employment — that regulate for-profit institutions
Reactions from higher education experts haven’t been positive, with many saying the bill will mainly benefit for-profit schools.
“Increasing the already heavy burden of student debt and gutting critical protections for students and taxpayers will not promote ‘real opportunity, success, and prosperity,’” said Debbie Cochrane, vice president of The Institute for College Access and Success (TICAS), in a statement.
“Make no mistake,” she continued, “this bill would close the door to a quality higher education and economic mobility for those who need it most.”
How student loan forgiveness could change
For people who’ve already borrowed money for college, the biggest blows come to student loan forgiveness programs.
Under current income-driven repayment (IDR) plans, loans are forgiven after 20 to 25 years of payments. Under the new plan, interest would be capped after 10 years of payments — but borrowers would never receive forgiveness.
Also on the chopping block is the Public Service Loan Forgiveness (PSLF) Program, which allows borrowers working at nonprofit or government agencies to have their loans forgiven after 10 years of regular payments. The House bill eliminates this program entirely.
Will these changes affect you?
If you’re currently seeking forgiveness through one of these programs, you might find this news alarming.
But changes to IDR and PSLF will affect only borrowers who enroll after June 2018, according to The Washington Post. In other words, if you’re already on track to receive forgiveness, you don’t need to worry.
If you’re in school, however, and contemplating a public service career or IDR plan with the hope that your loans will eventually get forgiven, you should track this bill as it moves through Congress.
It goes to the Senate next and reportedly could take more than a year to work its way through. The final version is likely to look “vastly different” from the current legislation, according to The Chronicle of Higher Education.
One reason is the fact that members of the Senate’s education committee have said they’ll pursue a bipartisan proposal — a striking change from the current bill, which was written with little input from Democrats.
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