Overview
Title
To amend the Higher Education Act of 1965 to require that institutions of higher education maintain certain adjusted cohort default rates to participate in programs under title IV of such Act, and for other purposes.
ELI5 AI
The bill wants schools to do a good job helping students pay back their school loans. If too many students have trouble paying back their loans, the schools might lose some help from the government.
Summary AI
H.R. 7880, known as the "Accountability in Student Loan Data Act of 2024," aims to amend the Higher Education Act of 1965 to ensure that colleges and universities maintain specific default rates on student loans to continue participating in federal financial aid programs. It introduces the concept of "adjusted cohort default rates," which take into account factors such as forbearance and student enrollment in loan programs. Institutions with high adjusted default rates may face ineligibility for participating in federal aid programs unless they show improvement or qualify for specific exemptions. The bill also provides grants and assistance to institutions to help them meet student achievement standards and manage default rates effectively.
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AnalysisAI
The proposed legislation, titled the "Accountability in Student Loan Data Act of 2024," seeks to amend the Higher Education Act of 1965 with the primary aim of ensuring institutions of higher education maintain specific adjusted cohort default rates to remain eligible for federal educational programs under Title IV. This bill is designed with the intention of holding educational institutions accountable for student loan repayment success, thereby aiming to improve the financial sustainability and accountability of student loan programs.
General Summary of the Bill
The bill addresses various updates and modifications to the Higher Education Act, including the institution of a new term, "progress period status," which characterizes institutions at risk of losing eligibility due to high student loan default rates. The bill further amends provisions related to consumer information, Federal Pell Grants, the disbursement of student loans, and specific requirements concerning cohort default rates. Institutions that fail to meet these updated criteria for managing student loan repayments may face potential ineligibility for federal funding. Additionally, the bill introduces support measures, like grants, to assist institutions classified under "progress period status" to improve student achievement and financial performance.
Summary of Significant Issues
One major concern with the bill is the complexity in language and the introduction of terms that may be difficult to understand for stakeholders not versed in higher education policy. For example, the terms "adjusted cohort default rate" and "progress period status" are critical to the bill but may lack sufficient clarity in their implementation.
The amendment lowering the default rate threshold from 10% to 5% raises questions, as the rationale for this adjustment is not elaborated upon. Such a reduction might heavily impact institutions that serve higher-risk student populations, potentially resulting in financial and operational stress.
Furthermore, the bill carries significant implications for institutions that show little progress in reducing their default rates or maintaining low-income student enrollment rates. The strict criteria for continued eligibility for support, particularly achieving a default rate below a specific threshold, could introduce challenges for institutions dealing with external factors beyond their control.
Impact on the Public
If enacted, the bill may lead to improvements in loan default rates and enhance the overall accountability of educational institutions in managing student debt burdens. However, stringent criteria may inadvertently penalize institutions, potentially reducing educational opportunities for students, particularly those from low-income backgrounds. The shifts in eligibility for federal support based on student loan performance may indirectly pressure institutions to prioritize financial metrics over educational inclusivity and accessibility.
Impact on Specific Stakeholders
Educational Institutions: Universities and colleges, particularly those with higher default rates, may face increased administrative burdens and potential ineligibility for federal programs if they fail to meet newly established benchmarks. This could spur efforts to improve financial counseling services and support structures for students but might also lead to less investment in programs serving vulnerable student populations.
Students and Families: For students, especially those from disadvantaged backgrounds, the bill could result in reduced availability of educational programs, especially if institutions lose federal funding. On the positive side, improved institutional accountability could result in more sustainable student debt levels and enhanced financial education.
Federal and State Governments: On a regulatory level, the bill will likely require enhanced oversight and data collection from educational bodies, potentially improving transparency in student loan management.
Overall, while the bill holds promise for improving financial accountability in higher education, it requires careful consideration and balance to ensure it does not unintentionally marginalize institutions and student populations essential to fostering educational equity.
Issues
The language used across multiple sections, such as the adjusted cohort default rate and related terminologies, is complex and might be difficult for individuals not familiar with higher education policy to understand. This may make it challenging for stakeholders to comprehend implications, compliance requirements, and strategic responses. Relevant sections include sections 5, 6, 7, and 8.
The amendment reduces the adjusted cohort default rate threshold from 10 percent to 5 percent in Section 7. This change could have significant implications for institutions, particularly those serving higher-risk student populations. The rationale for this change is not addressed, potentially impacting numerous institutions financially and operationally.
Section 9 introduces potential financial consequences for institutions based on their adjusted cohort default rates and enrollment of low-income students. It sets a strict requirement for institutions to achieve an adjusted cohort default rate of less than 10 percent after receiving support for three consecutive years and bars further support if low-income student enrollment decreases by 10 percent or more, raising ethical concerns regarding the fairness of these criteria.
Sections 2 and 9 define 'progress period status' but do not explicitly outline the specific actions to be taken by the Secretary or consequences for institutions under this status. This ambiguity could lead to inconsistent policy implementation and may affect public perception of transparency and fairness in educational oversight.
Across sections 4 and 5, the bill lacks clarity on how newly introduced terms like 'final adjusted cohort default rate' and 'on-time repayment rate' are calculated, which could lead to ambiguity and misinterpretation by institutions, affecting their compliance and strategic decision-making.
Section 6 outlines complex multi-year and multi-layered criteria for institutional ineligibility based on high adjusted cohort default rates. This complexity may result in administrative challenges for institutions to understand and navigate their compliance status, potentially leading to unintended sanctions.
Section 8 introduces ambiguity by specifying 'institutions with an adjusted cohort default rate for loans under part D of this title in excess of 18 percent or which places such institutions in the highest 25 percent'. The interaction between the 18 percent criterion and the top 25 percent criterion is unclear, creating potential challenges in enforcement and compliance.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill states that it will be officially called the "Accountability in Student Loan Data Act of 2024."
2. Progress period status Read Opens in new tab
Summary AI
The amendment to the Higher Education Act of 1965 introduces the term “progress period status” to describe colleges or universities at risk of losing Title IV eligibility because their student loan default rates are between 10 and 15 percent.
3. Consumer information Read Opens in new tab
Summary AI
Section 3 of the bill amends the Higher Education Act of 1965 by updating a part of the law to include the term "adjusted cohort default rate" along with "rate" in a specific subsection.
4. Federal Pell Grants Read Opens in new tab
Summary AI
The section outlines changes to the rules surrounding Federal Pell Grants by modifying the Higher Education Act of 1965. It adds that institutions with certain ineligibility determinations or financial metrics, like default or repayment rates, could be affected, and specifies that these changes align with previous amendments within the FAFSA Simplification Act.
5. Disbursement of student loans Read Opens in new tab
Summary AI
The amendment to the Higher Education Act allows schools with a low rate of students defaulting on loans to issue loans in a single payment for short enrollment periods, and sets specific requirements for schools based on their loan default rates.
6. Cohort default rates Read Opens in new tab
Summary AI
The bill introduces a rule that makes certain schools ineligible for federal education programs if their adjusted cohort default rates, which reflect the percentage of students who default on their loans, are too high over several years. It sets specific adjusted rate thresholds and provides exceptions for schools that can show improvements or have certain educational programs, along with defining how these rates should be calculated and adjusted.
7. Adjusted cohort default rate Read Opens in new tab
Summary AI
The section amends the Higher Education Act of 1965 to change how the adjusted cohort default rate is calculated. Starting with the 2023 fiscal year, the threshold for concern is lowered from a default rate over 10% to over 5%.
8. Program review and data Read Opens in new tab
Summary AI
The text amends the Higher Education Act of 1965 to change the criteria for identifying certain higher education institutions, specifying those with a loan default rate over 18% or in the top 25% of institutions with high default rates.
9. Assistance to progress period institutions Read Opens in new tab
Summary AI
The bill changes the Higher Education Act to allow grants and assistance for "progress period" institutions, which are colleges facing challenges in student achievement and financial performance. To continue receiving support, these institutions must show improvement, particularly in student achievement standards and reducing student loan defaults, while maintaining high enrollment of low-income students.
498C. Assistance to progress period institutions Read Opens in new tab
Summary AI
The section outlines a program where the Secretary of Education provides grants and assistance to certain institutions of higher education, known as "covered progress period institutions," to help improve student achievement. To remain eligible for support, these institutions must show progress within certain conditions, such as maintaining enrollment levels of low-income students and managing default rates, with funding determined based on a formula considering factors like institutional need and historical underfunding.