A few weeks ago, we reported on the recently passed GOP tax bill with a focus on the higher education sector. Our investigation found that several provisions of the tax bill will target graduate schools. At first glance, the impact of these provisions will be modest. But what we also found was the beginning of a longer and much more consequential set of changes on the horizon, changes that will have a real and tangible impact on all of higher education.
Behold, H.R. 4508—The PROSPER Act.
The Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act—they really reached for that clever acronym, didn’t they?—will receive a House of Representatives vote at some point in 2018. Students, educators, colleges and universities need to pay close attention, because if passed in its present form, this bill would dramatically reshape the higher education landscape.
PROSPER is a House Republican-backed reauthorization package for the Higher Education Act of 1965. Groundbreaking legislation at the time, the original act had far-reaching implications for access, opportunity, civil rights, and regulatory oversight. The PROSPER reauthorization would instead advance core conservative imperatives, including deregulation, privatization, and the elimination of myriad aid and forgiveness programs.
So what does the PROSPER Act look like in its present form and what are its likely legislative outcomes?
A closer look at this bill reveals a little good, more bad, and a whole lot of shady. We’ll give you our take on which is which. We’ll also do our best to peer into the not-to-distant future for clues about what’s to come.
The PROSPER Act
First, a little background on the bill:
When Donald Trump took office a year ago (it feels so much longer), we did our best to pin down his vaguely stated positions on education. During the election cycle, one priority in Trump’s scarce education discourse was a desire to dismantle the Department of Education. While we deemed this extreme course of action impossible, it seemed likely that Trump and congressional Republicans would work, piecemeal, to erode the Department’s regulatory authority.
And here we are, looking down the barrel of a Higher Education Act reauthorization that prioritizes deregulation and privatization. In terms of erosion, this would be a pretty big wave.
Sponsored by Rep. Virginia Foxx (R–N.C.), who heads the House education committee, the stated objectives of PROSPER are to:
- Streamline the student aid system,
- Eliminate burdensome regulations, and
- Elevate postsecondary certification and job-training programs.
The bill passed through committee, 23–17, cutting directly across party lines. The vote’s partisan nature reflected the bill’s decidedly right-leaning priorities. The bill will likely go before a House vote in 2018, at which point, the Senate would need to vote on its own version.
The margin of GOP power in the Senate is razor thin (51–49 at the time of writing). Any forthcoming bill from this side of the legislature likely would be less partisan in nature. At present, the Senate committee on education, chaired by Lamar Alexander (R–Tenn.), is only in the preliminary stages of developing its version.
At this juncture, the ball is entirely in the House’s court.
A quick qualifier: as far as we’re concerned, students come first. If we say something is good, it’s because we think it’s good for students. If we say it’s bad, it’s because we think it’s bad for students. If we say it’s shady, it’s because it looks like a drum of snake oil sitting in the trunk of a used Edsel in an empty lot on a piece of Florida real estate underneath a bridge that some Nigerian prince wants to sell you. In other words, we don’t trust it and neither should you.
So with that, here what’s in the PROSPER Act:
Emphasizing Competency-Based Programs
In November 2017, the Chronicle of Higher Education reported the landscape for trade and apprenticeship programs is confusing and often disconnected from traditional lending opportunities. The House reauthorization bill aims to correct this disconnect by coining a new category of postsecondary institutions employing competency-based education (CBE).
This strategy would bring greater academic legitimacy to programs that measure advancement based on demonstrated mastery of subject matter, as opposed to completion of credit hours. On its face, promotion of competency-based programs is a positive and sensible reform. Those schools classified as CBE-compliant would be eligible for Title IV federal student aid, including Pell Grants. This could mean a whole new level of access and support for students who would benefit more from trade schools or apprenticeships than from academic coursework.
But buried within this rational initiative is a dramatic lede. To create this new category of school, PROSPER alters the terms by which schools are deemed Title IV federal aid eligible. By removing the credit-hour mandate, the bill may legitimize not just trade schools but countless for-profit colleges that use alternative metrics for advancement (be it mastery of subject material or timely tuition payment).
In other words, a natural byproduct of this provision will inevitably create greater access to legitimacy for institutions that aren’t actually legitimate. The emphasis on trade schools and apprenticeships is itself nothing new, and represents a continuity from previous administrations. Still, on the balance, improved access to student aid and the premise of developing meaningful alternative metrics for student progress would both be positive developments.
Quad Snap-Judgment: Good
Streamlining the Financial Aid System
The stated goal in streamlining the financial aid system is to simplify the federal aid application and federal aid offerings by “making available one loan, one grant, and one work-study program.” This is another dimension of the proposal that would make federal aid more readily available to students seeking job training, apprenticeship, and skill-based educational opportunities.
Streamlining the student financial aid system sounds like a great idea in theory. In execution, it’ one gigantic money-grab that pits private enterprises against students. “Simplification“ is just code for slashing aid programs. Among its proposed cuts, PROSPER would:
- Eliminate all grant programs but the Pell Grant,
- Eliminate the Public Service Loan Forgiveness program, which cancels student debt after ten years for career public servants, including educators and police officers, and
- Eliminate grant funding for undergrads and grad students committing to teach math and science in high-need school districts.
Also as part of the “simplification” process, the bill would consolidate Stafford and PLUS loans into a single, unsubsidized Federal ONE Loan. This means, as a borrower, you start accruing interest right away, whereas previously, need-based Stafford borrowers had the option of a subsidized loan. In short, this will cost borrowers more money, particularly those with demonstrated financial need.
This dimension of the PROSPER Act also opens the door for more widespread private management of student loan debt, a condition that will make students more vulnerable to predatory lending practices and higher interest rates on loan repayment.
This is indeed a simplification of the process. Stated simply, this means fewer opportunities, higher costs, higher loan debts, and more defaults for students. The prosperity in the bill’s name must refer to the wealth of new opportunities created for private lenders and debt collectors.
Quad Snap Judgment: Bad
Consolidating the Definition of “Institution of Higher Education”
In addition to adding the new CBE classification, the PROSPER Act would remove fiscal distinctions between private and public learning institutions. This is another gesture that would help pave the way to Title IV federal aid access for vocational schools. This comports with the stated imperative of improving access to trade schools and competency-based education experiences.
However, this same consolidation would blur the lines of legitimacy between private schools and proprietary (or for-profit) schools. The for-profit sector’s recent history is rife with examples of what can happen when these enterprises are left to their own regulatory resources. The priorities of marketing, recruitment, and enrollment take center-stage in the for-profit sector. These priorities often don’t just overshadow priorities such as instruction, curriculum, graduation rates, employment rates, or loan repayment rates, but they promote inherently unethical and occasionally unlawful business models (think Trump University).
Based on recent evidence, few things represent a greater threat to our growing loan bubble, skilled-labor shortages, or skyrocketing tuition costs than deregulation that allows for-profit schools to run rampant. This provision loosens the standards that prevent vocational programs from gaining the traction they need, and it will likely do that, but we simply don’t trust that this strategy won’t also help for-profits get away with deceptive and exploitative shenanigans.
Quad Snap Judgment: Shady
Many of the provisions mentioned above might have fared better in our assessment if they weren’t paired with a battery of deregulatory moves clearly designed to help get the for-profit sector back onto its feet.
After two decades of rapid growth—decades paired not uncoincidentally with out-of-control tuition, swelling student loans, growing default rates, and rampant postgraduate underemployment—recent years have been tough on for-profit colleges. The Obama administration imposed an array of laws on the higher-education sector connecting quality and results with penalties and regulations. The result has been a major crackdown on fraudulent institutions and sketchy business practices. Some for-profits were forced into closure while others worked hard to get their act together.
Stated simply, the conditions of the PROSPER Act would turn back the clock to a time in recent history when for-profits ran amok at great cost to students and taxpayers. The bill rolls back nearly every measure taken by the Obama administration to reign in bad actors in the for-profit sector, measures that have reduced fraud, corruption, and exploitation in higher education.
For instance, PROSPER would:
- Remove regulations that require colleges to demonstrate the employability of their graduates in order to remain loan eligible,
- Remove regulations establishing minimum standards of state authorization that an institution must demonstrate to maintain Title IV eligibility, and
- Prohibit the Department of Education from making new regulations concerning the definition of credit hour, gainful employment, or state authorization.
It would also eliminate the “90/10 revenue rule” for proprietary institutions, which prohibits for-profits from receiving more than ninety percent of their revenue from student loans. The premise here is that any legitimate school would receive some portion of funding (at least ten percent) from employers, alumni, scholarship groups, or students. Instead, by removing this maximum threshold of ninety percent, the current version of the bill would place an even greater burden on taxpayers to help support these less-than-credible schools.
According to The Project on Student Debt, most for-profit colleges have little trouble meeting the 90/10 threshold. The Project reports that the average proprietary school draws roughly seventy percent of its revenues from student loans. Truly, only those for-profit institutions that most strain for credibility will have trouble meeting that threshold. Eliminating this parameter opens the door for only the least credible and most problematic of for-profit schools.
Quad Snap-Judgment: Bad and Shady
Improving Student Support Programs
Included in the PROSPER Act are a handful of provisions aimed at addressing current cultural and social issues impacting college students. The bill calls for mandatory staffing of alcohol and drug counseling personnel at postsecondary institutions, with an enhanced focus on the growing threat of opioid addiction. Another provision calls for institutions to prepare annual reports on the childcare resources available to their students. On the surface, both of these seem like positive developments.
Quad Snap Judgment: Good
The bill also lays out terms for confronting campus sexual harassment and assault. While the bill introduces requirements for properly designated personnel and annual training in the adjudication of cases, it contains little to no real mandatory responsibility on the part of colleges. In fact, the most stringent dimensions of this provision ensure the rights of the accused are protected, as opposed to ensuring due diligence by universities in conducting meaningful investigations into allegations. This section of the current legislation is toothless and falls well short of promoting institutional accountability.
Also problematic is a section addressing free speech on campus. Though no policy is recommended here, the bill takes a stated position in support of unfettered free speech on campus. Taken on its own and absent political invective, this is a worthy declaration. However, this section of legislation cannot be taken outside of a specific cultural context, one that casts college campuses as a place where free speech is routinely squelched by liberal activism. This perspective is reflected in the language of the legislation without also acknowledging the reality that the recent proliferation of hate groups and hate speeches have often sparked campus protest. The approach taken in this section betrays the bill’s partisan orientation.
In light of the deadly events in Charlottesville, Virginia, we are presented with stark evidence that hate speech is inherently provocative of a type of violence not defended by the First Amendment. A more responsible version of the PROSPER Act might make account of these facts in tandem with its endorsement of free speech.
Quad Snap Judgment: Good Ideas, Bad Execution
Deregulating the Standards for Accreditation
This is another dimension of the bill that could have a pretty far-reaching impact on higher education. Under the PROSPER Act, the Department of Education would no longer determine the standards an accreditor must employ when rating institutions. This power would now be placed with the accreditors themselves, as long as Department-recognized accreditors assess “student learning and educational outcomes in relation to the institution’s mission.”
This qualifier—“in relation to the institution’s mission”—is important language that allows for religious and proprietary institutions to be judged according to their own distinct missions (rather than federal standards such as student outcomes, curricular quality, accessibility, freedom from discrimination, etc). The same provision requires accreditors to make accommodations for evaluating newly designated CBE programs and would require that each accreditation commission seat at least one member of the business community on its board.
In tandem, the bill would reauthorize the National Advisory Committee on Institutional Quality and Integrity (NACIQI), which reviews and recommends accreditors for Department recognition.
These facts, taken together, suggest a lowering of the bar, both for accrediting commissions to gain recognition from the Department, and for institutions to gain accreditation. This would place the nation on a troubling path toward the devaluing of accreditation.
It would also create a new generation of “accredited” colleges. If you guessed that this generation would be largely comprised of for-profit schools, then you’ve picked up on the theme.
Quad Snap Judgment: Shady
Eliminating/Restricting Access to Data
For student applicants, changes to accreditation will complicate evaluating prospective schools. But then, this seems to be part of a broader trend within the PROSPER Act. Multiple provisions of this legislation are aimed unabashedly at obscuring, obstructing, or detaining information that students might use to make enrollment decisions. Among them, the PROSPER Act would:
- End the Higher Education Ratings System, an Obama-era regulation that evaluated schools on graduation rates, postgraduate employment rates, and other key indicators of quality;
- Maintain a ban on a unit-record system, a database of information on true college performance that remains inexplicably classified in spite of its obvious value to the public; and
- Replace the College Navigator website, which allows students to view ratings of higher education institutions, with a pointedly less informative College Dashboard website.
These provisions leave little room for interpretation. Their aim is to obscure data that reflects negatively on for-profit institutions and which has been used in recent years both to impede their commercial performance and to serve as prerogative for enforcement actions. The PROSPER Act defies transparency in ways that conspicuously benefit the for-profit sector.
Quad Snap Judgment: Super Shady
The current bill also lays out an array of new terms for loan repayment plans, limitations on borrowing, new conditions for the return of Title IV funds upon withdrawal from school, and new conditions by which institutions and programs can earn Title IV eligibility. Many of these provisions contain detailed formulas and financial thresholds that will probably change as this bill goes through reconciliation. We’ll reserve judgment on these terms until the final version of this bill shakes out.
Legislative Reality—Where Is This Headed?
As we noted from the outset, the PROSPER Act is unrepentantly partisan, serving pet conservative causes such as deregulation, privatization, and the elimination of public support programs.
Rep. Bobby Scott (D–Va.), a top Democrat on the House Education Committee underscored the partisan division over this bill. He notes: “HEA has always been considered in this committee in a bipartisan way. Unfortunately, [the bill] cannot be considered bipartisan because it chooses clear winners and losers. Under this bill, corporate interests are put first and students are put last.”
Indeed, through a combination of regulatory rollback and the obfuscation of data, House Republicans have proposed a bill that would usher in a new era of rampant for-profit growth. As for-profits make their great comeback, we’ll enjoy a whole new era of student exploitation, aided in no small part by the removal of several key protections for students. All of this will amount to an even greater rate of growth in student debt, loan default rates, and underemployment of graduates.
As part of its deregulatory thrust, this bill would simultaneously remove regulatory control from an inherently predatory sector and strip students of the few measures of defense they have.
Randi Weingarten, president of the American Federation of Teachers, and Frederick Kowal, president of United University Professions, issued a joint statement concerning the version of the bill coming before the House. It’s worth placing here in its near-totality:
If rogue for-profit colleges and private lenders were to dream up a higher education bill that lines their own pockets at the expense of working- and middle-class students, this would be it. The bill cuts off equitable access to four-year college degrees. It takes a scythe to income-based repayment programs and loan forgiveness for borrowers who serve the public. It trashes basic protections for students, such as the 90/10 rule, which caps the amount for-profit colleges can get from federal financial aid sources, and the gainful employment rule, which requires colleges to produce students who are gainfully employed after graduation. And it ignores all the instances of for-profit fleecing and worthless degrees that led to the gainful employment rule in the first place. The provisions around apprenticeships are window dressing to disguise the bill’s real purpose—to privatize and marketize. And all this is on top of the GOP tax plan that also hurts college students—a clear indication that affordable, publicly resourced college no longer matters to House Republicans.
We concur with this assessment, and apparently, so too do the Association of American Universities, the National Association of Student Financial Aid Administrators, and the American Association of Community Colleges. All have voiced major concerns over this proposed legislation.
With that said, a more bipartisan version of this bill will likely emerge from the Senate. Reconciliation between the two versions would mean scaling back from some of the deregulatory efforts and retaining certain protections and opportunities for students.
But who really knows? All of this must also be considered through the lens of an election year. By the summer of 2018, the battle for controlling majority of both houses will be in full heat. Any legislation left unsettled by that point may never see the light of day.
Until then, though, we’re left with a bill that’s awesome for shady for-profit colleges but atrocious for students.