House Education Committee and Commonsense Student Loan Reform: Nice Start, But More Change Needed

Teresa R. Manning

Editor's Note: This article was originally published by American Greatness and is cross-posted here with permission.


On Tuesday, April 29, the House Committee on Education and Workforce marked up a reconciliation bill for the federal budget called the Student Success and Taxpayer Savings Plan, which addresses out-of-control college costs and unprecedented student loan debt.

While some members simply read talking points, key issues about higher education finance were raised, even if the proposed solutions aren’t nearly enough to course correct.

Republicans propose three main reforms: First, they want to simplify repayment. The bill offers just two methods: a regular repayment schedule or an income-driven repayment plan, called an “IDR.” The latter has a graduated scale, so those making less money would pay a lesser percentage of their monthly income, with the maximum percentage capped at 10%. If the monthly payment doesn’t cover interest, the government waives the interest portion while also paying a subsidy of $50 per month against the principal. This ensures the outstanding balance is decreasing as borrowers repay, avoiding the problem of negative amortization, where borrowers see the balance increase even as regular payments are made. Finally, if borrowers make payments for 30 years, any outstanding balance is then discharged.

Second, schools are required to pay a portion of the balance when a graduate defaults, meaning they have skin in the game.

Third, annual borrowing limits for students would vary by course of study, calculated using the median cost of an academic program (so the limit for a year of medical school would presumably be higher than the limit for a year studying history). However, the aggregate limit for 4 undergraduate years—an entire course of study—would increase from $31,000 to $50,000.

The bill regulates other areas as well, such as eligibility for certain loans or grants, along with lower loan limits for graduate degrees. But these three aspects—repayment plans, borrowing limits, and schools having skin in the game—will likely be the most discussed, as they most directly affect students, graduates, and institutions.

Despite predictable pushback by Democrats who seem compelled to mention “students of color,” members made a number of good points. For example, Chair Walberg repeatedly lamented how college tuition has quintupled since the 1970s while salaries for college graduates have, overall, stagnated. One wonders how college can continue to be seen as a wise investment for most students.

Walberg additionally emphasized how schools take the easy money of federal student loans not to defray costs but to add ideological administrators and then to actually increase tuition. This phenomenon is detailed in a 2021 report by the National Association of Scholars called Priced Out: What College Costs America. Note well where all this money does not go. It is not spent on better instructors, improved laboratories, or more books and library holdings.

In short, the money doesn’t go toward education but rather toward indoctrination.

In the end, schools are not places of learning but simple grifters. Or, as Chair Walberg stated, “Colleges have ridden this gravy train of taxpayer dollars without any accountability.”

Even Harvard, with its $53.2 billion endowment, takes student loans and federal funds. It can’t tap its wealth to help its students avoid debt? No wonder some call universities hedge funds with a few students thrown in.

Interestingly, Democrats actually object to these wealthy schools having skin in the game. They say that schools will then reject more risky applicants, disproportionately affecting—you guessed it—“students of color.” But isn’t helping students dodge bullets a good thing? As it stands, schools take the student loan money and run, stopping only to brag about a “diverse” student body but caring nothing about graduates with bogus degrees and no skills to earn a living and yet sky-high student loans. Schools get the money; graduates get the debt. Dems are ok with this?

More fundamentally, however, the committee fails to examine hidden presumptions about college. For starters, universities are seen as public goods, as their nonprofit tax status attests. But are they?

Obviously not. They’re not only woke, left-wing hotbeds—the ratio of Democrats to Republicans is 50 to 1—but their liberal arts “classes” are resentment exercises called Women’s Studies, Black Studies, or Queer Studies. In brief, they take taxpayer dollars to produce indebted political activists who are actually more ignorant after college than before, especially in American civics, world history, and basic finance. Students even lose acumen in basic academic skills such as writing, reading comprehension, and problem solving.

This is more a public cancer than a public good.

Many point to increased earnings with a college degree. But even that should be unpacked. Much of this so-called college payoff is due to employers arbitrarily requiring a college degree for jobs. They did this after courts found that employment tests adversely affected racial minorities, making them possible civil rights violations. The effect was to herd most young people, interested or not, to college. This was good business for universities and a nice captive audience for campus lefties.

But even this house of cards is now falling. Many states are dropping the requirement for a college degree in government employment, allowing instead relevant skills, qualifications, or experience. As Utah Governor Spencer Cox said, “Degrees have become a blanketed barrier to entry in too many jobs. Instead of focusing on demonstrated competence, the focus too often has been on a piece of paper. We are changing that.” The private sector will no doubt follow. That means that a high school graduate with a decent academic record who’s worked in related fields is as strong a contender for a job opening as a college graduate. So why waste 4 years on campus? Especially if that means debt, forgone income, and lost skills and knowledge?

A huge number of high school graduates are realizing this and opting for certificates in everything from journalism to nutrition instead of college, grievance studies, and student loans.

Many committee members remember their college days fondly and saw their degrees as opening doors. But it’s a different world today. College closes as many doors as it opens, especially for those with debt. President Trump seems to know this, as does the committee, as both championed National Apprenticeship Day, a real college alternative, just last week.

Republicans get credit for pushing commonsense student loan reform, of course. But the problems in American higher education—cost, content, political conformity—are so profound that no one bill will fix it. So nice start, but keep the reforms coming.


Photo by Nikola on Adobe Stock

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