Shaking up student loans

Members of the House Committee on Education and the Workforce voted along party lines late Tuesday to approve legislation that could bring major changes to higher education next year.

The Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act, introduced by Reps. Virginia Foxx (R-N.C.) and Brett Guthrie (R-Ky.), offers the first major changes to the Higher Education Act in a decade. The 542-page bill touches on almost every part of higher education, but the changes it would make to the federal student loan program could have the most significant effect on students, parents, and schools.

As originally proposed, the bill would merge six different federal loan programs into one, raise the annual cap on what undergraduates can borrow, and end the practice of forestalling interest accrual until after graduation. It also caps the amount graduate students can borrow and ends forgiveness programs for students who take public sector jobs.

For years, conservative analysts have advocated for an end to Uncle Sam’s generous loan programs, noting they cost taxpayers billions. Almost exactly one year ago, the Government Accountability Office announced income-driven repayment plans, which limit what a borrower must repay, would cost taxpayers $108 billion, based on the number of students then enrolled. That number will only continue to climb. While the proposed bill would end loan forgiveness, it also would cap interest accrual to 10 years, somewhat softening the blow.

Opponents say the changes to the loan program will make higher education more expensive, and less attainable. Supporters say easing the federal government out of the student loan business will encourage universities to make getting a degree more affordable.

“The federal government’s excessive lending policies have been a major contributor to the skyrocketing price of college tuition in recent decades,” wrote Mary Clare Amselem with the Heritage Foundation. “Reducing the amount of federal dollars in higher education is the first step toward making college more affordable for all Americans.”

Preston Cooper, an analyst with the American Enterprise Institute, declared the bill not bad as a starting point.

“Overall, the bill takes some positive steps to improve the federal student loan program and other forms of student aid,” he wrote at the beginning of a long analysis. “It also makes some welcome changes to the regulatory environment, but falls short in crafting a viable accountability regime for colleges and universities receiving federal subsidies.”

Cooper’s analysis offers as much of an in-depth look at the bill’s provisions as the average person will want to read. In addition to student loan program reforms, the bill modifies accountability measures for schools, makes changes to Pell Grants, and requires schools to be more transparent about their free speech policies.

Although the bill has passed out of committee, it still could face significant changes before coming up for a final vote. Foxx plans to ask House Speaker Paul Ryan, R-Wis., to schedule it for debate early next year. While Republicans have the votes to get the legislation through the House, it faces a much tighter squeeze in the Senate, where the GOP will have an even thinner majority come January.

Taxes and school choice

The Republican tax plan going under the reconciliation knife this week includes a provision that would expand 529 college savings plans to cover K-12 education—a change hailed by some as a “game changer” for the school choice movement.

The provision, added by Sen. Ted Cruz, R-Texas, would allow parents to use money in 529 plans to pay for private schooling, homeschool materials, online education, and educational therapy for students with disabilities. The list mirrors the benefits of educational savings accounts, the voucher improvement plan now favored by school choice advocates. But 529 plans don’t involve taxpayer funds, giving parents the freedom to use the money as they see fit, no government strings attached

Critics of the Cruz plan point to two serious flaws: It won’t benefit low-income families and it really offers little benefit for families hoping to use the money right away.

Parents contribute to 529 plans with after-tax dollars. The interest earned on investment is not taxed, and that growth can really add up over time, especially if parents begin stashing funds away when their children are young. But the benefits of compounding interest diminish if parents start taking the money out too soon. The plans also don’t offer much help to families that can’t afford to save in the first place, making them a benefit for parents already able to afford school choice.

Nat Malkus and Preston Cooper, education policy analysts with the American Enterprise Institute, offer a blunt criticism of the Cruz plan: It won’t expand school choice.

“The benefits are too marginal to provide many families with new options,” they wrote. “The parents who will benefit most from these changes are those who already send their children to private schools or have access to tax advisors to help them plan their savings. If Congress really wishes to advance the administration’s stated goals on school choice, it would do better to scrap these reforms to 529 plans and come up with a different proposal.”

But the Home School Legal Defense Association (HSLDA) supports the change, saying it will help homeschooling families pay for pre-college expenses.

“The bottom line is that a 529 plan is your own money, not government money,” wrote William Estrada, federal relations director for HSLDA. “You put it into your own account after taxes. You decide whether and how to use it, or even whether to create a 529 plan for your children. HSLDA is hopeful Congress will ensure that homeschoolers have another tool in their financial toolbox as they educate their children at home.” —L.J.

Ivy League inclusivity?

Harvard University is moving ahead with a proposed crackdown on students who join single-sex organizations. The Ivy League school has a long history of men-only social clubs, which have faced criticism for their attitudes toward and treatment of women. Harvard does not officially recognize Greek organizations but several fraternities and sororities have unofficial, off-campus chapters. Anyone participating in such organizations will be banned from taking on-campus leadership roles, including with athletic teams.

Advocates say it will improve campus culture and make women feel safer. Critics, including some faculty members, blasted the policy for restricting students’ free speech and association rights. On Wednesday, three sororities sent a letter to university President Drew Faust, objecting to the policy. They say they’re being unfairly punished for the bad behavior of men-only clubs.

The Ivy League school isn’t the only one rethinking single-gender groups. Amid a rash of alcohol- and drug-related incidents at Greek organizations across the country, other schools could soon follow Harvard’s lead. —L.J.

Homeschooling in Birmingham

The Birmingham (Ala.) Times has an interesting profile of a group of African-American parents homeschooling their children. Black Star Academy, a homeschooling co-op, started as an outreach to Muslim families, but as interest among non-Muslim families grew, the founders dropped the faith component. About 35 students participate in the co-op each year. WORLD Magazine profiled African-American homeschoolers in 2011. Since then, the number of minority families choosing to homeschool has grown. —L.J.