Should Congress fine universities that have high student loan delinquency rates?
H.R. 713 would penalize universities with a high percentage of students not repaying their federal student loans. Any university with an endowment of $2,500,000,000 or more endowment must pay the Department of Education a portion of their delinquent loan balance: 2.8% times the university’s delinquency rate. The penalty and the delinquency rate will lower over the next five fiscal years. However, this payment does not help borrowers pay down their balances. Finally, the bill would also tax universities’ net investment income if they raise tuition over the next three years, adjusted for inflation. Sponsor: Rep. Beth Van Duyne (Republican, Texas, District 24)
View full bill text ➔
How do you feel?
Oppose
Support
Opponents say
• "This arrangement would save the government tens of billions of dollars on bad loans. CCRA reallocates a portion of the savings to reward colleges with good outcomes. Schools would receive direct grants determined through a formula based on the number of low-income students the institution enrolls, along with whether they graduate and secure high-paying jobs. Postsecondary education in America suffers from high costs, uneven financial value, and a chaotic student loan system that exacerbates more problems than it solves. This year, Congress has a unique opportunity to address many of postsecondary education’s most pressing challenges through the budget reconciliation process. By reforming student loan repayment, imposing commonsense limits on federal loans, and holding taxpayer-funded colleges accountable for their outcomes, the reforms outlined in the CCRA would be a strong first step toward restoring public confidence in American higher education." Source: AEI
• "Morally wrong. Forgiving a debt could be a morally virtuous act, but forgiveness—by definition—can only come from the one to whom the debt is owed. In the case of federal student loans, that’s the taxpayer. Biden’s plan to transfer $360 billion worth of individual student loan debts to taxpayers without their consent is closer to theft than “forgiveness.” Canceling student loan debt is also incredibly regressive, as individuals with a higher education tend to have the highest earnings. Fifty-six percent of all student loan debt is owned by a select group of individuals with advanced degrees, such as doctors, lawyers and engineers. Meanwhile, the much larger group of people in the U.S.—37 percent of all adults ages 25 and older—who have a high school degree or less hold no student loan debt at all. The Committee for a Responsible Federal Budget estimates that households in the top two income quintiles would receive 57 percent of student loan “forgiveness,” while those in the bottom two quintiles would receive only 17 percent. Working-class Americans without college degrees, people who worked their way through school without loans, and those who’ve worked hard to pay off their loans will be the ones paying for others’ student loan ‘forgiveness.’" Source: The Heritage Foundation
Proponents say
• "The promise of a college education has always been to help students gain valuable knowledge and experience that would allow them to secure a higher-paying career trajectory. Yet, with less than 50% of college graduates actually earning employment in their field of study, it’s clear that universities are failing their students and offering far too many worthless degrees whose main purpose is to gouge students with ever higher tuition costs. … With college tuition far outpacing core inflation for decades, it is apparent we need to compel universities to alter this unsustainable direction. To help change the conduct and culture at these institutions, it’s time for these universities to put their own skin in the game and assume some financial responsibility for student debt burden and loan delinquencies." Source: Rep. Beth Van Duyne (Republican, Texas, District 24)
• "When a college education is cut short by a school closure or a school engages in fraud, the students and their families suffer long-term financial distress. Higher education fraud, when unaddressed, devastates families and their communities, disproportionately impacting low-income, people of color, and women, who start out economically disadvantaged. In recent years, several large for-profit school chains, including Corinthian Colleges, ITT Tech, The Art Institutes, and Education Corporation of America, deceived hundreds of thousands of students into taking on enormous debts for worthless educations, and then suddenly closed, leaving financial ruin and trauma for students who attended the schools. Now, as for-profit distance education increases, students who enroll in out-of-state distance education programs are particularly likely to be left in the lurch. Currently, only 20 states have SPFs and most fail to provide adequate relief to harmed students and many of those should be strengthened to adequately protect student borrower." Source: National Consumer Law Center
- Rep. Van Duyne Introduces Legislation to Compel Institutions of Higher Education to Help Pay for Student Debt (Press Release)
- Van Duyne Introduces Bill to 'Impose Penalties' on Schools Taking Advantage of Students (Texas Politics)
- Proposed Legislation Threatens To Raise Costs for Student Borrowers and Dismantle Consumer... (Center for American Progress)
- Snowballing Student Loan Debt Leads to Dramatic Higher Education Reauthorization Proposals (IGrad)
- A Better, Fairer Way To Handle Student Loans (The Heritage Fund)
- Congress’s Unique Opportunity to Fix Federal Student Loans (American Enterprise Institute)
- Rep. Beth Van Duyne’s Largest Contributors (OpenSecrets)
