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WASHINGTON, D.C. – Today, Congress passed a reconciliation bill making radical changes to numerous federal safety net programs, taxes, and education. Many changes will negatively impact Americans’ economic futures, including significant adjustments in the structure of federal support for higher education. With these policies, students and borrowers can expect sweeping shifts in who can afford to go to college and in the treatment of their debt afterwards. Here are a few of the most notable changes:
- Cuts $300 billion of federal support for higher education students and borrowers.
- Raises the cost of student loan repayment. The new income-driven repayment plan contains unpredictable spikes in loan amounts, including a marriage penalty, and is likely to drive more borrowers into default.
- Weakens protections for borrowers who become unemployed, whose schools defraud them, or who face a sudden college closure.
- Limits access to federal aid for graduate students, likely leading more borrowers to pursue riskier private loans or forego further education.
- Opens eligibility for potentially high-cost, low-quality short-term programs to participate in the Pell Grant program, exacerbating future funding pressure on the program.
- Establishes new guardrails for loan eligibility, cutting off loans to degree programs that fail to meet state-level high school or college earnings benchmarks for undergraduate and graduate programs, respectively. But the legislation fails to apply those benchmarks to certificate programs, creating an inconsistent and poorly conceived differential accountability model.
- Shifts a portion of SNAP benefit costs to states based on a state’s error rate.
- Creates community engagement requirements for Medicaid enrollees as a condition of eligibility, putting millions at risk of losing healthcare coverage.
The following statement can be attributed to Sameer Gadkaree, President & CEO of The Institute for College Access & Success (TICAS):
“This bill can only be described as one big mistake—the consequences of which will negatively affect college students, borrowers, and their families for years to come.
“By increasing the amount, riskiness, and duration of student loan debt, the bill directly reduces the likelihood that current borrowers and future students can do better financially than their parents. The rushed legislation is sure to have unintended consequences, but it is equally sure to achieve one clear objective: fewer college graduates to support our nation’s economy and workforce.
“Cuts to and onerous eligibility requirements for SNAP and Medicaid will block millions of Americans from health care and affordable food—making it far more difficult for people to complete college degrees. The pressure these cuts put on state budgets also will imperil college affordability and success.
“From Congress to the White House, it’s painfully apparent that federal policymakers are divesting from higher education access, success, and affordability. This misguided direction will reverse 60 years of progress toward increased educational attainment and undermine the longtime consensus on the need to invest in a globally competitive workforce. The result will be a less prosperous nation.
“As we look to the future, TICAS remains committed to ensuring college is accessible to all, not only the wealthy. And we stand ready to work alongside policymakers to build a better system that ensures an affordable, quality education, keeps people out of default, and provides borrowers with essential protections.”
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