U.S. House Education & Workforce Committee proposes higher ed reforms

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The U.S. House Education and Workforce Committee released on Monday its part of the House reconciliation package, which would save over $330 billion through 2034.

The proposal would reduce and reform federal higher education spending by repealing the Biden Administration’s SAVE repayment plan, establishing new simplified repayment options, capping graduate borrowing, adopting a risk-sharing system that holds schools responsible for a portion of unpaid loans, and reducing the Pell Grant shortfall by better targeting the Pell Grant program to full-time students.

Even with these savings, the House is still likely to add substantially to the debt by combining them with new tax cuts and spending increases. Under the current budget resolution, the House is allowed up to $2.8 trillion of net borrowing through 2034, while the Senate is allowed up to $5.8 trillion.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

“After years of costly payment pauses and fiscally dangerous promises to cancel student debt, it’s refreshing to see Congress move to enact real reforms to our student loan programs. The cost of higher education has become a major burden to students and the American taxpayer. We need solutions that help control costs, boost quality, and begin to address the federal budget outlook.

“The Education and Workforce Committee has put forward a package of thoughtful and money-saving reforms that will begin to rationalize federal student loan programs while helping to reduce the cost and improve the quality of higher education.

“The proposal would simplify the student loan system, replacing legal ambiguity and numerous confusing repayment plans with a much more streamlined system. It would make clear that student lending is a loan, not a gift, and would target relief and support to those who need it most instead of subsidizing wealthier Americans with graduate degrees. The package also finally establishes accountability for colleges and universities to keep their costs down and ensure they are putting their students in a position to succeed.

“Unfortunately, the savings generated from these provisions will not go toward deficit reduction – which is sorely needed – and will instead be part of a tax cuts and spending package that is slated to borrow $2.8 to $5.8 trillion over the next decade. While the House’s $2.8 trillion of proposed borrowing would be less damaging than the Senate’s $5.8 trillion, either would be hugely problematic.

“Nonetheless, the House Education and Workforce Committee deserves tremendous credit for making the hard choices and putting forward an incredibly thoughtful package of reforms. This package – or something like it – should be enacted into law.”