New Student Debt Proposal
Reps. Rodney Davis (R-IL) and Scott Peters (D-CA) are championing a proposal to offer tax incentives to employers who help students pay down their student loan debt. The Employer Participation in Student Loan Participation Act (H.R. 795) would allow companies to give employees up to $5,200 a year to help pay off their student loan debt, while employers would get a tax break and employees would not be taxed on the money either. Rep. Peters said employers love the idea because it helps them recruit new employees. Rep. Davis said he believes that the student debt bubble will be the next bubble to burst, and this could help the government save “billions” in money that would be lost on student loan defaults.
Education Funding in President’s Budget
House appropriators from the Labor-Health and Human Services-Education subcommittee indicated this week there could be up to $20 billion in proposed cuts to the education section of the President’s budget. Rep. Rosa DeLauro (D-CT), ranking member of the Subcommittee, said cuts at the level would be “devastating” while Rep. Tom Cole (R-OK), chairman of the Subcommittee, said it is still too early to know exactly what they will be required to cut, but that cuts would affect almost the entire population. The Appropriations Subcommittees are still waiting to see what their funding levels will be from the House Budget Committee, but Chairman Cole indicated the appropriators would work within the guidance President Trump issued calling for a $54 billion cut to non-defense programs in order to increase defense spending.
Worth noting, last week House Speaker Paul Ryan (R-WI) announced he supports restoring year-round Pell Grants and Rep. Tom Cole (R-OK) said it “wasn’t off the table” in the Labor-HHS-Education appropriations negotiations for this year. As a reminder, last year the Senate passed a Labor-HHS-Education appropriations bill restoring year round access to Pell Grants, but the House stripped the language from its version.
Senator Enzi Calls for Audit of Federal Student Aid Programs
Sen. Mike Enzi (R-WY), chairman of the Senate Committee on the Budget, has requested the Department of Education perform an audit of all the student loan-related data it maintains.
In a letter to Education Secretary Betsy DeVos, Chairman Enzi noted the Department oversees a $1.3 trillion loan portfolio and he has concerns the Government Accountability Office found the Department underestimated the cost of income-based loan repayment plans under the Obama Administration.
House Committee on Education and the Workforce Begins Work on Perkins Reauthorization
Last year the House passed an overhaul of the Perkins Career and Technical Education Act in a 405-8 vote, but the Senate struggled to find common ground on the Secretary’s authority over how states spend money under the law. This week the House Committee on Education and the Workforce began its efforts to get the bill across the finish line with a hearing on the importance of career and technical education (CTE). A summary of the hearing is attached.
This Week’s Hearings:
There are currently no hearings scheduled at this time.
Trump Administrations Requests More Time on Student Loan Fee Case
This week the Trump Administration asked a federal court judge for an additional two weeks to consider whether it will continue the Obama Administration’s ban on certain student loan fees, arguing the new leadership at the Department of Education needs adequate time to consider the complex issue.
The Obama Administration directive prohibits guaranty agencies that collect federally backed loans from imposing collection fees when a borrower defaults on his or her debt but quickly agrees to start repaying.
United Student Aid Funds, a former student loan guaranty agency, has sued to block the guidance, arguing that the Higher Education Act permits them to impose such fees. The case could affect tens of thousands of student loan borrowers who have hundreds of millions of dollars in outstanding loans.
Department of Education Hires Taylor Hansen
Taylor Hansen, formerly a lobbyist for the Center for Education Reform, has been hired at the Department of Education. Mr. Hansen does not currently have a title as the Department is still assigning titles and policy portfolios to new hires. He has previously worked for the House Committee on Education and the Workforce and the Association of Private Sector Colleges and Universities.
Department of Education Inspector General Releases Report on Closure of For-Profit Schools
The Inspector General has released a report that finds the Department of Education has made some improvements in responding to unexpected closures of for-profit schools, but it should do a better job of requiring risky schools to post collateral. The report also says the Obama Administration’s “borrower defense to repayment” regulations would improve the Department’s ability to identify schools at risk and mitigate the cost to students and taxpayers of those closures. Republicans in Congress have targeted these rules for repeal, but the Trump Administration has not indicated a position on the rules.