Congress considers holding universities accountable if degrees don’t pay

“I think the idea here is that colleges should be held accountable when students are not economically successful,” said Cooper. “That doesn’t mean that every college degree has to make you rich, but colleges should, at the very least, not leave students worse off than they would have been otherwise.”

Antoinette Flores, a director of higher education accountability with New America, a self-described “think-and-action tank,” said the two proposals have very different philosophies on what accountability should look like. But both, “want to ensure that institutions that are taking taxpayer money are delivering value to students for the money invested,” Flores said.

House proposes risk-sharing plan

When the House passed a version of the bill last month, it included a risk-sharing provision for universities wherein they’d make annual payments to the federal government if former students don’t pay back their loans.

“If debt burdens are too high and earnings are too low, then there’s going to be a lot of unpaid interest on those loans, which the colleges will then be partially financially responsible for,” said Cooper.

While the payments would cost schools, some of the money could be made up for via a proposed grant program that would reward high-performing, low-tuition colleges that enroll low-income students.

Credit: Jason Getz / [email protected]

Credit: Jason Getz / [email protected]

An AEI analysis found that large for-profit college chains, some of which enroll large percentages of students who take out more loans, “are likely to face significant risk-sharing penalties.” Public colleges, however, could benefit greatly as the grants earned would outweigh their payments. Of the top 25 schools that AEI estimates will see the largest profits, two are Georgia schools; over the course of ten years, Kennesaw State University would earn more than $130 million and Georgia Southern University would make more than $80 million.

The provision is based off legislation proposed last year, using grants as the reward in what experts call a “carrot and stick” approach. “But I don’t know if that’s a big enough carrot compared to the stick,” said Ben Cecil, a senior education policy adviser for Third Way, a think tank that says it “champions moderate policy and political ideas.”

Estimations from a 2024 House committee analysis indicate that many private universities would suffer a net loss. For instance, Emory University in Atlanta would lose nearly $5 million annually. Atlanta’s private HBCUs, such as Morehouse and Spelman colleges and Clark Atlanta University would have to pay approximately $437,000, $675,000 and $4.4 million, respectively, annually. All four schools declined or did not respond to requests for comment.

HBCUs generally enroll more lower-income students. On average, they borrow nearly twice as much in federal loans to pay for their education, according to some research. “When the proposals about risk-sharing have come about over the last decade, HBCUs have been one of the trickiest pieces of the policy discussion,” said professor Robert Kelchen, who researches higher education finance at the University of Tennessee. “Just because of the relatively high student loan debt but also the realization they’re serving a lot of lower income students.”

Public HBCUs in Georgia wouldn’t fare any better. The House analysis estimated Fort Valley State and Savannah State universities would each lose more than $2 million and Albany State University would lose more than $3.5 million annually.

Those significant losses will have to be made up somewhere, said Cecil, “and chances are that would have to fall to students or to Georgia taxpayers.”

Some worry colleges would enroll fewer low-income students, turning to wealthier students who are more likely to pay back their loans. “I think that risk is real,” said Kelchen. “Especially when colleges are concerned about their budget.”

Experts say the formula is extremely complicated and would be very difficult for the U.S. Department of Education to implement. “Both because of the complexity and the data needed, a lot of which doesn’t yet exist,” said Flores. “And because half of the staff at the department has been let go.”

Senate focuses on income

The Senate’s proposal would target specific university programs. If most students in a degree program go on to make less annual income than the median worker in that region who didn’t attend college, federal loan eligibility will end for that academic program.

“If you’re not earning more than that comparable person with only a high school diploma, then we have a problem, because college should leave you better off than if you had only gone into the labor force with a high school diploma,” said Cooper.

The proposal doesn’t factor in how that income compares to how much federal money a student borrowed. “So it wouldn’t be catching programs that leave students with an increase in earnings, but their debt is so high that they have trouble repaying it,” Flores said.

One of the two proposals, or perhaps some combination of the two, could be coming soon. The Senate hopes to pass its version of the bill by July 4, and then it would have to be passed in the House.

“Accountability is something that we need in higher education,” said Cecil. “We need to do it in a way that doesn’t create uncertainty and disrupt the pipeline to higher education that millions of students rely on in the state of Georgia.”