This bill matters because it attempts to hold colleges more responsible for the financial success of their students after graduation. For years, there have been concerns about rising student debt and questions about the value of certain higher education programs, especially if graduates struggle to find jobs that allow them to repay their loans. If this bill becomes law, it could force institutions to better prepare students for the workforce, improve their career services, or reconsider offering programs with poor employment outcomes.
If the bill passes, schools might become more selective or change their programs to ensure students are more likely to repay their loans, which could impact access to education for some students. If it doesn't pass, the current system, where schools face less direct financial accountability for student loan repayment, would largely continue, potentially allowing programs with consistently low student success rates to continue receiving federal aid.
KEY PROVISIONS
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PROVISION 01
Beginning in fiscal year 2028, any college with a cohort repayment rate of 15% or less will become ineligible for federal student aid programs for three consecutive fiscal years.
This creates a direct financial consequence for schools whose students consistently struggle to repay their federal loans.
PROVISION 02
The 'cohort repayment rate' is defined as the percentage of former students who, within a specific timeframe (roughly two years after entering repayment), have reduced their initial federal student loan principal balance by at least one dollar, excluding those in specific deferments or mandatory forbearance.
This establishes a new, stricter metric for student loan success, focusing on actual principal reduction rather than just avoiding default.
PROVISION 03
Institutions can appeal a decision to lose eligibility within 30 days of notification, and if they continue to participate in federal aid programs during an unsuccessful appeal, they must repay the government for loans made during that period.
This provides a process for schools to challenge the decision but also implements a significant 'risk-sharing' payment if their appeal fails after continuing to receive funds.
PROVISION 04
A school deemed ineligible for federal direct student loans due to a low cohort repayment rate will also lose its eligibility for Pell Grants and the Federal Family Education Loan (FFEL) Program.
This expands the impact of low repayment rates, making schools ineligible for a broader range of federal student financial aid programs.
PROVISION 05
The Secretary of Education must notify institutions whose cohort repayment rate is 15% or less starting from the bill's enactment until fiscal year 2028, warning them of the upcoming risk of losing eligibility.
This provides schools with advance notice and time to improve their student outcomes before the new ineligibility rules take full effect.
This bill matters because it attempts to hold colleges more responsible for the financial success of their students after graduation. For years, there have been concerns about rising student debt and questions about the value of certain higher education programs, especially if graduates struggle to find jobs that allow them to repay their loans. If this bill becomes law, it could force institutions to better prepare students for the workforce, improve their career services, or reconsider offering programs with poor employment outcomes.
If the bill passes, schools might become more selective or change their programs to ensure students are more likely to repay their loans, which could impact access to education for some students. If it doesn't pass, the current system, where schools face less direct financial accountability for student loan repayment, would largely continue, potentially allowing programs with consistently low student success rates to continue receiving federal aid.
KEY PROVISIONS
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high
Beginning in fiscal year 2028, any college with a cohort repayment rate of 15% or less will become ineligible for federal student aid programs for three consecutive fiscal years.
This creates a direct financial consequence for schools whose students consistently struggle to repay their federal loans.
high
The 'cohort repayment rate' is defined as the percentage of former students who, within a specific timeframe (roughly two years after entering repayment), have reduced their initial federal student loan principal balance by at least one dollar, excluding those in specific deferments or mandatory forbearance.
This establishes a new, stricter metric for student loan success, focusing on actual principal reduction rather than just avoiding default.
med
Institutions can appeal a decision to lose eligibility within 30 days of notification, and if they continue to participate in federal aid programs during an unsuccessful appeal, they must repay the government for loans made during that period.
This provides a process for schools to challenge the decision but also implements a significant 'risk-sharing' payment if their appeal fails after continuing to receive funds.
med
A school deemed ineligible for federal direct student loans due to a low cohort repayment rate will also lose its eligibility for Pell Grants and the Federal Family Education Loan (FFEL) Program.
This expands the impact of low repayment rates, making schools ineligible for a broader range of federal student financial aid programs.
low
The Secretary of Education must notify institutions whose cohort repayment rate is 15% or less starting from the bill's enactment until fiscal year 2028, warning them of the upcoming risk of losing eligibility.
This provides schools with advance notice and time to improve their student outcomes before the new ineligibility rules take full effect.
Institutional ineligibility for federal student aid programs due to low cohort repayment rates begins.
Within 30 days of receiving notification
Institutions must appeal the loss of eligibility to the Secretary of Education.
Beginning with the first fiscal year for which data are available after the date of enactment and each succeeding fiscal year until fiscal year 2028
Secretary must notify institutions risking ineligibility based on low cohort repayment rates.
GLOSSARY
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Cohort Repayment Rate
A new measure that calculates the percentage of a school's former students who entered repayment on federal student loans and have reduced their initial loan principal by at least one dollar within a specific two-year period, not including those in certain hardship deferments or forbearance.
Federal Direct Loans
Student loans funded directly by the U.S. Department of Education, including Stafford Loans, PLUS Loans, and Consolidation Loans.
Pell Grants
Federal financial aid that does not have to be repaid (unless you withdraw early) and is awarded to undergraduate students who display exceptional financial need.
Deferment
A period during which the repayment of the principal and interest of a loan is temporarily postponed. For federal student loans, interest may not accrue during deferment on certain types of loans.
Forbearance
A period during which your monthly loan payments are temporarily suspended or reduced. Interest always accrues during forbearance, even on subsidized loans.
Fiscal Year
A 12-month period used for budgeting and accounting purposes. The federal government's fiscal year runs from October 1 to September 30.
ACTION TIMELINE
2 EVENTS
MAR 19
Introduced in House
INTROREFERRAL
MAR 19
Referred to the House Committee on Education and Workforce.
