The Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act, HR 4508, is designed to streamline and simplify the college loan process.
“With six million unfilled jobs and over a trillion dollars in student debt, simply reauthorizing the Higher Education Act will help no one,” Foxx, who is chairwoman of the House Committee on Education and the Workforce, said. “A hard truth that students, families, and institutions must face is that the promise of a postsecondary education is broken. We need a higher education system that is designed to meet the needs of today’s students and has the flexibility to innovate for tomorrow’s workforce opportunities. The PROSPER Act is higher education’s long overdue reform.”
The Consumer Bankers Association (CBA) commended the bill.
“We would like to thank Chairwoman Foxx for her leadership and the Committee for working to tackle this important issue,” CBA President and CEO Richard Hunt said. “The federal government certainly has a role to play in helping families afford to send their children to college, but when research shows a direct connection between federal lending and increased tuition costs, that role needs to be closely examined. Expanding direct loan limits, as this bill proposes, will encourage colleges to increase prices, further expanding the trillion-dollar federal loan portfolio.”
He said private lenders are ready to provide more capital to students but are often crowded out by federal government lending.
“We support an approach to allow students with means to access the private market while ensuring government subsidized loans are available for those most in need. This will benefit taxpayers and students alike,” Hunt said.
Specifically, CBA supports a provision requiring federal loans to disclose the full APR so borrowers know the loan’s true costs. It also supports the elimination of graduate PLUS loans and caps on parent loans to control colleges’ access to federal funds through student loans. A report by the Federal Reserve Bank of New York said every dollar increase in federal loans adds between $0.25 and $0.63 to the price of tuition.
The bill also expands federal Stafford loan limits.