Congressional group proposing major move on college debt, affordability

College Affordability Act comes amid growing concern about impact on individuals — and the economy — of ever-growing student debt.

More than 1 million people had $43 billion in outstanding student loans at the end of last year in New Jersey. (Twenty20/NJ Spotlight)

More than 1 million people had $43 billion in outstanding student loans at the end of last year in New Jersey. (Twenty20/NJ Spotlight)

This article originally appeared on NJ Spotlight.

Undertaking a major rewrite of the Higher Education Act is one way to address concerns about college affordability and student debt, according to a group of federal lawmakers that includes a congressman from South Jersey.

The group introduced legislation in the U.S. House of Representatives earlier this month that called for increasing student-tuition subsidies and boosting federal aid to states like New Jersey that fund free community-college programs, among other proposed policy changes.

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New efforts would also be made to assist those who already have significant college debt, including by establishing more generous repayment terms for low- and middle-income borrowers. The legislation also calls for the expansion of a program that offers loan forgiveness to those who go into a public-service field after graduating college.

The introduction of  the “College Affordability Act” by a group of sponsors that includes U.S. Rep. Donald Norcross (D-1st) comes as new alarms are being sounded about the impact of high  student debt on the economy. It is also aimed at making college more affordable as tuition bills continue to rise nationally.

“The College Affordability Act invests in America’s schools, teachers and students, makes college more affordable, provides student-debt relief and prepares graduates for meaningful careers,” said Norcross, who serves on the House’s Education and Labor Committee.

“We must provide every student with the tools to learn and the opportunity to succeed in their career and this bill does exactly that,” Norcross said.

Fewer people enrolling as costs rise?

According to recent estimates from the New York Federal Reserve, more than 40 million people across the country have taken on a combined $1.6 trillion in student loans, including more than $106 billion borrowed in 2017 alone. The record for single-year borrowing by students was $125.6 billion in 2010, according to the U.S. Chamber of Commerce. But experts attribute the decline to fewer people enrolling in colleges and universities, as tuition costs have gone up.

In New Jersey, more than 1 million people had outstanding student loans totaling more than $43 billion at the end of last year, according to the nonprofit Student Borrower Protection Center. And the average loan balance was nearly $40,000.

Earlier this year, a survey of New Jersey accountants suggested student-loan debt is having an impact on the state economy, including by keeping those with outstanding loans from saving for retirement or buying a home. The NJCPA has created a task force to examine the issue of student debt more closely.

Meanwhile, polling research released last week by The Pew Charitable Trusts found nearly 70% of those surveyed felt the struggles of those facing student debt are weighing down the national economy. Another 80% said the federal government should give more help to borrowers to repay their loans.

More generous terms for borrowers

The proposed legislation would overhaul the Higher Education Act — which is over a decade old — by establishing new repayment plans with more generous terms for borrowers. The measure would also make it easier for borrowers to refinance their debt, including by lowering interest rates. It also calls for an expansion of the federal Public Service Loan Forgiveness Program, which helps forgive the outstanding student loans of those who go into professions like teaching and law enforcement.

Other proposed policy changes in the bill are aimed at directly helping students, including by increasing the size of tuition-assistance subsidies known as Pell Grants that income-qualified students can receive from the federal government. The availability of such grants would also be widened to include more students attending short-term programs, according to the bill.

States would also be encouraged to establish tuition-free community-college programs by receiving more federal aid once they did so. Gov. Phil Murphy established such a program in New Jersey last year, and earlier this year state lawmakers renewed its funding in the state budget for fiscal year 2020. The bill would also allow for increased aid to states that make sustained investments in public colleges and universities.

In addition, the bill calls for more federal oversight of the federal accreditation process for colleges and seeks to close a loophole in current law that gives underperforming for-profit schools a financial incentive to enroll veterans.

Despite getting significantly less attention than other, higher-profile issues that have been dominating the headlines in recent weeks, the legislation is being closely watched by groups that represent students, colleges and veterans.

“We look forward to working further with legislators on this critically needed, comprehensive legislation to reauthorize the Higher Education Act,” the American Association of Community Colleges said in a statement.

“We are thankful to the House for their comprehensive bill that addresses most of the concerns the military-affiliated community has expressed,” said Veterans Education Success, a Washington, D.C.-based group that advocates for educational opportunities for veterans and military service members.

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