The Promoting Real Opportunity, Success, and Prosperity through Education Reform Act (PROSPER Act)
It could be a very big year for the higher education sector, as Congress sets to act on a complete overhaul of the Higher Education Act (HEA) and has already put forward proposals related to the changes they are looking to enact. A 590-page bill has already cleared the House of Representatives’ Committee on Education and the Workforce in the House and congressional leaders would like to have a vote set up as early as March. H.R 4508, is also known as the Promoting Real Opportunity, Success, and Prosperity through Education Reform Act (the PROSPER Act). While the bill spans a wide variety of topics, we share those below that are most relevant to those college and university financial aid administrators.
The Return to Title IV (R2T4) Calculations
The Return to Title IV (R2T4) process could receive some simplification but also a complete overhaul, when it comes to the calculation that schools make on students who have withdrawn prior to a term ending. Schools currently keep even the slightest of percentages when a student may attend only a week or two and get to keep 100% once more than 60% of a term is complete. Going forward there is a proposal for a sliding scale return of Title IV funds:
- If a student attended less than 25% of a term, the entire disbursement(s) would need to go back.
- For students attending 25 – 50% of a term, the school would be required to return 75% of Title IV aid.
- For students withdrawing after completing at least 50%, but less than 75%, of the pertinent period, the school would be required to return 50% of the corresponding Title IV funds.
- And finally, for students withdrawing after completing at least 75%, but less than 99%, of the relevant period, the institution would be required to return 25%of the applicable Title IV funds.
Loan Limits and Counseling Changes
Loan limits and counseling changes are also on the table for schools. Colleges would potentially have the ability to limit borrowing based on program year, credential level, enrollment status (full or part time), or labor statistical data regarding the average earnings in the occupations generally pursued by program graduates. Aggregate loan limits would be changed, including graduate limits going from $138,500 to $150,000. Loan limits for undergrad students may also be increased to $60,000+ (from $57,500) for independent students and those whose parent could not borrow from the PLUS loan program. How financial aid offices will control the loan borrowing for their students is a process that could become very complex in nature to implement and we await word on how this could possibly be enacted.
Pell and Other Grant Changes
Finally, federal grant programs and funding for those could significantly change. The PROSPER Act would reauthorize Pell grants through fiscal year 2024, and also provide for “bonus” Pell amounts to students who take more than a full-time course load. Other grant programs, however, would be discontinued under the bill, including academic competitiveness grants, Federal Supplemental Educational Opportunity Grants, TEACH grants and others. There is also talk of cutting federal work study (FWS) program amounts and potentially eliminating it for graduate students entirely.
Keeping Financial Aid Administrators Updated
We may still be a few months away from finding out the final pieces of legislation that could be enacted and as always, we expect changes along the way as parties reach across the aisle to cut a deal and ultimately bring to the table for a vote. HEAG will continue to update financial aid administrators on the legislative process as it occurs in 2018 and beyond.