Key Republican in House Proposes Broad Student-Aid Reforms

July 25, 2014

As the U.S. House of Representatives takes its first steps toward reauthorizing the Higher Education Act, Rep. Paul D. Ryan of Wisconsin, the Budget Committee’s chairman, is offering his own vision of student-aid reform.

In an antipoverty plan released on Thursday, Representative Ryan calls for streamlining the student-aid system, capping federal loans to parents and graduate students, and "disrupting the accreditation status quo." He proposes a database for tracking recipients of federal aid and argues for further consolidation of federal job-training programs.

The agenda comes three months after Mr. Ryan released a budget blueprint that would freeze the maximum Pell Grant at its current level for 10 years and roll back recent expansions of the program. That plan also would add a maximum-income cap for students to receive a Pell Grant, though it doesn’t propose a particular level.

Some of the proposals in Thursday’s plan mirror ideas in the Republican road map for reauthorization, including replacing the current patchwork of federal student-aid programs with one grant, one loan, and one work-study program. Both plans would make Pell Grants available year-round, creating "flex" funds that students could draw from until they graduated or exhausted their eligibility for aid. And both would remake federal college-access programs, with Mr. Ryan’s plan suggesting a single program.

Broadly speaking, both plans embrace online and competency-based learning, reduced regulation, and more transparency about student outcomes.

But the Ryan plan offers more specifics than does the Republican "priorities" list, particularly when it comes to accreditation. His plan would make it easier for new accreditors to gain federal approval and would allow accreditors to recognize specific courses, not just colleges or programs.

"Shaking up the accreditation status quo by allowing new postsecondary institutions to offer education—and allowing their students to receive federal aid—would expand opportunity," Mr. Ryan writes.

The plan also calls for the creation of a "Commission on Evidence-Based Policy Making" that would explore whether, and how, to create a federal clearinghouse that "could link anonymous participants across programs" to provide "a more complete picture" of their effectiveness. The clearinghouse, which sounds like a governmentwide unit-record system, might also contain state, local, and "even educational data sets, such as the National Student Clearinghouse," Mr. Ryan writes.

To pre-empt privacy concerns, the commission could study ways to ensure that "this data matching would not compromise the privacy rights of program participants or survey respondents," he adds. House Republicans have blocked the creation of a unit-record system in the past, citing privacy concerns.

Meanwhile, his plan would further consolidate federal job-training programs, merging them into a "flexible" block grant to states. Congress recently enacted legislation that ended 15 federally funded job-training programs, but the congressman argues that "more can be done to help workers and taxpayers."

House Votes on Tax Credits

The release of Representative Ryan’s plan followed the House’s passage of the first two bills in its piecemeal reauthorization of the Higher Education Act. On Thursday the chamber approved a third (HR 4984), to expand financial counseling for student-loan borrowers.

The House also passed a measure (HR 3393) to consolidate four existing higher-education tax breaks—the American Opportunity Tax Credit, the Hope Scholarship Credit, the Lifetime Learning Credit, and the tuition deduction—into an expanded American Opportunity Tax Credit. The bill would also make the credit permanent, index it to inflation, and increase its refundable portion by 50 percent, to $1,500.

The bill has the backing of community colleges and college bookstores, which say it would simplify the tax code and better coordinate the tax benefits with Pell Grants. But the American Council on Education has warned that the measure would hurt many low- and middle-income students and families who benefit under current law, as well as graduate and adult students who make use of the tuition deduction or the Lifetime Learning Credit.

In a statement issued on Thursday, President Obama said he supported making the American Opportunity Tax Credit permanent but opposed the bill "because it is part of a broader effort to pass permanent, unpaid-for extensions" that would add billions to the deficit.