Alexander Looks to Overhaul Federal Student Aid by Christmas

The chairman of the Senate Health, Education, Labor and Pensions Committee is looking to produce a bipartisan law by the end of this year to dramatically change how the federal student aid process works.

• By Sara Friedman
• 02/05/19

Before Senator Lamar Alexander (R-Tenn.) retires in 2020, the chairman of the Senate Health, Education, Labor and Pensions Committee is looking to revamp how the Department of Education's federal student aid process works through the reauthorization of the Higher Education Act. In a Feb. 4 speech at the American Enterprise Institute, Alexander laid out his priorities for the rest of this year.

"My goal is to report [this] legislation out of committee by spring so that the full Senate can consider it this summer," said Alexander. "That schedule should permit a conference with the House of Representatives on their version of reforms to the Higher Education Act so that we can produce a present for 20 million college students and their families by Christmas."

Alexander's proposal makes three major changes to the current law. First, Alexander wants to simplify the Free Application for Federal Student Aid by reintroducing legislation soon that would reduce the number of questions on the FAFSA form from 108 to 15-25 basic questions. 

The Republican committee chairman also plans to reintroduce legislation with Sen. Patty Murray (D-Wash.), the ranking member of the Senate education committee, that would allow families to answer up to 22 FASFA questions with a single click. The bill will also eliminate $6 billion in mistakes that the Treasury Department makes each year when it comes to awarding financial aid. This proposal passed the Senate in the end of December last year, but it was not taken up in the House before the 116th Congress began its work.  

Alexander's second major objective is to make federal student loans more affordable by simplifying students' repayment options, reducing them from nine to two. His proposal would ensure that borrowers never have to pay more than 10 percent of their income on loans. If a borrower loses their job or does not meet a certain threshold, they would not have to pay anything and it would not hurt their credit score.

"I believe every student will want to take advantage of this simple and affordable new option, but if not, they will still be able to opt to pay on the existing 10-year loan repayment plan schedule, which, for many borrowers, will help them pay off their loans faster," Alexander said. "Just like the new repayment plan, borrowers who wish to pay their loan off faster would have their payments automatically deducted from their paycheck."

His third proposal is to create a new accountability system to measure whether students are paying off their student loans by simplifying and expanding the gainful employment rule. The regulations, put in place by the Obama administration and suspended by Secretary of Education Betsy DeVos, require for-profit colleges and nonprofits running non-eligible programs to report annual completion rates for students in addition to debt repayment data.

Alexander's pitch is to require "every program at every college" to report this data to the Department of Education. "For some programs, this should provide colleges with an incentive to lower tuition and help their students finish their degrees and find a job so they can repay their loans," he said.  

However, this proposal was rebuked by James Kvaal, president of The Institute for College Access and Success. "College is more important than ever, but the Pell Grant's value is near all-time lows and state funding continues to fall. Too many low-income students and students of color are unable to earn a college degree. Moreover, the recent collapse of national for-profit college chains underscores the need for stronger protections against low-quality and even fraudulent colleges," said Kvaal in a statement.