Cotton unveils bill to cut college tuition and reform student loans
FOR IMMEDIATE RELEASE
Contact: Caroline Tabler Where James Arnold (202) 224-2353
September 20, 2022
washington d.c. – Sen. Tom Cotton (R-Arkansas) today introduced the Student Loan Reform Act of 2022, a bill that will lower tuition costs by holding colleges financially responsible for the loans they encourage students to take out.
Specifically, the bill requires colleges to become guarantors of up to 50% of future federal student loans and imposes fines on colleges of 25% of the value of future defaulted loans. This will force colleges to have a financial stake in the success of their students, giving them a strong incentive to offer useful and reasonably priced degree programs.
The bill will also require any university charging more than $20,000 a year for undergraduate tuition to phase out 50% of its administrative staff to qualify for future student loans. The invoice text is here.
“America has a student loan problem. But that’s not the problem Joe Biden wants you to believe. The real problem with student debt today is that the cost of tuition has skyrocketed, but the value of a college degree has dropped.Worst of all is that the federal government has created this problem by writing blank checks to colleges, with little effort to control the cost or quality of education My Student Loan Reform Act of 2022 would end this academic golden age, reduce tuition fees, and give colleges a much-needed reality check,” wrote Cotton.
A brief overview of the bill is below.
· The federal student loan program has prompted colleges to raise tuition fees and students to go into unsustainable debt.
· Higher education bureaucracy grew by 616% from 1976 to 2018, compared to just a 78% increase in student enrollment.
· Student loan debt has reached a staggering $1.7 trillion, posing a huge risk to taxpayers, while colleges have suffered no consequences if their graduates fail to repay their loans.
The bill would be:
Require any university with undergraduate tuition over $20,000 to phase out up to 50% of its administrative staff to qualify for future student loans, excluding religious colleges and medical schools
Require the wealthiest private colleges to distribute at least five percent of their endowment to support their educational mission per year or risk a penalty
Penalize universities up to 25% of a borrower’s loan for each of their student loan defaulters
Require universities to act as a loan guarantor for up to 50% of any future federal student loans
Place a 20% luxury tax on annual undergraduate tuition fees over $40,000, with funds raised to be used for manpower training, excluding religious colleges and colleges of medicine
Eliminate Plus loans, except for medical and dental students and parents of undergraduates, who would have loans capped at one loan of $10,000 per year
Require universities to implement admissions and hiring policies that protect political and ideological diversity on campus
Prohibit universities from soliciting FASFA documents from families who choose not to use financial aid
Levy a 1% tax on the fair market value of endowments held by the wealthiest private colleges. The tax would apply to private colleges that 1) have more than 500 full-time enrolled students, 2) have endowments worth more than $2.5 billion and $500,000 per full-time enrolled student, 3 ) do not have a religious mission.