Higher Education Reform Opportunity Act

Senator Mike Lee

One-pager

Higher education needs to be reformed. Todays students deserve an innovative higher education system with options that
prepare them for the challenges and opportunities in todays job market. Instead our current higher education system lacks
innovation, transparency, and accountabilitybut comes with rising tuition costs. Many of those left with staggering
student loan debt doubt whether college is worth the burden. Its time to make higher education work for students.

Summary:
Title I Accreditation Reform. Current Federal accreditation stifles innovation and diversity in higher education,
preventing new models from emerging. Even as the education market itself increasingly moves toward innovations like
distance learning, Massive Online Open Courses (MOOCs), competency-based offerings, and professional certification
exams, federal accreditation remains tied to the antiquated exclusivity of the static, four-year, residential institution.
This title allows States to accredit any institution, that provides postsecondary education (courses or programs) that
can be applied to a degree, credential or professional certification.
In order to participate, the State will enter into an alternate accreditation agreement with the Secretary of Education to
create their own process for accreditation.

Title II Transparency Reform. Even for those who complete the traditional higher education model, they often face
difficulties obtaining a good job and repaying their student loans. Students do not have access to accurate and easily
understandable data when determining which higher education institution will have the best return on investment. This
data should includes graduation and loan repayment rates, disaggregated by program or major.
This title requires institutions of higher education participating in Federal student loan programs to publish relevant
outcome information in a readily accessible format.
This information will be checked by the State board of higher education, or entity appointed by the State.
Prohibits personally identifiable information from being publically disclosed and creates penalties for unauthorized
disclosure.

Title III Student Loan Reform. The average class of 2016 graduate has $28,000 in student loan debt. Student tuition
inflated 439% between 1982 and 2007.1 There is a significant link between Federal student credit expansion and the rise
in student tuition. The July 2015 Federal Reserve Bank of New York study found a pass-through effect on tuition of
changes in subsidized loan maximums of about 60 cents on the dollar.2
This title simplifies Federal Student Loans into one option. Undergraduate students will have access to $30,000 with a
15-year repayment period. Graduate students will have access to $40,000 with a 25-year repayment period. These
caps and extended repayment period will lead to lower tuition and lower monthly payments.
This new loan is subsidized while in school. Repayment begins at 125% of normal program. (For instance, repayment
would begin one year after a 4-year program or 6 months after a 2-year program.)
Phases out the Federal loan forgiveness and repayment programs. All current recipients are grandfathered in. 3

Title IV Accountability Reform. The average national default rate is 11.3 percent. Effective delinquency rates on
student loans are now as high as they were on subprime loans during the 2008 housing crisis. 4 Some universities are held
accountable if they have serious default rates between 30 and 40 percent. Yet, the loan system doesnt require university
accountability to lower tuition and verify that their students are best able to repay the loans they take out.
This title creates a new skin-in-the-game program for universities with high default rates.
Requires that universities repay 10 percent of the student default amount (minus the Federal unemployment rate).
Universities credited $400 per Pell Grant graduate.

Senator Lee plans on introducing the 115th Higher Education Reform Opportunity Act on December 13, 2017. For more
information concerning this bill or to be added as a cosponsor, please contact Leslie Ford (8-1835) in Senator Lees office.

1 Tamar Lewin, New York Times, College May Become Unaffordable for Most in U.S., Dec. 3, 2008, http://www.nytimes.com/2008/12/03/education/03college.html?mcubz=3.
2 Federal Reserve Bank of New York, Credit Supply and the Rise in College Tuition: Evidence from the Expansion in Federal Student Aid Programs,
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr733.pdf.
3 Josh Mitchell, Government on Track to Forgive Up to $131,000 Each in Student Debt for Thousands of Doctors, Wall Street Journal, July 20, 2016,

http://blogs.wsj.com/economics/2016/07/20/government-on-track-to-forgive-up-to-131000-in-student-debt-for-thousands-of-doctors/.
4 Rana Foroohar, Financial Times, The US College Debt Bubble is Becoming Dangerous, https://www.ft.com/content/a272ee4c-1b83-11e7-bcac-6d03d067f81f.