With the 119th Congress expected to use the budget reconciliation process to achieve key policy goals, the higher education community might see proposals that would affect students, families, and colleges across the country.1 If these proposals mirror legislation that was introduced in the 118th Congress, such as the College Cost Reduction Act (CCRA), Congress could roll back crucial protections for students and taxpayers, raise costs for student loan borrowers and institutions of higher education, and potentially narrow higher education pathways for underrepresented students and those pursuing public service careers.2
The policy proposals Congress may consider could affect financial aid to students, funding to institutions, and program quality. Although the CCRA includes several provisions that have bipartisan support—such as financial aid award letter transparency; improved data collection; the elimination of interest capitalization and origination fees on student loans; and grants to support student success and completion—a range of other regulatory rollbacks and changes to financial aid would weaken postsecondary quality standards and raise costs for students and institutions.3 For example, new borrowing limits on student loans risk pushing low-income students to an underregulated private market, while the introduction of institutional risk sharing—where colleges pay back part of the loans their students cannot repay—would penalize institutions that enroll the most high-needs students and exacerbate shortages in critical fields such as teaching.4
If the 119th Congress pursues policies from the CCRA, lawmakers should understand that the measures could hurt students, veterans, and colleges. This issue brief explores seven such possibilities.
1. Reopening the 90/10 loophole would put a target on the backs of student veterans
The 119th Congress may consider proposals that would eliminate several important protections for students affected by fraudulent colleges and universities. One of those proposals is the reopening of the 90/10 loophole.5
The long-standing 90/10 rule requires that private, for-profit colleges derive at least 10 percent of their revenue from nonfederal funding.6 The rule is intended to make colleges demonstrate their value and market demand, with the idea being that if some students pay out of pocket or are funded through their employers, the education is worth the investment and the school is therefore a safe recipient of federal funds.7
However, a loophole in the 90/10 rule incentivized for-profit colleges to target veterans and their families who receive GI Bill and other veterans’ education benefits, which were excluded from the 10 percent nonfederal fund requirement.8 In other words, colleges could bypass compliance with the 90/10 rule by enrolling veterans over other students who are not federally funded. The for-profit sector has used deceptive marketing tactics to specifically target veterans and often left them in debt and with degrees of questionable value.9 In short, the 90/10 loophole incentivized institutions to implement predatory practices and treat student veterans as “dollar signs in uniform.”10
In 2021, Congress closed the loophole with bipartisan support and the support of the veteran service organization community.11 The CCRA includes a proposal to reopen the loophole, which would be a major step backward for student veterans and their dependents who are seeking postsecondary opportunities.12
2. A new income-driven repayment plan would raise costs for student loan borrowers and trap some borrowers in lifelong debt payments
The CCRA purports to address college affordability by introducing a new income-driven student loan repayment (IDR) plan. However, this plan would raise costs for borrowers who need the most repayment assistance.
Compared with existing IDR plans, the CCRA plan would decrease the amount undergraduate borrowers and certificate earners would eventually see canceled while increasing the amount canceled for the typical graduate school borrower.13 Specifically, it would require the typical borrower holding a certificate to repay three times more and a borrower who earned an associate degree to pay about 50 percent more over time than they would under the Biden-Harris administration’s Saving on a Valuable Education (SAVE) plan.14 Borrowers pursuing graduate degrees, on the other hand, would be required to repay 10 percent to 15 percent less over time under the CCRA than they would under SAVE.15
The CCRA plan’s benefits to graduate borrowers would increase access to and diversify more fields and professions.16 However, the CCRA’s distribution of benefits and loan relief from certificate, associate degree, and undergraduate students to graduate borrowers means those with lower average earnings would receive a smaller share of debt relief.17 Furthermore, student loan borrowers in public service fields such as teaching would pay more under the CCRA than under SAVE, and monthly payment requirements would be higher across the board.18 A progressive solution would instead limit the number of years in repayment and make payments affordable for all borrowers.19
The CCRA proposes replacing the time-based cancellation found in existing plans with a total payment cap. A feature of existing IDR plans, time-based cancellation eliminates the borrower’s remaining loan balance after they make income-based monthly payments for a set amount of time—typically 20 or 25 years, depending on the plan. A total payment requirement or cap is a feature of the proposed CCRA plan. This type of cancellation eliminates a borrower’s remaining loan balance after they have paid the total amount that they would have paid under the standard 10-year repayment plan. It also requires a borrower to pay indefinitely until they meet this threshold.
The CCRA replaces the time-based cancellation found in current repayment plans with a requirement that borrowers pay the total amount they would have paid under a standard 10-year repayment plan. All borrowers must fulfill this requirement, and it could trap some—particularly low-income borrowers—in lifelong repayment terms.20 In one example, a certificate earner in the bottom income quartile whose income did not grow faster than inflation would see their debt discharged only upon their death.21
3. New borrowing limits would force underserved borrowers into an underregulated private loan market
The CCRA also reduces access to education financing by eliminating the Parent PLUS and Graduate PLUS loan programs and introducing new student loan annual and aggregate borrowing limits.22(see Table 1) A recent analysis found significant shares of borrowers require financing beyond the CCRA’s proposed limits.23 This includes nearly 1 in 5 dependent, certificate-earning students who would exceed the annual limits and 1 in 5 bachelor’s degree earners who would exceed the aggregate limits.24
Graduate borrowers would similarly be affected by these limits. About 1 in 5 master’s degree borrowers and 1 in 4 professional degree borrowers would exceed the CCRA’s proposed annual loan limits.25 Graduate students in the medicine and health professions rely heavily on federal education financing, and proposed aggregate limits there could exceed 3 in 5.26 Reducing access to safe and reliable financing for these well-paying fields risks shutting low-income students and underrepresented students out of pathways that offer substantial economic mobility.
Reduced access to federal education financing means more student borrowers could be forced to rely on the private student loan market. Private student loans are less regulated and less transparent, and they come with fewer protections than federal student loans.27 They may have variable interest rates, for example, and may not offer the deferments, forbearances, repayment plan options, and targeted cancellation pathways that federal student loans do.28 Black and Latino borrowers are disproportionately more likely to face distress in repaying private student loans.29
From a consumer protection standpoint, the federal financial aid system is much safer for borrowers than the private student loan market.30 A December 2024 report from the Consumer Financial Protection Bureau found a variety of harmful practices in the private student loan market, including the wrongful denial of disability benefits, deceptive claims about autopay discounts, and misrepresentations regarding the availability of deferments for unemployment.31
Finally, the loan limits proposed in the CCRA would add complexity to the federal financial aid application process by tying annual and aggregate borrowing limits to the median cost of attendance for a given program of study. A new metric would be created and maintained by the U.S. Department of Education based on the median cost of attendance for every field of study, and financial aid offices would have to advise students on corresponding borrowing limits.32
4. New risk-sharing policies could create financial challenges for colleges and universities serving underrepresented students
The risk-sharing policy included in the CCRA would shift some of the risks of higher education financing to institutions in a way that could create financial challenges for these institutions and penalize schools that serve students with the most need. It would require institutions to remit annual “risk-sharing” payments to the federal government in accordance with a share of debt held by former students who are delinquent on their loans.33 Such a policy would therefore require higher payments from institutions that enroll higher percentages of low-income students, Black and Latino students, women, and students with disabilities—all of whom are more likely to struggle to pay back their loans.34 A recent analysis demonstrates, for example, that students who attended highly selective institutions pay back greater shares of their loans and earn nearly double what typical students graduating from less selective institutions earn. Risk sharing, therefore, would likely penalize institutions that require the most resources and support to help their students succeed.35
New risk-sharing requirements may also create financial challenges for institutions, particularly small, tuition-dependent institutions that may already operate on narrow margins and struggle with enrollment amid demographic changes.36 School closures devastate communities of students, staff, alumni, and local businesses.37 Instituting risk-sharing payments without updating policies that set standards for and monitor institutions’ financial capabilities may disrupt the higher education landscape and harm institutions that offer students and their surrounding communities a pathway into the middle class.38
Finally, the elimination of Parent PLUS loans would create additional challenges for historically Black colleges and universities (HBCUs) and the students who attend them. More than 1 in 5 HBCU students rely on Parent PLUS loans to finance more than 30 percent of their college costs.39 Parent PLUS loans offer access to additional education financing for low-wealth families, though the option is not ideal because many families struggle to repay them. Increased direct funding to institutions or a wealth-based supplemental Pell Grant could eliminate the need for loan programs such as Parent PLUS.40 However, eliminating Parent PLUS and similar options without providing a viable alternative, as the CCRA proposal would, would shut low-wealth students out of higher education and financially hurt the institutions that enroll them.
5. Elimination of established rules could put students at greater risk of attending low-quality higher education programs
The 119th Congress may further weaken consumer protections for students and borrowers by proposing to eliminate the gainful employment rule and the borrower defense to repayment rule. The CCRA also proposes to reinstate rules that would destroy the current federal standards for key federal funding gatekeepers: college accreditors.41
The gainful employment and borrower defense to repayment rules are federal regulations implemented by the U.S. secretary of education based on authority granted by Congress through the Higher Education Act to combat abuse in the education system. Both were developed through years of expert negotiations. The gainful employment rule creates standards for the debt and earnings of students who attend career training programs and prevents institutions that fail these standards from accessing federal student aid.42 The goal of this regulation is to protect students against predatory practices and low-quality programs that often leave students worse off. The borrower defense to repayment rule, meanwhile, creates a process for defrauded borrowers to seek relief from the loans that they took out to attend an institution that mistreated them.43
Repealing these two key consumer protection measures would reverse significant bipartisan progress in preventing fraud and would make it more difficult to ensure accountability among colleges, returning students to a time when borrowers were denied the very relief to which they were entitled. For example, under the first Trump administration’s secretary of education, Betsy DeVos, more than 130,000 borrowers who claimed they were defrauded by schools such as ITT Technical Institute and Corinthian Colleges were not granted relief under the borrower defense to repayment program.44 The Biden-Harris administration approved group discharges for the two schools in 2022.45
Moreover, proposed policies under the CCRA could return the nation’s accreditation system to an era of extremely weak regulations that made it easier for low-quality universities and programs to harm students.46 Such plans for accreditation could make the system more focused on institutional interests and move accreditation further away from protecting students from low-quality programs.47 The proposed changes would make it easier for accreditors who may not even meet current federal standards to retain their approval, and it would make it extremely difficult for the Department of Education to hold any colleges and programs accountable for harming students and borrowers.
Any proposed reform to accreditation should strengthen the substantive change process, examine how institutions can address noncompliance issues more promptly, and seek to improve the utility of accreditor websites and outcomes data.48 Such changes would make accreditation a reliable indicator of quality and effectiveness, ensuring that the higher education system remains both accessible and accountable.
6. New policies could disincentivize institutions from enrolling low-income students and increase barriers to public service fields
The risk-sharing proposal included in the CCRA would disincentivize institutions from enrolling low-income students and increase barriers to public service work. Under this plan, colleges would share the financial risk with borrowers if their students struggle with repaying loans.49 Such a provision would greatly affect institutions that enroll students from disadvantaged and underrepresented backgrounds, who generally face more challenges in repaying their loans due in part to structural factors such as the racial wage gap.50 Because institutions would have to pay a higher share of these students’ loans, this could disincentivize them from enrolling these students.
One analysis found that the risk-sharing model also would likely limit access to valuable but lower-paying professions such as teaching, nursing, mental health professions, and social work.51 This proposal would create financial pressures on colleges that would likely lead them to favor certain degrees and programs while discouraging others. The analysis found that the CCRA could discourage colleges from promoting and supporting students pursuing public service careers, which could have significant negative economic and social consequences. Under this risk-sharing model, colleges could be forced to cut programs that feed into essential fields including education and health care, largely because of factors beyond their control such as the low average salaries in those fields. The proposed model in the CCRA does not include any measures to either address or mitigate these potential effects and risks exacerbating teacher shortages and other workforce shortages in rural areas.
While it is vital to implement safeguards to protect students and taxpayers from fraud, it is equally important that any policies aimed at addressing these issues are well designed and that their potential impacts are made clear.
7. Repealing central pieces of the student loan safety net would leave borrowers who attended schools that closed or misled them without any options for debt relief
Also under consideration are two key programs that offer debt relief to borrowers who attended institutions that misled students: borrower defense to repayment and closed school discharge. Borrower defense allows borrowers who attended schools that misled them—for example, with misinformation about graduation rates, job placements, or whether credits would transfer—to apply for student loan debt relief.52 Closed school discharges offer debt relief to students who attended institutions that abruptly closed while or shortly after they were enrolled.53 These sudden closures disrupt students’ educational careers and frequently leave them without other paths to a degree.
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As of January 2025, almost 1.8 million students have received debt relief through borrower defense, closed school discharge, or related court settlements.54 One study found that 85 percent of students who attended schools that closed between 2014 and 2018 had attended for-profit colleges, despite this sector enrolling only 11 percent of students nationwide.55 A 2018 congressional investigation found that the top five schools with the most pending borrower defense claims were for-profit college chains.56 The for-profit college industry has a history of predatory behavior, including misrepresentations, fraud, false certifications, high-pressure recruiting practices, and low-quality academic programs.57
These two programs are essential safety nets for students who are taken advantage of by predatory actors in higher education and frequently left without a degree, underprepared for the workforce, and/or with high levels of debt.58 Without these safeguards, students who were left worse off through no fault of their own after trying to attain a higher education would be burdened with student loan debt that they should never have been saddled with in the first place.59
Conclusion
Policymakers agree that how higher education is financed and the way college costs affect students and their families need to change. However, the policies in the College Cost Reduction Act are not the change institutions and students need. The sweeping deregulatory proposals in the CCRA would eliminate the tools the federal government uses to ensure program quality and hold institutions accountable when they fail students. This legislation would also reduce funding to students with the most need and the institutions that serve them. The 119th Congress should instead approach higher education from a student-centered perspective and adopt policies that lower direct costs for students, ensure institutions are equitably funded, and preserve the quality standards that have long brought global admiration to American higher education institutions.60