RELEASE: Rethinking Accountability to Get Repayment Rates Right

Washington, D.C.— Congressional proposals to rewrite the Higher Education Act (HEA) for the first time in a decade are considering holding colleges accountable by measuring the extent to which borrowers repay their federal instead loans instead of the rate at which they default. As these efforts continue, a new analysis from the Center for American Progress shows that while judging the nearly $100 billion lent in federal student loans each year based on repayment has promise, it also raises a series of policy challenges that require additional data to unpack. Failing to address these issues could lead to a new accountability regime that is either ineffective or treats colleges unfairly.

“While current accountability measures have considerable flaws, upending the current system in favor repayment rates requires policymakers proceed with caution,” said Ben Miller, senior director for Postsecondary Education at the Center for American Progress and author of the report. “Policymakers must fully understand how students move through the modern postsecondary education system before shifting from cohort default rates to repayment rates.”

The report calls for more data from the Department of Education that would allow policymakers to account for nuances in identifying successful accountability measures, such as repayment rates. It also makes use of long-term data on loan repayment to explore what paths may cause borrowers to not repay and what that means for designing an accountability measure. The report also addresses six key questions policymakers should ask when considering using repayment rates as an accountability measure, including:

  • What is successful repayment, and how should it be calculated?
  • How should repayment rates address subsequent enrollment at another institution?
  • How should repayment rates address income-driven repayment?
  • Should repayment rates be assessed at the program or the institutional level?
  • What should the consequences be if schools miss the repayment rate benchmark?
  • Should there be a distinction between default and nonrepayment?

The HEA reauthorization presents a rare opportunity for Congress to rethink their current accountability law. Should policymakers miss this window, student borrowers may continue to face continued insufficient protection from institutions that produce poor debt outcomes for a decade or more.

To read the report, click here.

For more information or to speak with an expert, please contact Kyle Epstein at kepstein@americanprogress.org or 202.481.8137.