HR-8009-119
Referred to the House Committee on Education and Workforce.
Sponsored by Erin Houchin (R-IN)
What it does
This bill would make colleges and universities ineligible for federal student financial aid programs for three fiscal years if 15% or fewer of their students begin repaying the principal on their loans by specified deadlines. It would also create a grant program — funded by "risk-sharing" payments from schools with high nonrepayment loan balances — that awards money to schools where more than 25% of students are repaying loans and that have strong records of serving low- and moderate-income students. Eligible schools could use grants for need-based financial aid, academic support services, and accelerated learning programs. The bill would also require the National Center for Education Statistics to collect new data on student service spending, resources, and recruitment and marketing expenditures.
Who benefits
Low- and moderate-income students at high-performing schools, who would receive additional need-based aid and support services funded by the new grants. Students broadly, who would gain new consumer information through improved data collection. Colleges and universities with strong loan repayment outcomes, which would receive grant funding. Taxpayers, who could see reduced federal loan losses if schools with poor repayment outcomes lose access to federal aid programs. Employers and the broader economy, if accelerated learning opportunities reduce time-to-degree and student debt burdens.
Who is hurt
Students currently enrolled at or planning to attend schools that could lose federal aid eligibility — including many low-income and first-generation students who disproportionately attend open-access institutions with lower repayment rates. Those schools themselves, which may serve harder-to-graduate populations and could face a cycle of reduced funding and worsening outcomes. Community colleges and minority-serving institutions, which often enroll students with greater financial need and may have structurally lower repayment rates. Schools that must make risk-sharing payments, which could pass those costs on to students through higher tuition or fees.
Supporters argue
Supporters argue that the federal government currently has no meaningful accountability mechanism for the roughly $100 billion it distributes annually in student aid, allowing schools with chronically poor outcomes to continue collecting federal dollars while students graduate — or drop out — with unmanageable debt. They contend that tying aid eligibility to repayment rates creates a direct incentive for schools to improve graduation rates, job placement, and affordability, and that the risk-sharing payment structure ensures institutions bear some financial responsibility for the debt burdens they help create, a model with bipartisan support in prior Congresses.
Opponents argue
Opponents argue that loan repayment rates are a flawed accountability metric because they reflect a school's student population — income level, race, family wealth — more than its educational quality, meaning the bill would effectively penalize open-access institutions that serve the most economically vulnerable students. They contend that cutting off federal aid to these schools would not improve outcomes but would instead eliminate access to higher education for the students who need it most, and that risk-sharing payment requirements could accelerate tuition increases at schools already operating on thin margins, harming the very low-income students the bill claims to protect.
Constitutional context
Congress uses its Spending Clause authority (Art. I, §8, cl. 1) to attach conditions to federal education funding. Under South Dakota v. Dole (1987), such conditions are permissible if they are unambiguous, related to the federal interest, and do not cross the line from incentive to coercion — a line that remains contested. Cutting off all federal aid eligibility for three years could face a Dole-based coercion challenge, though courts have generally upheld aid-eligibility conditions in the education context.
Checks and balances
The Department of Education gains authority to determine aid eligibility and administer the grant and risk-sharing programs; Congress retains oversight through appropriations and the requirement that the National Center for Education Statistics report new data; affected institutions could challenge eligibility determinations through administrative and judicial review.
Historical precedent
The Higher Education Act has historically included accountability provisions tied to cohort default rates, and prior Congresses debated risk-sharing proposals (including in the 2017-2018 HEA reauthorization discussions), though no federal risk-sharing or repayment-rate-based aid-eligibility cutoff has been enacted into law.