The PROSPER ACT- What is it, and how might it affect my student?

The Higher Education Act (HEA) is an expansive piece of federal legislation that is the foundational law for our nation’s colleges and universities. The HEA covers topics such as student financial aid (Pell Grants, Stafford and other loan programs, work-study programs), accreditation and oversight, and persistence and completion rates. In 2018, the HEA is expected to come up for reauthorization once again – and the proposed changes could have sweeping effects for UW students and families.

Recently, the U.S. House of Representatives wrote its version of the HEA, called the PROSPER Act, which is due to come up for a vote in April. The Senate will write its version separately, and then the two chambers will try to find compromise.

Some changes in the PROSPER Act are good: they are designed to reduce regulatory barriers that drive up costs for families and students. The PROSPER Act would simplify the financial aid process that often leaves students and families frustrated. The Act would also cap the total sum a borrower can pay under the income-based repayment (IBR) plan at the total sum that would be paid under a standard 10-year repayment plan (principal and interest). The Act would also offer some new aid, such as an additional $300 “Pell Bonus” for students upon completing their first 15 credits.

However, the PROSPER Act would also significantly cut benefits for middle- and low-income students and their families. For example, a student who borrows the average amount for their undergraduate degree, and decides to continue their education for two years of graduate school, would see an increase in the interest paid on their undergraduate loan by $3,798 or 87 percent (assuming a standard 10-year repayment plan). The PROSPER Act eliminates subsidized Stafford loans for the neediest students, and eliminates or significantly cuts almost all federal grant programs except the Pell Grant. Student support programs such as TRIO, McNair Scholars, GEAR UP, Talent Search, Upward Bound, Veterans Upward Bound and numerous others face drastic reductions in funding. TRIO alone would face a $50 million cut and a new 20 percent match requirement (institutions must match 20% of their federal TRIO funds with public or private dollars). These programs assist low-income, first-generation students, and individuals with disabilities. Additionally, the popular Public Service Loan Forgiveness Program, which eliminates loan debt for police officers, teachers, and others in public service after 10 years, would be discontinued.

This legislation continues a recent trend of eliminating support for graduate students, which was seen initially in the recent federal tax bills. The PROSPER Act would discontinue Graduate PLUS loans and Federal Work Study for grad students. According to the Bureau of Labor Statistics, positions requiring a master’s degree are expected to grow 18 percent over the next 5 years. Over the next decade, 16 percent growth is expected in positions requiring a doctoral or professional degree.

As this legislation develops look for UW Impact to stay informed on the PROSPER Act and the HEA.


Additional resources:

  • President Cauce wrote a letter to the Washington Congressional delegation outlining her concerns about the PROSPER Act here.
  • Click here to access the American Council on Education’s list of changes to the HEA found in the PROSPER Act.
  • US News and World Report lists potential effects on student loans here.