E&W Blog

There is bipartisan agreement that student loan debt is too high, completion rates are too low, and far too many students are left worse off after paying for postsecondary education than if they had never enrolled in the first place. House Republicans have stepped up to fix the underlying problems by introducing H.R. 6951, the College Cost Reduction Act (CCRA), which will lower college costs for students, families, and taxpayers.

Lowering Costs and Increasing Value

The centerpiece of the CCRA is the bipartisan notion that institutions should have a stake in their students’ success. A metric, the Earnings-Price Ratio (EPR), gives a figure that can be used to either financially reward an institution or hold it financially responsible for losses to taxpayers. The more an institution charges current students relative to the earnings increase graduates receive, the greater the portion the institution pays.

For instance, UNC Chapel Hill charges students a total price of $33,400 for their English degree; the value-added earnings of former graduates of such program are approximately $32,000. Dividing the value-added earnings by the total price (and subtracting 1) yields an EPR of -0.04, and thus resulting in UNC covering 4 percent of any taxpayer losses on loans for its English graduates.

To be effective, accountability requires both carrots and sticks and the CCRA uses both to encourage colleges to lower costs and improve student outcomes by pairing risk-sharing with performance-based PROMISE grants, which provide flexible funds to schools who demonstrate progress in to lowering tuition, aligning programs with workforce needs, and enrolling and graduating low-income students in high-value programs.

PROMISE Grant = Avg. EPR x Total Pell x Completion Rate

The tables above show how decreasing tuition not only makes it easier to avoid responsibility for loan losses, but also increases the likelihood that schools will receive funding under the performance-based PROMISE program.

How will the CCRA Impact Students and Institutions?

Importantly, the CCRA’s accountability system provides a strong incentive for schools to do right by their students without breaking the bank for colleges. Most students are enrolled in colleges and universities that will benefit under this bill, including over two-thirds of students enrolled in community colleges. For institutions facing net penalties, the financial impact is less than 1 percent of their total revenues.

Note: Estimates have been produced by Committee staff using data from the Department of Education and supplemental information from the Congressional Budget Office, the Foundation for Research on Equal Opportunity, and other sources. All data is reported in 2022 dollars.

Using the searchable table above, policymakers and the public can analyze which institutions and their programs are held financially responsible or are financially rewarded for the successful outcomes of their graduates. For the full data set, including program-specific information, click here to download.

Key terms 

• Risk Sharing Payment – This is the estimated (average) annual risk sharing payment made by schools during the 10-year budget window.
• PROMISE Grant – This is the estimated (average) annual PROMISE grant received by schools during the 10-year budget window.
• Net Impact – This is the estimated (average) annual change in funding relative to current policy during the 10-year budget window, calculated as the difference between a school’s risk sharing payment and its PROMISE Grant.
• Net Impact (Per Student) – This is the net financial impact per full-time equivalent student enrolled at the institution.
• Net Impact (Percent of Federal Student Aid Volume) – This is the net financial impact as a percentage of institutions’ federal student aid volume (e.g., federal student loans, Pell Grants, campus-based aid, etc.).
  
• Net Impact (Percent of Total Revenues) – This is the net financial impact as a percentage of institutions’ total revenue sources.