Research & Commentary: PROSPER Act Would Revolutionize Higher Education

Published June 11, 2018

A massive revision of the federal law governing higher education has been introduced in the U.S. House of Representatives. The 590-page Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act is designed to hold students and institutions more accountable for how they use federal loans and financial aid and to help students complete the education they choose.

The aims of the PROSPER Act are to innovate higher education by promoting access and completion, at the same time simplifying and improving student aid and ensuring strong accountability alongside a reduced role for the federal government.

“This is the first real reform of the Higher Education Act since 1965,” Rep. Virginia Foxx (R-NC), the bill’s chief sponsor and the chair of the House Committee on Education and the Workforce, told School Reform News. “Nothing like this has been done before, although … there have been accretions and additions to the law. The world has changed a lot, and postsecondary education has not. We have focused too much on stratifying education, saying that higher education means getting a baccalaureate degree and only a baccalaureate degree. We’re trying to break that down by talking about lifelong learning.”

The bill would make it easier for students to participate in industry-led “earn-and-learn” programs by facilitating partnerships between colleges and industries. Students would also be allowed to use Pell Grants for short-term courses that provide certificates, rather than requiring a traditional academic year aimed at obtaining a degree. Students would be encouraged to graduate on time and with less debt by receiving a $300 Pell Grant bonus every year for which they take 15 credit hours per semester. Another provision would reform the eight federal TRiO outreach programs for disadvantaged students, giving first-time applicants easier grant-application access.

The PROSPER Act would also streamlines federal student financial aid by simplifying the Free Application for Federal Student Aid form and consolidating programs so that there is just one federal grant, loan, and work-study program. Pell Grants would be reauthorized through 2024, while the six loan programs would be consolidated into the new Federal ONE Loan Program. This new program would offer only one unsubsidized loan type for undergraduates, graduate students, and parents. Both ONE Loans and Pell Grants would be distributed either weekly or monthly, like a paycheck, instead of the current lump sum issued at the beginning of a semester. Repayment options would either be via a 10-year repayment plan or through an income-based repayment plan.

Students, even those receiving Pell Grants, would also have to undergo “enhanced” financial aid counseling before they can start to receive financial aid, and they would then have to undergo further counseling each year. Colleges would have to return unused portions of grants and loans if students drop out before receiving a degree.

“University systems—mostly public schools, not necessarily the small liberal arts colleges—have a huge washout after the freshman year,” said Foxx. “Students leave because they are ill-suited to attend college. They shouldn’t have been admitted. We are asking for a sense of responsibility on the part of both the student and the institution. Under this bill, institutions have to pay back some of the debt if students drop out.”

Currently, higher education in the United States is not working well. It costs far too much, is resistant to reform, and considering only roughly half of students graduate within six years, it often produces a low-quality educational experience. Government and private subsides granted to higher education institutions have caused spending to soar and have disempowered students. Federal aid programs have mostly failed and contribute to the upward spiral of higher education costs. They need to be reformed. The PROSPER ACT would help move higher education in the right direction, adding much-needed accountability and transparency to the higher ed industry while simultaneously adding additional tools to help students prepare for their careers outside of the classroom.

The following documents provide more information about the PROSPER Act and higher education reform.

Podcast: Fixing the Student Debt Crisis by Holding Higher Education Accountable
In this edition of the Heartland Daily Podcast, U.S. Rep. Virginia Foxx (R-NC) discusses how Congress is proposing to fix the student debt crisis while holding colleges and universities accountable with House Resolution 4508, known as the Promoting Real Opportunity, Success, and Prosperity through Education (PROSPER) Act. The PROSPER Act would streamline the post-secondary financial aid reward process to one grant, one loan, and one campus-based program. Rep. Foxx explains how this bill would save taxpayer money, help more students attend post-secondary education, increase lending fairness and equality, and lower costs for students.

PROSPER Act – Bill Summary
This document is a four-page summary of the PROSPER Act, which aims to innovate higher education by promoting access and college completion while at the same time simplifying and improving student aid. The PROSPER ACT also looks to ensure strong accountability alongside a reduced role for the federal government.

The Bennett Hypothesis Turns 30
In this study by the James G. Martin Center for Academic Renewal, Jenna A. Robinson merges findings from 25 empirical studies on the “Bennett Hypothesis”: former Secretary of Education William J. Bennett’s theory that large amounts of federal student aid drive up the cost of tuition. Of the 25 studies surveyed, a majority found some effect of federal subsidies on the price of higher education in at least one segment of the higher education market. Based on these findings, Robinson makes several policy recommendations that would help to slow the growth of university tuition and fees.

Competency-Based Education: A Study of Four New Models and Their Implications for Bending the Higher Education Cost Curve
In this report from rpkGROUP, researchers suggest competency-based education has the potential to produce significant cost savings for colleges and students alike, while also offering students better pathways for demonstrating content mastery. The report also emphasizes that the advantages of competency-based education require “patient capital,” as the time it takes to reach the point where annual revenues at least equal operating expenses may take five years or more.

Ten Principles of Higher Education Reform
In this Heartland Institute Legislative Principles booklet, Heartland Policy Advisor Richard Vedder and George W. Bush Institute Research Fellow Matthew Denhart explain why higher education costs are increasing rapidly while student learning outcomes have steadily declined. The authors identify the reforms states should take to jump-start higher education, which is notoriously resistant to change. 


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit School Reform News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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