Taxpayers and astute observers of the increasingly perilous financial position the federal government is heading in might be pleased to learn that pending legislation in Congress would begin to modestly shrink the massive student loan bubble by roughly $15 billion – or at least keep it from growing by that amount. Prospective college students looking to finance an increasingly unaffordable degree may be less sanguine.
The Congressional Budget Office issued its cost analysis of H.R. 4508, the Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act, introduced Dec. 1, 2017, by Rep. Virginia Foxx, R-NC. The legislation, which passed the House Committee on Education and the Workforce on Dec. 13, 2017, would reauthorize the Higher Education Act of 1965 (HEA) and amend institutional and student eligibility for several major student aid programs, including the William D. Ford Federal Direct Loan Program and the Federal Pell Grant Program. It also would reauthorize funding for most other federal higher education programs.
“CBO estimates that enacting the bill would increase direct spending by an estimated $0.6 billion in 2018, but would reduce direct spending by $2.2 billion over the 2018-2022 period and $14.6 billion over the 2018-2027 period. Almost all of the effect on direct spending would result from changes to student loans and Pell grants,” it said. “CBO estimates that changes to student lending would reduce direct spending by $26.3 billion over the 2018-2027 period and changes to the mandatory portion of the Pell grant program would increase direct spending by $12.2 billion over the same period (the bulk of funding for Pell grants is discretionary and is not included in that total).”
The student loan bubble now stands at roughly $1.48 trillion, crippling the Millennial generation with debt that is delaying many of them from starting families and buying homes.