After more than a week of silence, the Senate Education Committee revealed a new draft plan to overhaul federal student aid. The proposal makes a buzz across colleges as it ties federal loans to how much students earn after graduation—promising a simpler and more effective approach than the House’s risk-sharing plan. This is a major Daily news highlight on education reform.
Why This Plan Is Gaining Support
- Earnings-Based Accountability
- Colleges must prove their graduates earn more than those with only a high school diploma. If they don’t meet this goal, they may lose access to federal loans.
- Clearer and Simpler Than Risk-Sharing
- Unlike the House plan, which penalizes colleges based on loan defaults, the Senate plan focuses on real student earnings. This is easier for schools to understand and manage.
- Fairness Over Status Quo
- Universities currently negotiate indirect cost rates with the government, a process seen as opaque. The new system aims to be more transparent and fair.
How the Plan’s Rules Work
- Comparison Benchmark
- The plan uses the average income of adults aged 25–34 with a high school diploma.
- Graduation Timeline
- For bachelor’s degrees: earnings are measured four years after graduation.
- For graduate programs: compared to adults with bachelor’s degrees, earnings measured later after degree completion.
- Penalty Clause
- If earnings fall short in two of three years, the college may lose federal student aid for that program for two years.
What’s Next for Colleges
- Universities told this is their last chance to shape the system before it becomes law.
- Senate and Trump officials are currently reviewing two versions of the plan.
- Support from Republicans like Sen. Susan Collins and NIH director Jay Bhattacharya is building momentum.
- The plan might be included in a larger budget bill expected by July 4, under the budget reconciliation process that needs only 51 votes.
Pros and Cons of the Plan
Pros:
- Easier to understand and manage
- Tied to real-world graduate outcomes
- Applies equally to all kinds of institutions (public, private, for-profit)
Cons:
- Some say measuring earnings at four years is too soon
- Critics worry the benchmark unfairly compares young grads to experienced high-school diploma holders
- Certificate and short-term programs are left out, despite calls to include them
Why This Plan Matters
- Student debt is a growing crisis, and taxpayers fund billions in loans every year.
- Linking funding to graduate earnings ensures colleges offer true value.
- This approach could pressure schools to boost job training, internships, and real-world skills.
The Senate’s proposal offers a new vision: college programs will be judged by graduate income, not enrollment alone. For many, that’s a fairer measure of value and impact. If approved, this plan could reshape higher education and federal funding rules for years.
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