Election 2020 and Potential Impacts on Higher Education
Higher education policies remain a contentious topic on the presidential campaign trail, with proposals ranging from college loan debt forgiveness to billions in budget cuts. Regardless of political affiliation, administrators at higher education institutions need to identify potential external risks related to new policies at the federal level. Whether risk presents as additional compliance and regulation measures, or as cuts to federal financial aid programs, examining the policies of each candidate will help your institution plan for the future.
Trends that shaped the primary
During the 2016 presidential primary cycle, Senator Bernie Sanders was the first to propose the progressive “College for All” policy. In the recent primary cycle, many candidates built off of Senator Sanders’ proposal and backed a plethora of ideas from expanding investment into minority-serving institutions to student loan debt forgiveness. As student loan debt continues to grow, the trend towards more involved and expansive policy appears to be in the focus of many heavyweights within Congress. Specifically, legislators are backing proposals inspired by Senator Sanders’ “College for All” policy as well as expanding Pell Grants.
As an administrator, it is important to recognize these trends and prepare your institution for potential changes in the regulatory environment. As such, it appears there is increasing appetite among some of the political-class to expand access to Higher Education in the forms of increased investment, grants, debt-forgiveness, or other policy.
Former Vice President Joe Biden
As the vice president to Barack Obama from 2009 to 2017, Joe Biden worked on several higher education initiatives, including the America’s College Promise proposal, which was referred to the House of Representatives in 2015. This proposed policy, which never made it out of committee, would have made two years of community college free to students who maintained half-time enrollment, as well as at least a 2.5 GPA.
Under the proposal, participating community colleges would have been required to offer programs that are transferable to either four-year colleges or occupational training programs. States would have been required to opt in and cover a quarter of the costs, while the federal government would have covered the remaining three-quarters. If elected, Biden plans to reintroduce this policy and continue to place a strong emphasis on investing in minority-serving institutions and community colleges.
Biden’s other notable policies related to higher education include:
- Implementing an income-based repayment plan, while capping loan payments at 5% of annual discretionary income for graduates making less than $25,000 per year
- Offering $10,000 in annual loan forgiveness for public servants
- Doubling the maximum Pell award and removing restrictions for DACA recipients and the formerly incarcerated
- Enforcing the Obama-era borrower defense, which allowed students to have loan debt forgiven if they were defrauded by predatory institutions
- Changing the tax code to exclude student loan debt forgiven under an income-based repayment plan from a borrower’s taxable income
- Investing $750 billion in community colleges over 10 years, paid by changes in the tax code, including capping itemized deductions and repealing the step-up in basis of inherited capital assets
In addition to his own signature policies, Biden has pivoted his position to adopt Senator Bernie Sanders’ College for All proposal, which would make public colleges and universities tuition-free for all families with income below $125,000.
What a Biden presidency might mean for the higher education
Biden’s policies are heavily focused in two areas: nurturing community colleges and implementing stricter regulation on for-profit colleges.
The benefits to community colleges are contingent, to an extent, on whether states choose to participate. As noted above, America’s College Promise requires states to foot a quarter of the bill, which could result in an uneven implementation of the policy. Some states have legislatures that might not be open to covering these costs, while other states might jump at the opportunity to adopt this policy. The policy also creates some additional work for community colleges to ensure their programs are appropriately transferrable.
For-profit colleges can expect treatment similar to that received under the Obama administration. It is also likely that Biden would consider re-implementing gainful employment as previously invented under President Obama. That rule, which applied only to for-profit colleges, penalized programs that graduated students with too much debt relative to those graduate’s typical earnings.
As a whole, if Biden’s legislative goals were to succeed, higher education institutions could expect potential boosts to community college enrollment and funding, as well as a potential decline in for-profit college funding.
President Donald Trump
The incumbent president, along with Secretary of Education Betsy DeVos, has been successful in rolling back many Obama-era regulations. The Trump administration has often targeted higher education with proposed budget cuts, most recently proposing a budget that would have cut $7 billion from the prior year higher education budget. The House and Senate, however, appear poised to pass a budget that includes a $2.5 billion increase to higher education spending.
Aside from budget requests, the Trump administration has also proposed significant changes to the Higher Education Act. Generally, these changes would cut funding to various federal programs and increase opportunities given to for-profit and alternative programs. Among the proposed changes are the expansion of Pell grants to cover credentialing, licensing, certification, or other nontraditional programs for in-demand skills.
President Trump also proposed to refocus the federal work-study program to shift away from on-campus work toward career-oriented jobs that will give college students meaningful work experience, while also cutting $130 million from the program. These two seemingly contradictory positions are part of the Trump administration’s focus on streamlining federal programs. In theory, reducing overall federal work-study participation and focusing on positions that provide more career-oriented opportunities to students could cause the program to be more effective as a whole.
In addition to the above changes, other measures included in the proposed changes to the Higher Education Act call for:
- Establishing parent and graduate student PLUS loan limits
- Creating federal financial aid programs targeted at prisoners eligible for release
- Streamlining the burdensome accreditation process for higher education institutions and refocusing priorities to student outcomes
- Providing additional loan counseling to students and establishing one income-driven repayment plan to cap payments at 12.5% of a borrower’s discretionary income
- Improving capacity and competitiveness of historically black colleges and universities (HBCUs)
The Trump administration has also proposed abolishing the Public Service Loan Forgiveness Program, potentially replacing it with a plan to forgive all undergraduate student loan debt after 15 years, and graduate debt after 30 years. More concrete actions taken by the administration during Trump’s tenure include removing the Obama-era gainful employment regulations that affected for-profit institutions and reversing the Obama-era policy to recognize borrower defense claims for students who feel they were defrauded by certain higher education institutions.
One action that has drawn widespread attention was an executive order authorizing the withholding of federal research grants from schools that block free speech. Though public institutions are required to protect freedom of speech under the first amendment, President Trump’s action came after several high-profile speakers were prevented from participating at scheduled events on multiple campuses by members of the student body.
What a Trump second term might mean for the industry
Trump’s higher education policies are poised to benefit for-profit institutions. For-profit colleges face fewer regulations with the reversal of gainful employment, and the prospect of additional regulations from a Trump administration appears unlikely.
Additionally, by signing the FUTURE Act into law, the Trump administration provided $250 million annually to HBCU and minority-serving institutions. Though it falls short of other policies proposed by Democratic presidential candidates, the FUTURE Act shows the Trump administration is serious about investing in HBCUs.
The elephant in the room is the proposed budget cuts for higher education. Despite assurances that reducing inefficiencies and regulations would make up the cost, cuts to federal financial aid programs could have a potentially negative impact on enrollment at four-year institutions and community colleges.
Based on actions and proposals we have seen so far from the Trump administration, we can see a clear emphasis on reducing regulation. Notably, the administration has also proposed cuts to higher education, with federal financial aid in the crosshairs. Under a Trump administration, for-profit institutions and nontraditional programs such as license, credential, or certification programs stand the most to gain within the higher education sector.
How we can help
Regardless of affiliation, as administrators of higher education institutions, it is your responsibility to properly plan for and address changes. With such a broad field of candidates, there are many opportunities and risks for institutions of all shapes and sizes. It is important to study, analyze, and understand the trends and potential changes proposed by – both candidates. In doing so, remember that no matter the outcome, CLA professionals can help address your pain points and assist your institution in responding to new policies and regulations.