- The Washington Times - Wednesday, March 13, 2019

The White House is considering an executive order that would require colleges to share some of the risk for taxpayer-backed federal student loans, which have a relatively high rate of default, according to people familiar with the matter.

A section in President Trump’s fiscal 2020 budget proposal released this week refers to a “request to create an educational finance system that requires postsecondary institutions that accept taxpayer funds to have skin in the game through a student loan risk-sharing program.”

While the pending executive order isn’t finalized, officials said it could include a provision seeking to make colleges and universities more accountable for the cost of an education. The order is expected to be issued soon.

Presidential adviser Ivanka Trump also is expected to appear at an event Monday that will address reauthorization of the Higher Education Act and college affordability.

The president said at the Conservative Political Action Conference earlier this month that he is preparing to issue an order pertaining to higher education, but he indicated it would deal with his concerns about institutions that restrict free speech.

He highlighted the case of Hayden Williams, a conservative activist who was assaulted while on a recent recruiting trip to the University of California, Berkeley.

“If they want our dollars and we give it to them by the billions, they [have] got to allow people like Hayden and many other great young people…to speak,” the president said. “Free speech. And if they don’t, it will be very costly.”

Student loan debt has climbed from $600 billion in 2008 to about $1.5 trillion in 2018. The Consumer Bankers Association said while 98 percent of private student loans are repaid, government student loans have a double-digit default rate and should be issued with clearer disclosures about the loans’ total costs.

“Greater accountability by colleges and universities should be applauded, but when one in five federal borrowers are delinquent or defaulting, the root cause of the student loan crisis clearly starts at origination,” said CBA Vice President of congressional affairs Kris Fallon. “Currently, the federal government makes about 92 percent of the $1.5 trillion in student loan debt without providing the most basic of loan disclosures like APR and monthly repayments – something supported by 90 percent of recent poll respondents and provided on every bank loan.”

In a January survey of 1,000 registered voters, CBA found 87 percent of Americans voiced concern that student loan debt has exceeded $1.5 trillion, and 90 percent of respondents said borrowers should receive disclosures detailing costs and terms such as monthly payments before taking out an education loan.

Sen. Lamar Alexander, Tennessee Republican and chairman of the Senate Health, Education, Labor and Pensions Committee, has advocated a proposal for colleges to assume financial liability by linking it to a measurement of their graduates’ ability to repay federal loans. That would dovetail with the president’s push to require colleges to disclose their educational outcomes through a sort of “scoreboard.”

The National Association of Independent Colleges and Universities said the average debt per borrower for all bachelor degree recipients at private colleges in 2014-15 was $31,400. The group said much of the collective student debut is due to an increased number of Americans who went to college during the last recession.

“Contrary to public perception, it is not the students with the largest loans who are unable to repay them,” the group said. “Very large loans are most often taken out for professional degrees and are repaid because the borrowers have higher incomes upon graduation. Rather, the borrowers who experience the most difficulty commonly have small (under $5,000) loan balances, and did not complete a certificate or degree program.”

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