Student Bar Association: A statement on the PROSPER Act

February 2018

In early December, Rep. Virginia Foxx of North Carolina introduced a bill titled "the Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act." A modified reauthorization of the Higher Education Act of 1965, the PROSPER Act would radically constrict the funding options available to prospective students, as well as their post-graduation options.

First and perhaps most alarmingly, the proposed bill would in essence eliminate the Public Service Loan Forgiveness program for new borrowers. The Public Service Loan Forgiveness program allows a graduate who spends ten years working for a certified nonprofit or government agency and who makes regular income-based payments to have the remaining balance of the loan forgiven. This program is essential to incentivize students to work in relatively low-paying but invaluable career fields such as rural medicine, social work, government, public education, low-income legal assistance organizations like Colorado Legal Services, and public defenders' offices. According to FedLoan Servicing, close to 740,000 graduates self-reported their reliance on the Public Service Loan Forgiveness program in 2017. While our Congress ought to be encouraging more students to pursue public service, its passage of this bill would do the exact opposite.

Under the terms of the bill, the income-driven repayment option required to qualify for student loan forgiveness would be unavailable to borrowers who begin taking out student loans in 2019, rendering it impossible for them to establish eligibility for the program. Starting in the 2019-2020 academic year, new students wishing to pursue a career in public service will be unable to do so for financial reasons.

In addition, the bill will eliminate federally subsidized Stafford loans, which defer interest while students with financial need are attending school. Under the new system, all federal loans will be unsubsidized, which means interest on the loans will accrue while students are attending school. According to the National Student Loan Data System, 29.5 million students received subsidized Stafford loans in 2017. This bill would force these millions of deserving students to either forego higher education because of the increased debt obligations or to leave school with substantially more debt.

Moreover, the proposed changes would establish caps on federal student loans, forcing students to turn to private student lenders. A student who is unable to pay for his or her education within the federal loan cap will be forced to either seek out private lenders for loans with unreasonably high interest rates or forgo higher education altogether.

In sum, the PROSPER Act would be devastating to the future of Colorado by constricting prospective students' ability to attend, by limiting students' post-graduation employment options, and by increasing the debt carried by graduates. We wholeheartedly oppose this bill and ask that you vote against it so as to maintain educational opportunities for all of Colorado's students.