Student Loan Debt Forgiveness | Why There’s No Easy Solution

After Friday’s Supreme Court decision affirmed the lawsuits that challenged the legality of the Biden Administration’s loan forgiveness program, it appears that the Biden Administration was prepared to lose their legal appeal. Later that day, President Biden announced that he will create a new loan forgiveness program based on a law different than the HEROES Act. The new law with the legal authority for the Secretary of Education to utilize to forgive student loan debt appears to be the original Higher Education Act of 1965 as amended.

It doesn’t surprise me that the Biden Administration is “working on a new proposal” since the 2024 presidential elections are next year. It’s a great political strategy to keep the student loan debt forgiveness issue present in the minds of your targeted voters and look like you’re the hero trying to resolve the problem instead of working with Congress for a bi-partisan solution that some of them may not like.

It’s clear to me that the Biden Administration doesn’t believe it will ever resolve the “student loan debt balance problem” by working with Congress. The spirit of Congressional bipartisanship doesn’t appear to apply to the field of higher education in recent years. The Higher Education Act has not been reauthorized by Congress since 2008. Reauthorization is not on President Biden’s agenda nor the Senate’s.

How did our country get into this mess? I decided to review the history of federal programs that provided funding to college students. I commented about a few of these programs as well as a few other events that occurred during the period from World War II to the present.

You can’t discuss programs that provide funding to college students without including The Servicemen’s Readjustment Act (GI Bill) passed during World War II. The purpose of that bill was to avoid the protests of unemployed veterans returning home from the war similar to those that happened after World War I. The GI Bill not only provided World War II veterans for funds for a college education or workforce training, but it also provided unemployment insurance and housing benefits. See my summary overview below.

1944 – The Servicemen’s Readjustment Act (GI Bill)

  • Provided WWII veterans with funds for college education, unemployment insurance, and housing.
  • Put higher education within the reach of millions of veterans of WWII and later military conflicts.
  • Within seven years, eight million vets received education benefits including 2.3 million for college. The number of degrees awarded by all colleges and universities doubled between 1940 and 1950.
  • 5 million vets received school training and 3.4 million received OTJ training.
  • First version of the GI Bill expired at end of 1956. Congress estimated that income tax increases resulting from wage increases due to the servicemembers’ education and training more than repaid the $14 billion expended.

Shortly after the expiration of the original GI bill, the Soviet Union launched its first earth-orbiting satellite, Sputnik. Congress worried that our education system was not producing enough scientists and engineers to win the Cold War. There had been strong resistance to federal aid to higher education, but Alabama Democrat Senator Lister Hill believed if an education bill was called a defense bill, a federal student aid bill might pass. The Senate’s focus was on using federal funds as grants for students to attend college. The House believed that college education grants were socialistic and refused to vote for grants. When the House won the loans vs. grants debate, the rest of the Senate bill passed. See my summary overview below.

1958 – National Defense Education Act

  • Passage spurred by Soviet launch of Sputnik.
  • Established legitimacy of federal funding of student loans.
  • Made substantial funds available for low-interest student loans called National Defense Student Loans (NDSL).
  • These loans required a monetary match from institutions.
  • The Act helped expand college libraries and other student services.
  • Funding began in 1958.
  • By 1960, there were 3.6 million students in college vs. 1.5 million in 1940 (pre-WWII).
  • By 1970, there were 7.5 million students in college.

As part of President Lyndon B. Johnson’s (LBJ) Great Society domestic agenda, the Higher Education Act of 1965 (HEA) was signed into law on November 8, 1965. LBJ wanted to strengthen America’s colleges and provide financial assistance to colleges and college students. Financial assistance for students was included in Title IV of the HEA. See my summary overview below.

1965 – Higher Education Act (HEA)

  • Successor to National Defense Education Act
  • Title IV of the Act authorized financial aid to students including grants, loans, work-study, and rules for financial aid need analysis.
  • Guaranteed Student Loans (GSL) were created. This was a public-private partnership with the federal government subsidizing capital from private banks for low- and middle-income students.
  • 3.97 million students were enrolled at public institutions.
  • 1.95 million students were enrolled at private institutions.
  • 5.92 million students were enrolled overall in colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 12.0% male
    • 7.1% female

The Higher Education Act was constructed to sunset every few years unless Congress voted to reauthorize it. The first reauthorization was in 1968. There were no significant amendments to that year’s amendment.

The second reauthorization of the HEA occurred in 1972. There were several notable changes including the creation of Title IX. Title IX may be best known for its impact on college sports, but it also impacted admissions decisions to professional programs that did not admit women. See my summary overview below.

1972 – Higher Education Amendments of 1972 – Second Reauthorization

  • Title IX was added – prohibited sex discrimination in any program or activity at institutions receiving federal financial aid. Most known for its impact on college sports requiring an equal number of female/male participants on teams.
  • Basic Education Opportunity Grant created, provided direct monetary assistance to students.
  • Student Loan Marketing Association (SLMA, later Sallie Mae) created to add liquidity to the GSL program by buying loans from lenders to add more capital.
  • For-profit schools allowed to participate in Title IV.
  • 7.07 million students were enrolled at public institutions – +3 million in 7 years.
  • 2.14 million students were enrolled at private institutions – +20,000 in 7 years.
  • 9.21 million students were enrolled overall in colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 15.4% male
    • 9.0% female

I graduated from high school in 1972. That fall, I attended Duke University and was the recipient of several scholarships as well as a $600 National Defense Student Loan. A $600 work-study grant was also included in my financial aid package. The interest rate on the loan was three percent per annum and interest did not begin to accrue until six months after I ceased to attend college. A year later, in 1973, I was awarded a Basic Education Opportunity Grant of $1,000 as part of my overall financial aid package which included a new NDSL of $600 as well as a work-study grant of $600. My scholarships and loans covered tuition and my dorm room cost. My summer jobs and work-study grant covered books and supplies and other incidental costs. My parents paid for Duke’s dining plan. When I graduated from Duke in December 1975, my student loans aggregated $2,100. Because I attended graduate school in August of 1976, my student loans repayment (and interest accrual) was deferred. See my summary overview below of the estimated cost of attendance at Duke my senior year (source: Duke undergraduate catalog, 1975-76).

1975-76 Personal Snapshot

  • 1975-76 Duke University undergraduate
    • Tuition – $2,780
    • Room and board – $1,244
    • Estimated books & supplies – $200
    • Total cost of attendance – $4,224

The HEA was reauthorized for a third time in 1976. Senator Claiborne Pell of Rhode Island sponsored the bill. Four years later, the Basic Education Opportunity Grant was renamed the Pell Grant to honor his support of the BEOG program. See summary overview below.

1976 – HEA Reauthorized – Third Reauthorization

  • Extended and increased the cap of the Basic Education Opportunity Grant program from $1,400 per year to $1,800 per year.
  • Encouraged states through financial incentives to establish state lending agencies for student loan administration.
  • 8.65 million students were enrolled at public institutions.
  • 2.36 million students were enrolled at private institutions.
  • 11.01 million students were enrolled overall at colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 18.6% male
    • 11.3% female

In 1978, Harvard University increased its tuition by 10 percent. In a December 1978 New York Times article, the university’s treasurer expressed his concern that the high tuition might price out students from middle income families, leaving only the very rich and the poor. The treasurer pointed out that student loans were being utilized in increasing amounts to pay for Harvard’s high tuition. Evidently, his concern was not heeded as Harvard increased its tuition by an average of eight percent annually for the next decade. Other elite colleges and universities followed Harvard’s lead.

In 1980, the HEA was reauthorized again. The Parent PLUS loan program was created to help high asset (homeowners) families create liquidity to cover their expected family contribution to their child’s education. See overview below.

1980 – HEA Reauthorized – Fourth Reauthorization

  • The Parent Plus Loan program was added to help high asset families who needed liquidity to cover their expected family contribution.
  • Basic Education Opportunity Grants were renamed Pell Grants.
  • 9.46 million students were enrolled at public institutions – +5.5 million in 15 years.
  • 2.64 million students were enrolled at private institutions – +.5 million increase from 1972 due to enrollment growth at for-profit institutions.
  • 12.0 million students were enrolled overall at colleges and universities.
  • The percentage of Americans who earned a four-year degree or more:
    • 20.9% male
    • 13.6% female
  • The average student loan debt balance at graduation – $3,900.

The reauthorization of the Higher Education Act in 1986 created an extensive number of amendments to bill language as well as clarifications and adjustments to funding programs. Notably, Pell Grants were approved for annual increases over the reauthorization period, and Title III was amended to authorize additional funding to Historically Black Colleges and Universities as well as other minority-serving institutions.

1986 – HEA Reauthorized – Fifth Reauthorization

  • Pell Grants increased from $2,300/yr in FY87 to $3,100/yr in FY91.
  • Amended Title III further defining minority serving institutions and authorizing funding from Secretary of Education to institutions and to grad students at these institutions.
  • Added provisions prohibiting students in default under GSL from receiving new federal loans.
  • Income contingent direct loan demonstration project initiated.
  • 9.71 million students were enrolled in public institutions.
  • 2.79 million students were enrolled in private institutions.
  • 12.5 million students were enrolled overall in colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 23.2% male
    • 16.1% female
  • The average student loan debt balance at graduation – $5,200.

1987 – The Bennett Hypothesis

As Congress continued to reauthorize the HEA, the numbers of students attending and graduating from colleges and universities grew as well. Not everyone was convinced that providing a generous student loan program to fund a college education was creating the right incentives for colleges.

President Reagan’s Secretary of Education, William Bennett, penned an opinion piece in the New York Times in October of 1987 titled “Our Greedy Colleges” that included his hypothesis that every year that Congress raised financial aid benefits (for the past six years at the time), colleges raised tuition at rates that far outstripped the increases in financial aid.

Secretary Bennett noted that Federal outlays for student aid had increased 57 percent since 1980 while inflation had increased just 26 percent during the same period. Tuition increases during the same period had far outstripped inflation. According to Secretary Bennett, “higher education is not underfunded. It is under-accountable and under-productive.”

Despite the warning from Secretary of Education Bennett, in 1992, Congress reauthorized the HEA and continued to increase loan caps as well as created an unsubsidized (interest) Stafford loan program. See my summary overview below.

1992 – HEA Reauthorized – Sixth Reauthorization

  • Authorization of a new loan program, the unsubsidized Stafford Loan program.
    • Eligibility not dependent on need.
    • Interest accrues while student is in school.
  • Loan caps were increased for all loans and annual and aggregate loan caps were removed for PLUS programs.
  • 11.38 million students were enrolled in public institutions.
  • 3.1 million students were enrolled in private institutions.
  • 14.48 million students were enrolled overall in colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 24.3% male
    • 18.6% female

Changes not submitted in time for the 1992 reauthorization were included in the Omnibus Budget Reconciliation Act of 1993. Most of these changes related to the Direct Loan program.

1993 – Omnibus Budget Reconciliation Act

  • Called for phasing in of Direct Loan program to begin in 1994.
  • Established Income Contingent Repayment, Extended Repayment Plan, and Graduated Repayment Plan for Direct Loan Borrowers.

By 1994, the practice of tuition discounting was becoming popular enough that economist David Breneman published a book, Liberal Arts Colleges – Thriving, Surviving, or Endangered, which detailed the strategy of tuition discounting at length. The strategy was simple. Small colleges would artificially inflate their tuition (list price) and grant merit scholarships designed to yield a targeted enrollment. The theory was that by offering tuition discounts in the form of merit scholarships, small colleges could attract more academically qualified students.

Jones International University opened as the first fully online university in 1996. That year, the Alfred P. Sloan Foundation funded the creation of the Sloan Consortium to study the effectiveness of teaching online courses and programs.

1996 Snapshot

  • 11.12 million students were enrolled at public institutions.
  • 3.25 million students were enrolled at private institutions.
  • 14.37 million students were enrolled overall at colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 26.0% male
    • 21.4% female
  • The average student loan balance at graduation – $12,750.

The increasing number of students enrolling in online programs was the stimulus for a provision in the next reauthorization that created a demonstration program for online education being eligible for Title IV funding. See my summary overview below.

1998 – HEA Reauthorized – Seventh Reauthorization

  • Distance Education Demonstration Program authorized.
  • 11.14 million students were attending public institutions.
  • 3.17 million students were attending private institutions.
  • 14.31 million students were enrolled overall in colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 25.5% male
    • 22.4% female
  • The average student loan balance at graduation – $14,590 (vs. $5,200 in 1986).

By 2000, tuition discounting by colleges had become so prevalent that the National Association of College and University Business Officers’ (NACUBO) Accounting Principles Council issued Advisory Report (AR) 2000-05, Accounting for Scholarship Discounts and Allowances to Tuition and Other Fee Revenues by Public Institutions of Higher Education. Institutional aid had to be reported as revenue discounts, not expenditures. The advisory created an alternate method of estimating and allocating the discount. NACUBO began tracking the average tuition discount percentage through an annual voluntary survey of institutions.

University of Pennsylvania Professor Robert Zemsky, Stanford University Professor Emeritus William Massy, and Great Lakes Colleges Association Director of Program Development Gregory Wegner published their book, Remaking the American University: Market-Smart and Mission-Centered, in 2005. They discussed the college and university “arms-race” for new students as well as the influence of U.S. News & World Report College Rankings (started in 1983) on the higher education market. The authors also wrote that faculty had distanced themselves from students to focus on research, driving up the hiring of administrators to complete activities (like academic advising) previously handled by faculty. This “administrative bloat” increased overall costs.

Zemsky and his co-authors wrote that “the genie is out of the bottle” and there was no answer for those who want to put it back. Instead, they recommended that institutions focus on quality, expand access to higher education, and be held accountable for learning outcomes.

While the decline in bi-partisan agreement on amendments to the HEA delayed the frequency of HEA reauthorizations, there was enough agreement in early 2006 to pass a few key amendments to the HEA in lieu of a full reauthorization process. See my summary overview below.

2006 – Higher Education Amendments of 2005

  • Federal Grad Plus Loan Program initiated.
    • Virtually NO LIMITS on borrowing
  • Distance Education Demonstration Program ended and ”50/50” rule for online education eliminated.
  • 13.18 million students were attending public institutions.
  • 4.58 million students were attending private institutions.
  • 17.76 million students were enrolled overall in colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 29.2% male
    • 26.9% female
  • The average student loan balance at graduation – $26,900 (vs. $5,200 in 1986).

George W. Bush is remembered for sending our troops to Afghanistan and Iraq after the September 11, 2001, terrorist attacks at the World Trade Center and Pentagon. However, during his tenure, the 2005 Amendments to the Higher Education Act were passed as well as the Post-9/11 Veterans Educational Assistance Act of 2008, and the 2008 HEA reauthorization. Who knew that 2008 would be the last year the HEA would be reauthorized? Clearly, the disagreements between the parties since then have been so substantial that bipartisan “compromises” have not been possible. See my summary overviews below.

Post-9/11 Veterans Educational Assistance Act of 2008

The purpose of the Post-9/11 bill was to expand veterans’ educational benefits to a level commensurate with the benefits that the original GI Bill extended to veterans after World War II. The main provisions of the act included:

  • Funding 100 percent of the cost of a four-year public university education for any veteran who served at least three years on active duty since September 11, 2001.
  • Housing allowances were based on the cost of living of the zip code of the institution attended.
  • Also provides the ability for a veteran to transfer the benefits to a spouse or dependent after serving (or agreeing to serve) ten years.
  • The Yellow Ribbon program provides for a 50/50 (government/university) cost share for the “excess” cost of a participating private university over a public university for veterans deciding to attend private universities.
  • The bill was modified several times after its initial passage to fix issues that surfaced after the initial bill was signed.

2008 – HEA Reauthorized – Eighth Reauthorization

  • Act sought to streamline the FAFSA to make it easier to apply for federal aid.
  • Required all colleges to provide Net Price Calculators and the DoE to post more information on its College Navigator website including warnings for the colleges with the largest tuition increases.
  • Set new standards for distance ed oversight & credit transfer.
  • 13.97 million students were attending public institutions.
  • 5.13 million students were attending private institutions.
  • 19.1 million students were enrolled overall at colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 30.1% male
    • 28.8% female
  • The average student loan balance at graduation – $23,300.

The Great Recession – 2008-2009

With corporate and individual income taxes declining because of the Great Recession (late 2007 through 2009), states had to cut appropriations to higher education during and after the recession to make up for lost tax revenues. Many state colleges and universities raised tuition to offset the declines in appropriations. Net tuition (cost to students) increased as a result and the per student state funding has not recovered a decade and a half later.

Almost immediately after his inauguration, the Obama Administration actively began to change higher education regulations through the negotiated rule-making process. If panels of interested parties represented a diverse perspective of interests, the Department could propose its own rules when the panels did not reach an agreement on outlined changes. Given the lack of Congressional bi-partisanship agreement on higher ed policies, the DoEd was the primary source of regulatory changes during the eight years that Obama was president. See my summary overview below.

2010 Snapshot

  • Enrollment in higher education reaches its all-time high.
  • Gainful employment rules were proposed by Department of Education.
  • 15.14 million students were attending public institutions.
  • 5.88 million students were attending private institutions.
  • 21.02 million students were enrolled overall in colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 30.3% male
    • 29.6% female
  • The average student loan balance at graduation – $24,200.

In 2011, Harvard Business School professor Clayton M. Christensen and BYU-Idaho administrator Henry Eyring published Innovative Universities. One of their premises was that nearly all colleges and universities aspire “to be like Harvard” but only five percent are capable. Christensen and Eyring predicted that online education would disrupt higher education because (a) the cost of online education is half of traditional universities, (b) online universities can offer class starts monthly or more frequently to meet the needs of working adults, and (c) online universities can measure learning outcomes more effectively.

Christensen and Eyring pointed out that the 2008 economic downturn exposed the high cost of traditional higher ed, and students embraced alternatives like community colleges, for-profit colleges, technical institutes, and online universities. They recommended that traditional universities embrace learning innovations made possible by new technologies.

2014 Snapshot

  • The percentage of women in America who earned a four-year degree or more exceeded the percentage of men who had earned a four-year degree for the first time ever:
    • 31.9% male
    • 32.0% female
  • 14.65 million students were attending public institutions.
  • 5.55 million students were attending private institutions.
  • 20.2 million students were enrolled overall at colleges and universities.
  • The average student loan balance at graduation – $28,650.

A Department of Education initiative to provide prospective students and their families with more consumer-oriented information about the costs of college as well as the average salaries earned by graduates was launched by the Department of Education in 2015. Salary data was obtained through a cross-department agreement with the Internal Revenue Service. Due to data privacy concerns of the IRS, salary information for programs with fewer than 60 graduates over the past two years was not released. For that reason, many degree programs have no published earnings data. See my summary overview below.

2015 – College Scorecard Launched

  • Department of Education initiative to provide more transparent consumer information about colleges and universities.
  • Enrollment data
  • Earnings and debt by degree program
  • Costs of attendance
  • Completion rates
  • Weakness #1 – only reports data for student borrowers.
  • Weakness #2 – only reports program data for programs with 60 or more graduates over two years.

Another product created by the Obama Administration’s negotiated rule-making process was the Borrower Defense to Repayment (BDTR) regulations. More than 10,000 comments were received on proposed rules which were to go into effect on July 1, 2017. The Trump Administration delayed the implementation and created its own rules that went into effect on July 1, 2020. Not satisfied with the Trump Administration’s “watered down” regulations, the Biden Administration opened another negotiated rule-making session to create “stronger” rules.

2016 – Borrower Defense to Repayment Rules

  • Basis for borrower defenses was in statute since mid-1990’s.
  • Enables students who have been defrauded by an institution to have their federal student loans forgiven.
  • Provision seldom used.
  • After a contentious rule-making process, proposed regulations were issued in June 2016 to go into effect on July 1, 2017.
  • Trump Administration delayed implementation and issued new regulations that went into effect on July 1, 2020.

2020 – COVID-19 Pandemic

There were multiple bills passed by Congress to address the economic impact of the coronavirus. Each of these provided funding to institutions of higher education.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act

Included a Higher Education Emergency Relief Fund (HEERF I) that provided more than $14 billion in relief funding to higher education. $6 billion of the funding was required to be distributed to students in the form of emergency grants.

The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 provided $22.7 billion for institutions of higher education (HEERF II).

The American Rescue Plan (ARP) provided an additional $39.6 billion in support to institutions of higher education (HEERF III). These funds can be utilized provided they are spent by June 30, 2024.

The 90/10 rule was put into place when for-profit institutions were granted eligibility to apply to participate in the federal student aid programs. The rule was originally the 85/15 rule and required for-profit institutions to receive at least 15 percent of their revenue funding from sources other than federal student aid funds. As tuitions increased, the rule was changed to 90/10. When very large for-profits such as the University of Phoenix and Ashford University were able to increase enrollments of students using 100 percent federal student aid by enrolling soldiers who used GI Bill funding and active duty tuition assistance funds, the Democrats began calling the benefits funding a “loophole” and looked for opportunities to change the law (something they determined they could not do through negotiated rule-making).

In the American Rescue Plan Act of 2021, the Moran Carper Amendment removed the “loophole” by calling for inclusion of GI Bill (VA) funds and Tuition Assistance (TA) funds in the 90 percent numerator. It also called for negotiated rulemaking to determine the appropriate calculation methodology. With the Biden Administration controlling the negotiated rule-making process, every form of federal government tuition benefits was included in the 90 percent calculation assuring the Democrats that no “loophole” exists for the for-profit industry to be able to satisfy the 90/10 calculation.

Notably, the 90/10 calculation has practically prevented most for-profits from cutting tuition over the years as loan caps increased to the point where the loan cap met or exceeded the total tuition and fees charged. Cutting tuition below the federal loan caps would allow students to borrow more and not result in additional cash contributions that would increase the 10 percent portion of the formula.

2021 – American Rescue Plan Act of 2021 – Moran Carper Amendment

  • Democrats changed a long-standing rule put in place when for-profit schools were made eligible for federal financial aid. The 90/10 rule meant that no more than 90 percent of a student’s college funding could be received from federal aid (Title IV) sources. Democrats seized a short-term opening in their legislative majority after Biden’s election and voted to include Veterans benefits, active-duty tuition benefits, and tuition benefits to every federal tuition reimbursement program fathomable as now included in the 90 percent calculation.
  • The 90/10 rules don’t distinguish between lower tuition institutions that are attractive options for students, and higher tuition institutions that receive higher cash payments since their tuition exceeds student loan caps.

 2021 Snapshot

  • 12.8 million students were attending public institutions.
  • 4.5 million students were attending private institutions.
  • 17.3 million students were enrolled overall in colleges and universities.
  • The percentage of Americans who had earned a four-year degree or more:
    • 36.6% male
    • 39.1% female
  • The average student loan balance at graduation – $31,100
  • Representative median debt for:
    • Med school grads (Michigan State) – $228,393
    • Law school grads (George Mason) – $121,831
    • Dental school grads (Ohio State) – $194,757
    • Pharmacy school grads (Oklahoma University) – $139,667
    • Rehabilitation grads (PT) UMD-Balt) – $98,380
    • Is a Graduate Degree Worth the Debt? Check It Here

It doesn’t require a college degree to see the evidence that college attendance costs increased at rates much higher than family incomes over the past four-and-a-half decades. I inserted the cost of attendance for my senior year at Duke in 1975-1976 to compare to Duke’s current costs. Those increases are likely comparable to any other highly selective college or university. The summary overview is below.

2022 – Personal Snapshot

  • 2022-23 Duke University vs. 1975-76
    • Tuition – $62,941 vs. $2,780
    • Room and board – $18,166 vs. $1,244
    • Estimated books & supplies – $3,410 vs. $200
    • Total cost of attendance – $84,517 vs. $4,224
  • Duke cost of attendance increased 20X since 1976, during the same period the Median Family Income increased 5.7X.

The demands for skills training leading to attractive employment options has triggered a call for increases in options like apprenticeships. Apprenticeship funding has been closely aligned with labor unions for decades. The National Apprenticeship Act of 2023 did not get out of the House of Representatives (see summary overview below). The Senate has a similar bill, the American Apprenticeship Act that is currently sitting in the Health, Education, Labor, and Pensions Committee. It is unlikely that there is bi-partisan agreement that would lead to passage of either of these bills in their current form.

2023 – National Apprenticeship Act of 2023 proposed, not passed out of Education and Workforce Committee

  • Currently, operating under NAA of 1937
  • Codifies standards and regulations
  • Codifies DOLs Office of Apprenticeships
  • Strengthens connections between DoEd and DOL
  • Goal – one million new programs over next five years
  • New act proposes to increase funding for:
    • Registered apprenticeships
    • Youth apprenticeships
    • Pre-apprenticeships

 Federal Coronavirus aid to colleges and universities masked some of the demographic shift impact. The number of high school graduates will reach a demographic low in 2026. With remaining COVID aid funds expiring after June 30, 2024, several large state flagship universities have announced significant budget deficits that they have to resolve.

In March, Gordon Gee, president of WVU, announced:

  • Over next 10 years, WVU enrollment will decline by 5,000 students.
  • $75 million in expenses will have to be eliminated.
  • Programs and positions that serve students effectively will be prioritized; rest are up in the air.

The State Higher Education Executive Officers Association expects more state flagships to follow suit. Among those that have publicized future deficits:

  • Rutgers faces a $125M deficit.
  • Penn State projects a $150M deficit.
  • University of Nebraska projects a $50M shortfall.

What does the higher education business environment look like at this point in 2023?

  • Student loan debt totals $1.7 trillion.
  • Biden debt forgiveness programs do not solve the problem of college affordability, college degree completion, or college graduate employability. There is likely no legal statute that supports the blanket loan forgiveness that the White House wanted to enact without Congress’ approval.
  • Tuition discounting for small colleges is at an all-time high at an average of 56.2% for college freshmen. Only colleges with large endowments can afford discount rates higher than that over the long run.
  • Traditional four-year college degrees do not provide skills required by employers.
  • The numbers of companies as well as government entities that have reduced the “bachelor’s degree requirement” for jobs continues to increase.
  • High school vocational education needs to be rebuilt. We must change the “everyone needs to go to college” mindset.
  • K-12 education outcomes are a disaster. Most recent NAEP scores show continuing declines in math and reading proficiencies.
  • Colleges compete with free content – OER, MOOCs. Pressure on tuition and other fees will continue for all but the most elite colleges and universities.
  • The Federal budget deficit is at an all-time high. New programs must compete with incumbent programs for funding.
  • ”You don’t have to learn how to program AI, you have to learn how to use it.”
  • World Economic Forum 2023 Future of Jobs Report predicts that globally, AI will create 70 million new jobs by 2027, and 83 million jobs will be eliminated.
  • ChatGPT and other generative AI tools will force higher ed curriculum to change. Employers will expect college graduates to be familiar with AI Tools. Many front-line jobs will be eliminated.

After creating this historical timeline of legislation, events, and rulemaking, I believe that it’s evident that Congress has been complicit in creating student loan programs and supporting them for years before they passed the Higher Education Act of 1965. When new programs were added in subsequent reauthorizations, Congress authorized increased annual caps on loans or eliminated those caps altogether. Fixing the system will require eliminating loan programs, implementing loan caps on the Parent and Graduate Plus programs, and increasing the cap on annual Pell Grants. There is not a current proposal in Congress to fix the existing system nor will there be legislative proposals that will improve the affordability issue anytime soon. President Biden is running for re-election in 2024. Any bi-partisan initiative will be viewed as an unnecessary compromise by his party as well as the Republicans.

In recent years, Democrat Presidents occupying the White House have mastered the art of implementing regulatory changes without legislation. If the Biden Administration believed that they could implement a loan forgiveness program through negotiated rulemaking, the rule-making process would have occurred already.

When I wrote about the Biden Loan Forgiveness Proposal nearly a year ago, I listed nine issues that needed to be resolved. One of those issues was “these may be great ideas but appear to me to go beyond what the Executive branch of the federal government is entitled to do. Will they survive legal challenges?” We know that answer (for now).

Students are the biggest victims of our current federal student aid system, particularly when the bulk of their college funding options are loans. If the current system continues to operate due to legislative gridlock, colleges that depend on lower-and-middle-income students will suffer the consequences when those students flock to more affordable alternatives.

The GI Bill, National Defense Education Act, and Higher Education Act of 1965 (including its reauthorizations) are responsible for the growth of higher education from 1940 to the present. The increases in the number of people as well as the percentage of our population with college degrees expanded our economy substantially. Only time will tell if free markets or government policy changes will take us to the next level.

Subjects of Interest


Higher Education

Independent Schools


Student Persistence