H.R.713 - Preventing Financial Exploitation in Higher Education Act (119th Congress)
Summary
H.R.713, the "Preventing Financial Exploitation in Higher Education Act," aims to hold institutions of higher education accountable for student loan defaults, delinquencies, and underpayments. It introduces financial penalties for institutions with high percentages of students in these categories, particularly those with large endowments. The bill also increases the tax on net investment income for certain educational institutions that increase tuition.
Expected Effects
The bill would likely lead to increased scrutiny of student loan outcomes at wealthier universities. These institutions may face pressure to improve student loan repayment rates or risk financial penalties. Additionally, universities might be more cautious about raising tuition to avoid increased taxes on their endowments.
Potential Benefits
- Could incentivize institutions to provide better financial counseling to students.
- May lead to lower tuition increases at some universities.
- Could reduce the burden on taxpayers by shifting some of the financial responsibility for student loan defaults to institutions.
- May encourage institutions to be more selective in admissions or to provide more support to students at risk of default.
- Could improve student loan repayment rates overall.
Most Benefited Areas:
Potential Disadvantages
- May disproportionately affect institutions serving a higher percentage of low-income students, even if they have large endowments.
- Could lead to institutions reducing financial aid or increasing tuition for some students to offset the penalties.
- May create an incentive for institutions to avoid enrolling students perceived as high-risk for default.
- The increased tax on endowments could reduce funds available for scholarships or other educational programs.
- The complexity of the calculations for penalties and tax increases could create administrative burdens for institutions.
Constitutional Alignment
The bill's focus on higher education and taxation falls under the purview of Congress's power to provide for the general welfare (Article I, Section 8). The bill does not appear to infringe upon any specific constitutional rights. However, the equal protection implications of targeting institutions with large endowments could be raised, though such classifications are generally subject to rational basis review.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).