Us Congress House Bill HB713

Us Congress 2025-2026 Regular Session

• Introduced: 1/23/25
• Refer: 1/23/25

Caption

Preventing Financial Exploitation in Higher Education Act

Impact

The implications of HB 713 are significant for state laws, as it seeks to hold educational institutions accountable for their students' loan repayment behaviors. This legislation is expected to encourage institutions to focus on improving their support systems for student borrowers to prevent defaults and delinquencies, potentially leading to changes in tuition pricing strategies and financial aid offerings. In addition to direct financial penalties, the bill may prompt educational institutions to enhance academic and financial counseling services to help students manage their loan repayments more effectively.

Summary

House Bill 713, titled the 'Preventing Financial Exploitation in Higher Education Act', aims to impose financial penalties on institutions of higher education with high rates of students defaulting or becoming delinquent on their federal student loans. The bill specifically targets institutions characterized as 'covered', which are defined as those with an endowment fund totaling $2.5 billion or more. Under this legislation, such institutions are required to pay penalties proportional to their cohort default, delinquency, and underpayment rates for each fiscal year. The penalties increase progressively based on the severity of the rates, starting from fiscal year 2025.

Contention

Notable points of contention surrounding the bill include concerns from higher education advocates about the fairness of penalizing institutions for factors beyond their control, such as broader economic conditions affecting students' ability to repay loans. Critics argue that high default rates may not necessarily reflect the quality of education provided but rather the socioeconomic challenges faced by students. Furthermore, there is apprehension that the implementation of such penalties could disproportionately affect institutions with large populations of low-income students, leading to unintended negative consequences on educational access and affordability.

Congress_id

119-HR-713

Policy_area

Education

Introduced_date

2025-01-23