Academic journal article Journal of Developmental Education

Proposed PROSPER Act Could Cause Colleges Financial Duress: Feedback Needed

Academic journal article Journal of Developmental Education

Proposed PROSPER Act Could Cause Colleges Financial Duress: Feedback Needed

Article excerpt

A proposal included in the House bill to reauthorize the Higher Education Act has the potential to have a large impact on colleges' financial resources. Under the "PROSPER" Act (H.R. 4508), colleges would have to return a larger share of financial aid granted to students if they do not complete a term or academic period. The American Association of Community Colleges (AACC) is gathering data to determine just how costly the new "risk-sharing" proposal might be to institutions.

The AACC plans to make a case to Congress regarding the extent of hardship member colleges would experience using data submitted by colleges across the nation. Therefore, the organization needs information from institutions regarding how the new requirements would affect them. The PROSPER Act makes current "Return of the Title IV" procedures more costly, especially to community colleges. PROSPER guidelines expand the percentage of returned funds by requiring additional federal money be returned for students who withdraw earlier in a semester. Supporters of the act state that it will augment colleges' efforts to improve college completion. However, institutions may elect to change their admissions policies to accomplish the completion agenda if faced with returning a larger portion of aid income after enrollment.

A central premise of the bill's institutional refund/risk-sharing policies is the idea that a student "earns" federal financial aid funds. All funds not earned in alignment with the new guidelines would have to be returned to the sponsoring federal agencies by the college. Specific stipulations include the following:

* Title IV aid would be earned by students in 25% increments based on completion of corresponding periods of enrollment. That is, if a student fails to complete 25% of an enrollment period, he or she would earn zero federal student aid. The college would have to return all of that student's Title IV aid for that period. For a student who completes 25% of the semester and then withdraws, 75% would be returned. …

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