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S. 806 (115th): College for All Act of 2017

The skyrocketing cost of higher education is more expensive than ever before. 44 million borrowers owe a cumulative $1.3 trillion in student loan debt, having recently surpassed total credit card debt and auto loan debt.The tax bill the GOP is currently working on would add to this problem by increasing taxes on graduate students.

A bill in Congress, moonshot though it may be, would try to make public colleges completely tuition-free for most families in order to address at least some of the costs associated with higher education.

What the bill does

The College For All Act would aim to make all public colleges and universities tuition-free for anybody making less than $125,000. It would also aim to make community college tuition-free for everybody, at any salary level.

The bill would also lower the student loan interest rate for new borrowers by half, and permit any existing borrower to refinance their existing rate to the current prevailing rate if it’s lower. It would also cap the student loan interest rate at 5 percent for undergraduates and 8.25 percent for post-grads.

While the Congressional Budget Office does not appear to have officially estimated the bill’s costs yet, the sponsors estimate it would cost about $600 billion over the next decade. They plan to pay for it by instituting a 0.5 percent tax on Wall Street stock trades and a 0.1 percent tax on bonds, which more than 30 countries already have.

The legislation was introduced in April as H.R. 1880 in the House by Rep. Pramila Jayapal (D-WA7), and as S. 806 in the Senate by Sen. Bernie Sanders (I-VT).

What supporters say

Supporters argue the legislation is a financial lifeline for what is increasingly seen as a mandatory purchase for job security in the modern economy.

“Our young people are forced to make untenable choices: Going to college and taking on mountains of debt, or foregoing their college degree to work part-time or minimum wage jobs that simply won’t allow them to build a future,” House lead sponsor Rep. Pramila Jayapal (D-WA7) said in a press release.

“The College for All Act renews our compact with our young people,” Jayapal continued. “We’re going to piece back together the broken promises of a broken American Dream, and give back hope and opportunity to the middle class and working families across this country.”

What opponents say

Opponents counter that the plan would raise taxes in the guise of lowering costs, pointing to the famous economic axiom that there’s no such thing as a free lunch.

“Unequivocally no,” President Trump’s campaign’s top economic advisor Sam Clovis said in an interview with Insider Higher Ed when asked about debt-free college. “How do you pay for that? It’s absurd on its surface.”

In fact, Trump’s proposed budget went the exact opposite way of this bill. Currently, the federal government partially subsidizes student loans. This bill would essentially have the government subsidize all of it. Trump’s plan announced in May would subsidize none of it.

Some believe this would actually help drive tuition costs down, since subsidizing loans means that more students can afford to attend college, which removes colleges’ biggest incentive to lower the actual tuition rate: potential declining enrollment. Some research has determined that subsidized loans increase tuition more than other forms of student aid.

Odds of passage

This bill isn’t going anywhere during this current Congress, but is intended more as a template for future Democratic politicians, perhaps as soon as after the 2020 presidential election.

But it could also serve as a template for action in the states, which isn’t as farfetched as it may seem. In April, New York became the first state to make all public universities tuition-free for residents. Also, at least four states have made community college free for residents recently, including Tennessee where the idea was actually championed by Republican Gov Bill Haslam.

The House version has attracted 37 Democratic cosponsors and awaits a vote in the Education and the Workforce Committee. The Senate version has attracted seven Democratic cosponsors and awaits a vote in the Health, Education, Labor, and Pensions Committee.

Last updated Nov 19, 2017. View all GovTrack summaries.

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Apr 3, 2017.

College for All Act of 2017

This bill amends the Higher Education Act of 1965 (HEA) to establish a grant program to eliminate tuition and required fees: (1) for all students at community colleges and two-year tribal colleges and universities, and (2) for working- and middle-class students at four-year public institutions of higher education (IHEs).

Additionally, the bill amends title IV (Student Assistance) of the HEA to:

reauthorize the Federal TRIO Programs, the Gaining Early Awareness and Readiness for Undergraduate Programs (i.e., GEAR UP), and the Federal Work Study Program for FY2018-FY2027; eliminate existing base guarantees of Federal Work Study funds to IHEs and require funds to be allocated based solely on the aggregate need of the institution's students; modify the interest rate formulas for federal student loans to revise applicable rates on new loans disbursed on or after July 1, 2017; and allow student loan borrowers to modify interest rates on outstanding federal student loans to current rates. Finally, it directs the Department of Education to use any excess revenue generated by the Federal Direct Loan program to carry out the Federal Pell Grant program.