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S. 2124: Skin in the Game Act

If a student defaults on their college loans, who should pay — the student or the educational institution itself?


College is more expensive than ever. Student loan debt now totals $1.47 trillion and still rising, more than the total of credit card debt or auto loan debt.

And more and more students are defaulting. Last year, more than 1 million students defaulted on their student loans

Varying proposals have been introduced across the political spectrum.

On the left, Democratic presidential candidate Sen. Elizabeth Warren (D-MA) would cancel student loan debt entirely for tens of millions of people, while fellow candidate Bernie Sanders (I-VT) would eliminate all $1.6 trillion in student loans made by the federal government.

A new bill from a Republican senator offers another idea.

What the bill does

The Skin in the Game Act would require universities and colleges to pay off half of the student loans for any student who defaults, and would prohibit the institutions from raising tuition to cancel out this new expenditure.

It was introduced in the Senate on July 16 as bill number S. 2124, by Sen. Josh Hawley (R-MO).

What supporters say

Supporters argue the bill would give universities and colleges more of an incentive to keep costs down, and not overly burden students who may not be able to immediately pay back what they owe in the short-term.

“American students and workers… shouldn’t have to further enrich colleges by taking on a mountain of debt or mortgage their lives in order to get a good-paying job,” Sen. Hawley said in a press release. “This system protects higher education institutions that have been padding their endowments with taxpayer money while they raise tuition.”

“It’s time to break up the higher education monopoly,” Sen. Hawley continued. “We also must hold higher education institutions accountable that take advantage of students who rack up mountains of debt, are unable to find a good job and default on their loans.”

What opponents say

Opponents counter that if students (and possibly their families) are the ones who ostensibly owe the money for their educations, then they should pay it at the end of the day, with no end run around that responsibility.

“Colleges and universities will push back on any such legislative proposal,” writes senior contributor Zack Friedman for Forbes. “Their argument, among others, could go something like this: We provide a solid education to our students and prepare them to have successful careers. We can’t control whether our alumni ultimately repay their student loans. We also can’t be held financially responsible if our students do not earn enough income to repay student loans that they borrowed.”

Opponents may also note this bill would make colleges much less likely to accept poorer students, because they would be more likely to default and cost the college money. It would also likely discriminate against certain majors which usually earn less post-graduation, especially many liberal arts majors or fine arts majors.

Odds of passage

The bill, which does not appeal to the traditional views of either party, has not yet attracted any Senate cosponsors. It awaits a potential vote in the Senate Senate Health, Education, Labor, and Pensions (HELP) Committee.

Last updated Sep 3, 2019. 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 Jul 16, 2019.

Skin in the Game Act

This bill requires each institution of higher education (IHE) participating in the student loan program to pay 50% of any student loan balance that is in default for a loan that was used toward the cost of attendance at such IHE.

An IHE may not increase the costs of attendance in order to offset its liability to pay such balances.