A new proposal by the White House could force colleges and universities to share in the risk of their students’ defaults on federally funded student loans. Michelle Hackman reports on the plan in The Wall Street Journal, writing:
The White House is weighing a measure that would require colleges and universities to take a financial stake in their students’ ability to repay government loans, an effort that could squeeze loan availability to students and reduce defaults.
For several months, Trump administration officials have been discussing enacting such a mechanism or making a push for one in Congress as part of a broader effort to combat rising college costs.
In the administration’s budget proposal released Monday, officials made brief mention of a “request to create an educational finance system that requires postsecondary institutions that accept taxpayer funds to have skin in the game through a student loan risk-sharing program.”
Such a proposal could be included in a coming executive order addressing higher education, several officials said. A draft of the order isn’t final and the specifics of exactly how a skin-in-the-game provision would work haven’t been laid out. It also isn’t clear whether the White House will back an administration proposal or urge Congress to take one up.
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