The Republican-controlled U.S. House of Representatives this week will propose sweeping legislation that aims to change where Americans go to college, how they pay for it, what they study and how their success—or failure—affects the institutions they attend.

The most dramatic element of the plan is a radical revamp of the $1.34 trillion federal student-loan program. It would put caps on borrowing by parents and students and eliminate some loan-forgiveness programs for students.

The package—a summary of which was reviewed by The Wall Street Journal—would be the biggest overhaul of education policy in decades.

The rising expense of higher education is deeply troubling to many Americans, and many increasingly question its value. Despite a steady rise in the share of high-school graduates heading to college, a skills gap has left more than 6 million jobs unfilled, a significant drag on the economy, according to the Labor Department.

Republicans say their policy proposals, which would make up the new Higher Education Act, are aimed at filling that gap by both deregulating parts of the sector and laying the conditions for shorter, faster pathways to the workforce. They say the act focuses on ensuring students don’t just enroll in school, but actually graduate with skills that the labor market is seeking.

The opening House GOP gambit will likely take more than a year to wind through Congress and could undergo substantial revisions. The Higher Education Act of 1965 was last reauthorized in 2008. It was set to expire in 2013 but was extended to allow legislators more time to work on a new version. The Congressional Budget Office is expected to score the bill this week.


Although some elements of the bill, titled The Promoting Real Opportunity, Success and Prosperity Through Education Reform (PROSPER) Act, could gain bipartisan support, the overall plan is dramatically different from recent Democratic proposals. For example, Democratic lawmakers have said the best way to help students is to provide them with more direct subsidies, including grants, and to let them pay off what they can afford for a set time, then forgive the balances.

The bill would create losers and winners. Some student borrowers would see increased loan payments. Many universities are likely to oppose the limits on federal student loans and fight new competition from alternative education providers. The bill also attaches new strings to grant funds for historically black and minority-serving colleges.

On the other hand, community colleges would get more funding to team with the private sector and create apprenticeships. And for-profit colleges, which were targeted by the Obama administration because many of their students ended up with high debt loads and limited job prospects, could get many changes it has lobbied for, including equal footing with nonprofit schools when it comes to limits on federal aid and measurements of graduate success.

Rep. Virginia Foxx (R., N.C.), chairwoman of the House Committee on Education and the Workforce that drafted the proposal, lamented that so much of higher education was considered “irrelevant” by employers. She hopes to push accreditors to lean on schools to accept credits from technology-based programs.

Education Secretary Betsy DeVos Photo: Ted S. Warren/Associated Press

“Since the last bill came out, we had a big recession and tremendous technological changes,” she said. “We have a shortage of 6 million skilled workers. What we want to do is help colleges provide students with the skills they need to succeed in the workplace.”


The GOP plan aims to expand apprenticeships and competency-based education, along with more “learn and earn” opportunities, said Ms. Foxx, a former community-college president.

The changes align with a call by Education Secretary Betsy DeVos for a “major shift” away from reliance on the four-year degree.

“Students should be able to pursue their education where, when and how it works for them and their schedules,” Mrs. DeVos said in a speech on Tuesday. “Financial aid should not be withheld simply because they pursue a nontraditional path. Politicians and bureaucrats should not dictate to students when and how they can learn.”

Sen. Patty Murray (D., Wash.), the top Democrat on the Senate’s Health, Education, Labor and Pensions Committee, said Wednesday that the House proposal was “extremely disappointing,” cutting oversight of predatory for-profit colleges and eliminating federal financial aid for needy students. She said the bill “would put corporations’ bottom lines ahead of students’ best interests,” and called it “another partisan step in the wrong direction.”


The higher-education establishment is likely to balk at many of the changes, said Judith Eaton, president of the Council for Higher Education Accreditation, which oversees the regional accreditors that serve as gatekeepers to federal student aid. “You will get nontraditional actors like companies that provide coursework for apprenticeships.”

As part of its plan to slow the growth of federal student loans, graduate students and parents of undergraduates would face so-far-unspecified caps on how much they could borrow for tuition and living expenses—instead of borrowing whatever schools charge. The change could cut into enrollment and potentially siphon off billions of dollars a year from universities.

The bill would also end loan-forgiveness programs for public-service employees, who currently can make 10 years of payments and then have their remaining debt forgiven, tax-free.

It would preserve an option known as “income-driven repayment,” which ties borrowers’ monthly bills to their earnings, but would eliminate the ability of borrowers to have balances forgiven under them. Currently, borrowers can make payments of 10% or 15% of their discretionary incomes—as determined by a formula—and have remaining balances forgiven after 20 or 25 years. Under the bill, borrowers would pay 15% of discretionary incomes for as long as it took to cover the amount they would have paid under a 10-year standard repayment plan. Current participants in both programs would be grandfathered in.


Many Republicans and conservatives believe student-aid programs have become too generous and have enabled schools to charge higher prices, ultimately at taxpayers’ expense.

One of the biggest winners in the new higher-education legislation is the for-profit college industry, which faced new regulations under the Obama administration. The rollback of those regulations has been under way since President Donald Trump took office.

The reauthorization proposal goes a step further by prohibiting future action by the Education Department on what is known as the gainful-employment regulation, which ties access to federal student aid to whether career programs lead to decent-paying jobs.

Steve Gunderson, chief executive and president of Career Education Colleges and Universities, said he is eager to eliminate the gainful-employment rule, because it scrutinizes graduate outcomes almost exclusively at for-profit colleges.

“If we can replace those two words with a common set of outcomes metrics for everybody, I think we’re all better off,” he said.

The bill also touches on regulations that online programs view as burdensome, eases restrictions on paying student recruiters and other issues with an outsize effect on for-profit institutions.

“It sounds to me as if they’re including pretty much everything the for-profit schools want,” said Bob Shireman, a deputy undersecretary in the Education Department in the Obama administration and now a senior fellow at the left-leaning Century Foundation.

While the bill eases up on for- profits, it purports to move toward greater accountability at all schools by revamping the dashboard of information available to prospective students and by mandating that schools would have to pay back some portion of federal loans if the student didn’t. This so-called skin-in-the-game proposal has been long fought by the higher-education lobby.

“Institutions need to recognize they have a role to play in this process, and they need to have ‘skin in the game’ when it comes to preparing students for success academically and financially,” Ms. Foxx said. “Under the committee’s proposal, if an institution’s program or repayment system doesn’t set up a student for success, then it cannot be eligible for student aid.”

—Michelle Hackman contributed to this article.

Write to Douglas Belkin at doug.belkin@wsj.com, Josh Mitchell at joshua.mitchell@wsj.com and Melissa Korn at melissa.korn@wsj.com