The Republicans’ proposed risk-sharing plan aims to hold colleges accountable for student loan debt outcomes. Under this plan, institutions would reimburse the government for a portion of federal loan debt left unpaid by students. The Congressional Budget Office estimates potential government savings of over $6 billion in the next decade if the plan is enacted. The proposal would categorize borrowers by program and calculate the unpaid debts for each program. Schools could also face penalties for students enrolling in income-based repayment plans. Additionally, the plan includes PROMISE Grants to reward schools providing value to low-income students.

Critics raise concerns about the exclusion of defaulted loans in penalty calculations and the potential impact on schools’ repayment policies. Experts also question the availability and reliability of the data required for the plan’s implementation. The plan could disproportionately affect for-profit undergraduate programs and private, nonprofit graduate programs, with institutions like Strayer University and University of Phoenix potentially facing significant penalties.

In contrast, public universities in California and Florida, known for lower tuition and serving low-income students, could benefit from PROMISE Grants. Community colleges are also expected to gain from the proposed system. While previous accountability efforts focused on for-profit colleges, this plan seeks to hold all institutions accountable for student debt outcomes. The plan’s future hinges on Senate deliberations, as lawmakers have proposed their version of a college accountability plan.