Oppose Risk Sharing Penalties for Community Colleges

risk sharing

As Congress continues to work on the reauthorization of the Higher Education Act a new policy proposal has emerged that could result in significant financial penalties for community colleges. Risk sharing would make postsecondary institutions pay a financial penalty to the federal government based on federal loan defaults or repayment. The concept is that colleges and universities should have more ‘skin-in-the-game’ regarding the federal loan program. Risk sharing has gained some bipartisan support, and there are currently two bills on risk sharing that have been introduced in the Senate. In particular, the Shaheen-Hatch bill (S. 1939) would inflict enormous financial penalties on community colleges. Nearly 300 community colleges could owe $1 million or more annually under this bill. We urge you to write your Representative and Senators to oppose risk sharing.

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