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Sen. Brian Schatz backs bill that targets college students with financial needs and aims to offset tuition and living expenses

With student loans spiraling upward, U.S. Sen. Brian Schatz is sponsoring the Debt-Free College Act, which aims to ensure low-income students can attend public colleges without going into debt.

“There’s something wrong with a society that says it values higher education but then punishes you for pursuing it,” Schatz said in an interview.

Student debt in the United States soared to $1.7 trillion last year, more than three times what it was in 2006, according to the Federal Reserve. It now outpaces credit card debt and is second only to mortgage debt. Roughly 43 million student borrowers owe an average of more than $39,000 each.

“Every student in America deserves the opportunity to get a college education without being crushed for years by student debt,” said U.S. Rep. Mark Pocan (D, Wis.), the bill’s lead sponsor in the House.

Unlike proposals for “tuition­-free college,” their bill would cover other costs as well, such as living expenses. But it is more targeted, applying only to students with financial need.

“If we are going to be serious about solving the student loan debt crisis, we need to focus on the real cost to students and their families, and that includes books, room and board, and supplies,” Schatz said. “‘Tuition-free’ is still unaffordable for a lot of people.”

Tuition typically runs roughly 40% to 50% of the cost of attending college, he said.

When the economy crashed in 2008, states cut their spending on higher education and didn’t restore it after the economy recovered, Schatz said. Meanwhile college costs keep rising, well beyond inflation.

“It’s pricing lots of kids out of college and saddling lots of graduates with a mountain of debt,” he said. “Our bill brings states back to the table and leverages federal dollars to reinvest in public education and help people cover the full cost of college.”

The bill creates a grant program that would provide a dollar-for-dollar federal match to state spending on higher education. In exchange, public colleges and universities would cover the full cost of attendance for students who are eligible for federal Pell grants, which are based on need and take into account income and assets.

Schatz and Pocan reintroduced the legislation on April 22 with eight co-sponsors in the Senate and 17 in the House.

The Hawaii senator proposed the same bill in 2018, but it never got a hearing in the Republican-­controlled Senate. Now, with the balance of power shifted to the Democrats, it has better prospects.

“We have a realistic shot here,” Schatz said.

The cost may be a hurdle, however, with a price tag pegged at $84 billion annually.

The partnership between the federal government and the states would be voluntary. States who accept the federal matching funds would commit to covering the cost of student attendance with grants.

“The way the program works is the states have to prioritize the Pell-eligible first and then work their way up the income and asset chain to other students who are borrowing for college,” Schatz said.

University of Hawaii President David Lassner said he supports the idea.

“I think it’s a very creative and direct approach that makes higher education affordable,” Lassner said.

“It does a couple of things really well. One is it focuses on the total cost of education rather than just free tuition. The second is that it bases it on the ability to pay. It puts the money into the hands of the people who need it most.”

The maximum Pell award for the 2021-22 academic year is $6,495. That could cover tuition at a community college, but not the full cost of attendance. And it doesn’t come close to covering tuition at most public universities.

“What we hear now from a lot of students is that they either don’t go to college or they have dropped out because of financial pressures associated with the pandemic,” Lassner said. “So the bill is especially timely.”

To ensure federal money wouldn’t replace state dollars, states would have to maintain or increase their support of higher education. Participating colleges and universities would also have to limit any annual increase in tuition and fees to the Consumer Price Index.

Rather than moving forward as a stand-alone bill, Schatz said he expects it to be incorporated into a larger piece of legislation, such as the American Jobs Plan or the American Families Plan.

For 10 states, including Hawaii, just maintaining their current spending levels on higher education would enable them to cover the unmet need of all their public college students with the federal match. That estimate is based on the number of students who had to borrow to attend UH in 2019.

“If we were to enact the bill as it is written, Hawaii would be able to provide debt-free college for every student in our public universities,” Schatz said. “It makes it attractive for the 10 states that would immediately be able to say we provide debt-free college. For the other states it’s designed to incentivize investment in higher education.”