ACE Analysis Shows College Cost Reduction Act Could Lead to Cuts in Higher Education Funding

The Congressional Budget Office (CBO) released its score of the bill on May 10, paving the way for a possible House vote, though the timing remains uncertain.

ACE's analysis, conducted in collaboration with staff, outside experts, and other associations, indicates that the proposed annual reimbursement formula-known as risk-sharing-and the PROMISE grant formula in the CCRA would have a significant negative financial impact on institutions, leading to reduced support for students.

Of the 3,030 institutions in the data set, 2,619 institutions (86 percent) would be required to make an annual risk-sharing payment to the Department of Education, and approximately 889 institutions (30 percent) could be eligible to receive one of the newly created PROMISE grants. A total of 831 institutions (27 percent) would receive a net gain overall and 1,878 institutions (62 percent) would receive a net loss. The CBO estimated that institutions would see a net loss of over $17 billion due directly to the risk-sharing and PROMISE grant formulas.

The analysis also highlights significant gaps in existing federal data, which make it risky to rely on these formulas to determine financial penalties and grant eligibility. The data limitations preclude a fully valid and reliable analysis, yet the trends are clear: the proposals would be broadly harmful, especially to institutions serving a significant number of low-income students.

While the CCRA risk-sharing proposals differ from previous ones, ACE remains opposed to risk-sharing, as imposing financial penalties on institutions serving Title IV recipients is counterproductive.