Enter the College Cost Reduction Act (CCRA), introduced by Representative Virginia Foxx, Chair of the House Committee on Education and the Workforce. A key component is institutional risk-sharing – where universities accept some liability for student loan defaults. This idea had been circulating in Republican policy circles for some time, and the bill was formally introduced in January 2024. At the time, it went nowhere—just one of several structural reform ideas parked under a Democratic president and a divided Congress.
But Trump’s return to the White House, coupled with Republican control of both Houses, has propelled the idea back onto the legislative agenda. What’s new is that key provisions have now been introduced to the House as the ‘Student Success and Taxpayer Savings Plan’. A revolutionary structural reform that once looked purely theoretical is now a live prospect. Amid headlines fixated on campus protests and DEI rollbacks, the CCRA carries a deeper ambition: a legislative mechanism for holding universities financially accountable when their graduates fail to repay their loans.
The implications for the UK are hard to overstate. As I argued in Shares in Students, published by the IEA in November last year, a properly structured risk-sharing model would align universities’ financial incentives with student outcomes – leading to higher educational quality, as measured by career gain, across the board. Universities would no longer be rewarded simply for recruiting students, but for helping them build a better financial future. The U.S. now looks set to beat the UK to the punch. What matters is who is next to adopt risk-sharing – whether the UK acts to protect its position as the world’s No. 2 provider, or whether China and other Anglophone competitors seize the initiative, the resultant quality gain enabling them to overtake Britain in the international rankings. The danger is that UK institutions remain trapped in the comfort of subsidised underperformance while others progress.
The politics of this in the UK are wide open. Both the Conservatives and Reform are in the midst of developing their platforms. Reform has openly signalled its intention to borrow elements of the Trump agenda, and if it seizes upon risk-sharing before the Conservatives do, the Tories may find themselves outflanked. Yet this is precisely the kind of policy Conservatives should own: aligning institutional financial incentives with educational outcomes will not just be efficient—it will be popular.
But it’s not just a Conservative opportunity. Labour, too, may be open to structural reform. Having increased defence spending and cut welfare, the party has shown a willingness to move beyond its comfort zone. Risk-sharing would serve its student constituency well – putting pressure on universities to deliver real value for money, and making student success central to how universities are funded.
Under the current model, where universities are paid on recruitment, the graduate earnings premium has been in long-term decline. The only way to reverse it is to link institutional remuneration to graduate success, as the Americans are proposing to do. Done well, that would motivate universities to reduce costs and/or reorient courses toward real labour market value, reestablishing the economic relevance of higher education.
What’s needed now is political courage. Risk-sharing isn’t just a technical reform—it’s a reset of the relationship between students, universities, and the state. The U.S. is moving first. If the UK hesitates, America – and any country that follows its lead – will improve the economic returns of their degrees, while the UK becomes less appealing to the international students who pay most of the bills.
The UK still has the infrastructure, the reputation, and the global footprint to lead. But unless universities are rewarded for delivering real value – measured in outcomes, not enrolments – it risks slipping into the second tier: still talking about the problem, while others get on with solving it.
