Why Biden’s student loan relief efforts haven’t changed a DeVos decision on for-profit colleges so far

The rule was struck down by former Education Secretary Betsy DeVos, who was later sued for the decision. The Biden administration He asked a judge late last year to uphold the repeal while a months-long process goes through to write a new version.

It is a movement that has surprised some student loan Borrower Advocates.

“If the Biden administration is serious about protecting students, it doesn’t make sense for them to continue to fight them in court, “said Aaron Ament, president of the National Student Legal Defense Network, which filed the lawsuit in 2020.

“You can help right now, all you have to do is stop defending Betsy DeVos’ illegal decisions,” added Ament, who previously served as an attorney for the US Department of Education under the Obama administration.

For-profit colleges have helped fuel America’s student debt problems. About 11% of for-profit college students default, compared to 7% of students who attend public universities and about 5% who attend private, non-profit colleges, according to the latest data from the Department of Education.

Many for-profit programs do not lead to higher-paying jobs, leaving some students struggling to pay off their debts. The Department of Education has discovered that several for-profit schools defrauded their students and, as a result, has it forgave thousands of those borrowers, a measure that provides debt relief but also costs taxpayers money.

Known as “gainful employment,” the rule was intended to identify low-performing for-profit colleges and certificate programs at non-profit colleges – that is, those whose graduates had high student loan payments relative to your income. Those who did not meet government standards would lose access to federal funding. As a result, your students will not be able to apply for federal student loans and receive other types of federal financial aid.

DeVos repealed the rule in 2019, arguing that it did not take into account factors that could affect a graduate’s earnings in addition to the quality of the program. He also criticized the rule for holding for-profit universities to a higher standard than non-profit institutions.

Biden’s administration wants to rewrite the rule

The Department of Education intends to implement a new rule that establishes standards around gainful employment. To do so, it will begin a formal rule-making process next week. The process, known as negotiated rulemaking, includes a series of meetings followed by a public comment period that generally takes months.

“We are committed to restoring a strong rule of paid employment as quickly as possible,” Department of Education Undersecretary James Kvaal said in a statement sent to CNN.

“While we respect and appreciate external feedback on the best route to that goal, our judgment is that focusing on the regulatory process will produce the best and longest-lasting rule to protect students,” added Kvaal, who played an important role in the drafting of the first rule of paid employment.

But while the department goes through the rulemaking process, the student protections provided by the previous paid employment regulation it won’t be in place, allowing people to potentially enroll in risky college programs in the meantime.

In a court document, Kvaal argued that, from an operations perspective, it would likely take at least a year, if not longer, to fully implement the above rule. It’s unclear if that could happen before a new rule takes effect, he wrote.

If the old rule is reinstated, the department anticipates it would have to fight new lawsuits, according to court documents.

Targeting for-profit universities

Other actions taken by the Biden administration have suggested that it intends to target the university sector for profit. The Federal Trade Commission, for example, sent a letter to 70 for-profit universities in October, notifying them that the agency plans to crack down on any false promises they make about their graduates’ work and income prospects.
Additionally, a Biden-backed plan to expand Pell Grants, a type of federal aid awarded to students with exceptional financial need. would make for-profit college students ineligible for the money. The plan was included in Democrats Build Back Better legislation, which has stalled in the Senate.

“I think it’s a priority for them, but I think they could do more. It was a bit surprising that they didn’t go back to gainful employment,” said Carolyn Fast, attorney and senior fellow at The Century Foundation. , where he works on higher education policy.

“The timeline for implementing a new rule is quite long. It seems to make sense to have the old rule in place in the meantime to make sure students don’t enroll in programs that don’t meet the standards.” she said.

How the rule was intended to work

The paid employment rule required for-profit colleges and career certificate programs at nonprofit colleges to post debt-to-earnings ratios, demonstrating that their students could find well-paying jobs upon graduation. If the average proportion did not meet government standards for two of the three consecutive years, the school’s federal funding would be revoked.

The ratings were released in 2017 and more than 800 programs were found that did not meet the department’s standards. But DeVos repealed the rule before either institution lost federal funding.

The rule still had some effect by revealing programs whose students are burdened with debts they cannot pay. A graduate theater program at Harvard University, for example, froze enrollment after getting a failing grade on the government report.

Paying Off Debt vs. Addressing College Affordability

To date, the Biden administration has written off about $ 2.8 billion on student loan debt owed by students who were defrauded by their for-profit colleges, according to the Department of Education. It did so by reversing a DeVos policy that limited the amount of relief due to defrauded borrowers and determining that 115,000 alumni of ITT Technical Institute, a now-defunct for-profit company, were eligible for automatic discharge.

But those actions offer relief only after someone has been defrauded. The gainful employment rule tries to prevent the problem from occurring in the first place by protecting students from incurring debts that they will not be able to pay.

“Instead of fixing problems at the rear, they could also fix things at the front and prevent a lot of people from suffering,” said Fast.


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