What is Biden Missing in For-profit college debt

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(CNN) – The Biden government is committed to making college more affordable. But it has chosen not to reintroduce any Obama-era rule designed to prevent students from taking on too much debt to attend predatory for-profit colleges.

The rule was lifted by former Education Minister Betsy DeVos, who was later sued over the decision. The Biden government asked a judge late last year to maintain the repeal while it goes through a month-long process to write a new version.

It’s a move that has taken some student loan proponents by surprise.

“If the Biden administration is serious about protecting students, there is no point in continuing 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 now. You just have to 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 student debt problems in America. According to the latest data from the Department of Education, about 11% of for-profit college students drop out, compared with 7% of students who attend public colleges and about 5% who attend private, nonprofit colleges.

Many for-profit programs do not result in higher paying jobs, so some students have difficulty paying off their debts. The Department of Education found that several for-profit schools defrauded their students and as a result thousands of these borrowers canceled their debts – a move that offers debt relief but also costs taxpayers’ money.

The rule known as “gainful employment” was aimed at identifying underperforming for-profit colleges and certificate programs in nonprofit colleges – that is, those whose graduates received high student loan payments relative to their income. Those who did not meet government standards would lose access to federal funding. As a result, their students would be prevented from obtaining federal student loans and other types of government financial aid.

DeVos lifted the rule in 2019, arguing that it ignored factors other than program quality that could affect a graduate’s income. She also criticized the rule that for-profit colleges are of a higher standard than nonprofit institutions.

Biden administration wants to rewrite the rule
The Ministry of Education intends to enact a new regulation that will set standards for employment. A formal rule-setting process will begin next week. The process, known as negotiated rulemaking, involves a series of meetings followed by a public comment phase that typically lasts months.

“We are determined to restore strong employment regulations as soon as possible,” said Under-Secretary of State for the Department of Education James Kvaal in a statement sent to CNN.

“While we respect and value external feedback on the best way to achieve this, our judgment is that focusing on the regulatory process will produce the best and most durable rule for protecting students,” added Kvaal, who has an important role in drafting the first played employment regulation.

But while the department is going through the rulemaking process, the student protections provided by the previous Employment Ordinance will not be in place, so people may be able to enroll in risky college programs in the meantime.

In a court document, Kvaal argued that from an operational standpoint, it would likely take at least a year, if not longer, to fully implement the first rule. It is unclear whether this could happen before a new rule comes into effect, he wrote.

If the previous regulation is reintroduced, the ministry expects, according to court documents, to have to contest new lawsuits.

Orientation towards for-profit universities
Other measures taken by the Biden government suggest that it intends to target the for-profit higher education sector. For example, the Federal Trade Commission sent a letter to 70 for-profit colleges in October warning them that the agency would crack down on any false promises they make about their graduates’ job and earnings prospects.

Also, a Biden-backed plan to expand the Pell grants – a type of federal aid to students in exceptional financial need – would mean for-profit college students not entitled to the money. The plan was incorporated into the Democrats’ Build Back Better bill, which stalled in the Senate.

“I think it’s a priority for them, but I think they could do more. It was a bit of a surprise they didn’t get the job back on track,” said Carolyn Fast, attorney and senior fellow at The Century Foundation, where she works in the field of university policy.

“The timeframe for introducing a new rule is quite long. It makes sense to put the old rule in place in the meantime to make sure students don’t enroll in programs that won’t meet the standards. ”She said.

How the rule should work
The employment rule required that for-profit colleges and professional degree programs at nonprofit colleges have debt-to-earnings ratios to demonstrate that their students could find well-paying jobs after graduation. If the average quota did not meet government standards for two out of three consecutive years, government funding would be withdrawn from the school.

In 2017, reviews were published that found more than 800 programs that did not meet the department’s standards. But DeVos lifted the rule before either institution lost federal funding.

The rule still had some effect by exposing programs whose students are burdened with debts they cannot afford. For example, a graduate drama program at Harvard University froze enrollment after receiving a poor grade on the government report.

Debt forgiveness vs. tackling college affordability
To date, the Biden government has canceled approximately $ 2.8 billion in student loan debt from students defrauded by their for-profit colleges, according to the Department of Education. It did so by repealing a DeVos policy that capped the amount of relief available to defrauded borrowers and by finding that 115,000 former students of the ITT Technical Institute, a now defunct for-profit institution, were automatically waived.

But these actions only provide relief when someone has been betrayed. The employment rule tries to prevent the problem in the first place by protecting students from taking on debts that they cannot afford to pay back.

“Instead of cleaning up problems in the back end, they could also clean things up in the front end and save a lot of people grief,” said Fast.


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