The Department of Education will roll back two regulations from the Obama administration aimed to protect students and hold for-profit colleges more accountable. The U.S. Secretary of Education, Betsy Devos said, “Our mission in the student loan servicing procurement process is to provide high quality customer service to federal loan borrowers in a cost-efficient and effective manner.” She continued, adding “Unfortunately, this process has been subjected to a myriad of moving deadlines, changing requirements and lack of consistent objectives.”
The Department is reworking the “gainful employment” rule that was passed in 2010. The rule required programs at for-profit higher education institutions and nondegree programs at community colleges to meet minimum requirements in relation to the debt-to-income rates of their graduates. Programs that consistently failed to meet the minimum requirements would potentially lose federal financial aid, thus risking closure. The rule was designed to weed out programs that burden students with unmanageable student loan debt and few quality job prospects.
The second rule, “borrower defense to repayment,” was intended to go in place this July. The regulation was put into place to make it easier for students who said they were defrauded by their schools to get their loans potentially forgiven. Though the Department of Education has completely rescinded this rule, it did release a statement saying that the 16,000 borrower defense claims currently under review will be processed. According to The Chronicle of Higher Education, Devos said, “We are working with servicers to get these loans discharged as expeditiously possible. Some borrowers should expect to obtain discharges within the next several weeks.”
Several Democratic lawmakers quickly decried the moves. According to Senator Dick Durbin of Illinois, “Her (Devos) actions to eliminate important protections in higher education will harm students and waste millions in taxpayer dollars.” Additionally, advocacy groups vowed to fight the new change. Harvard University’s Project on Predatory Student Lending vowed to “use all legal means” to combat the delay of the borrower defense rule.
Critics of the gainful employment rule are mostly for-profits, who say it unfairly singles them out, but does not punish underperforming programs at nonprofit institutions. Devos stated that prior rulemaking “missed an opportunity to get it right. The result is a muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs.” The department is planning to start drafting new regulations this October.