Regulatory policy

Biden’s education department just passed a policy that could prevent student borrower debt from piling up after graduation

President Joe Biden delivers remarks at the White House on April 1, 2022.Demetrius Freeman/The Washington Post via Getty Images

  • Biden is pushing back on implementing the “paid employment” rule on his regulatory agenda.

  • The rule would prevent student borrowers from taking on too much unaffordable debt after graduation.

  • Biden has opposed efforts by advocates to reinstate the rule that was repealed under Trump.

President Joe Biden’s to-do list for the coming year has a lot going for it, and a rule preventing for-profit student debt from growing isn’t one of them.

In 2014, then-President Barack Obama established what was known as the “paid employment” rule, which removed federal support for schools offering career and certificate programs that left their students with significant student debt relative to their likely position. – graduation income. The rule was intended to prevent students from borrowing an excessive amount that they would not be able to repay based on their career prospects after graduation.

Former Education Secretary Betsy DeVos repealed the rule in 2019, and despite supporters’ calls for Biden to reinstate it, the president’s latest regulatory agenda pushed it back to July 2024 at the earliest.

A spokesperson for the Department of Education told Insider that “the administration is committed to preventing a future student debt crisis by holding colleges and universities accountable if they leave students with mountains of debt. debt or without good jobs”.

“This vision included raising the standards of vocational training programs and requiring that programs allow graduates to earn more than those who never attended college, a measure that would ensure that students get their tuition dollars. “said the spokesperson. “The Paid Employment Rule is the cornerstone of our ambitious regulatory agenda. We look forward to publishing a Notice of Proposed Rulemaking in the spring of 2023 to produce the best and most durable rule possible to protect students and borrowers.”

The administration typically publishes a list of proposed regulatory actions for federal agencies twice a year. But shaping education department priorities can be a years-long process that involves negotiated rule-making sessions, where experts come together to discuss higher education policies they would like to see. the department implement.

The paid-employment rule is one of the talking points, and despite student-borrower advocates calling for the rule to be reinstated, for-profit education industry representatives did not want it happen so quickly. For the moment, it seems that the latter has won, and the administration is stepping on the brakes.

Jason Altmire, president and CEO of Career Education Colleges and Universities, which represents for-profit institutions, said in a statement that he was “pleased that the Department of Education is taking the time necessary to reconsider its plans. poorly designed to provide an accountability measure that exempts the vast majority of higher education institutions.

“We look forward to working with the Department in the months ahead to craft a meaningful and fair rule that applies to all institutions across all industries,” Altmire said.

For-profit education industry executives have criticized the paid employment rule for distinguishing for-profit schools, although the rule applies to nearly all programs offered by for-profit schools and non-degree programs in public and nonprofit schools, where students can earn certifications in cosmetology, medical or legal assistant, vehicle repair and maintenance, among others.

But supporters are confused that the rule will be pushed back — especially since Biden’s undersecretary of education James Kvaal, who helped shape the rule as deputy undersecretary under Obama, called the failed to implement it under former President Donald Trump’s “neglect” in 2018, when he was president of the Institute for College Access and Success.

“It’s one thing to say we’re struggling to implement this,” Kvaal said at the time. “But to say that we are going to ignore this regulation because we have encountered logistical problems, I think is negligence and does not fulfill its responsibilities.”

Biden rejected lawyers’ efforts in court to reinstate the rule

The Department of Education released data in 2017 on paid employment accountability measures — essentially a comparison of post-certification income versus student debt — and it found that more than 800 programs were about to fail the rule, including 98% of for-profit colleges. After the rule was officially repeal, lawyers took to the courts to try to reinstate it and avoid bad outcomes for student borrowers.

Student Defense, a group that defends the rights of borrowers, filed a lawsuit in 2020 on behalf of the American Federation of Teachers, the California Federation of Teachers and individual members asking the Department of Education to restore the Obama-era paid employment rule.

“This error-filled repeal would be comical if the stakes weren’t so high, but for borrowers facing a lifetime of debt and worthless degrees, their lives are literally on the line,” said Randi Weingarten, chairman. of the AFT, in a press release. at the time. “We are confident that the court will reject this illegal scheme and stand with the students DeVos has ripped off time and time again.”

But Biden’s attorneys filed a brief in October opposing the request, and alongside the brief, Kvaal filed an affidavit saying reinstating the rule “would cause significant disruption and diversion of resources from Department priorities.” , which include the restoration of student protections in this rule.”

To be sure, Biden has taken a number of steps to help borrowers who attended and were defrauded by for-profit schools. Its education department has approved more than billions of dollars in relief for defrauded borrowers, and improving that process is on the department’s regulatory agenda. Still, the department is delaying the implementation of the paid employment rule and, for now, it will return to the rule-making process with the possibility of coming into force in July 2024 at the earliest.

“Over the past few weeks, the Department has announced more than $11 billion in debt relief for defrauded students,” Dan Zibel, vice president of chief counsel for Student Defense, told Insider. “This is great news and it is long overdue as those who have been ripped off. But at the same time, the Department has now delayed implementation of its signature proposal to ensure that students and taxpayers do not will pay more for that price. It’s disappointing and it could prove expensive.”

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