Strong college accountability is key to reducing the number of students left worse off by burdensome student debt. Stronger policies, oversight, and enforcement are urgently needed to address high-cost but low-quality programs and predatory practices that prey on vulnerable students and our nation’s veterans. These problems are of particular concern in the for-profit college sector, where borrowing rates, debt levels, and default rates are highest. For-profit colleges enroll only eight percent of college students but account for 30 percent of all student loan defaults.
Thirty-seven state attorneys general have jointly investigated potential fraud by for-profit colleges, and the Department of Justice, the Securities and Exchange Commission, the Federal Trade Commission and the Consumer Financial Protection Bureau have sued major for-profit colleges and secured hundreds of millions of dollars of private debt relief for students who attended these schools.
Yet in recent years the abrupt closures of for-profit colleges have left more than 100,000 students stranded, many with debt but few options to complete their degrees, while more than 170,000 students continue to seek to fully cancel federal loans taken based on misrepresentations or illegal conduct by colleges.
The Trump Administration repealed the gainful employment rule, which required career programs to demonstrate that average graduates’ debts are reasonable relative to their earnings. The rule had proven to be a successful tool to lower costs and improve the quality of career programs, and its repeal will cost taxpayers an estimated $6 billion over ten years.
The Trump Administration also repealed protections for students against colleges’ fraud and other illegal conduct. Under the Trump Administration borrower defense to repayment rule, rather than creating a fair process for students to demonstrate they should not be required to repay loans connected to illegal conduct, 97 percent of students who took out loans connected to illegal conduct by schools will nonetheless be required to repay those loans. Colleges would be held responsible for just one percent of loans made based on misconduct. The removal of these guardrails puts students and taxpayers at greater risk of unaffordable debt, higher rates of defaults, and wasted time and money.
Strengthen Policies to Prevent Waste, Fraud, and Abuse
It is imperative that Congress maintain existing accountability mechanisms, many of which Congress adopted with bipartisan support and have proven successful over the course of decades. These critical protections include reinstating the gainful employment and borrower defense rules, requiring at least 15 percent of tuition be paid without federal subsidies, prohibiting the use of commissioned sales and other tactics associated with high-pressure and deceptive recruiting, and holding colleges more accountable for excessive student loan default rates.
It is also more critical than ever that Congress act to put in place new accountability protections. Legislation introduced in 2019 (S. 867, H.R. 3512) provides a comprehensive set of policy solutions to ensure both students and the taxpayer investment are protected. Known as the PROTECT Students Act, the bill the bill addresses these key priorities and more.
For information on the broad coalition of student, consumer, civil rights, veterans, and college access organizations working to better protect students and taxpayers, visit ProtectStudentsandTaxpayers.org.