While students are, and should be, held accountable for studying and making progress toward a credential, and remaining in good standing on their debt, federal policies can and should do more to protect taxpayers and students from waste, fraud, and abuse in federal student aid programs as a result of schools failing to graduate large shares of students and consistently leaving students with debts they cannot repay. It is imperative that Congress maintain existing accountability mechanisms, many of which were adopted with bipartisan support and have proven successful over the course of decades. These critical protections include the cohort default rate, the 90-10 rule, and the gainful employment rule. Removing these guardrails – even if Congress intends to replace them with new, untested metrics – puts students and taxpayers at greater risk of unaffordable debt, higher rates of defaults, and wasted time and money. Federal accountability policies should be enhanced, and strengthened, not weakened.

Enhance and improve institutional accountability

There is strong bipartisan support for improving the current financial aid eligibility system that relies on an all-or-nothing approach allowing schools to too easily maintain the status quo, even if their performance consistently falls near the established threshold for failure. We propose more closely tying a college’s eligibility for federal funding to the risk students take by enrolling and the risk taxpayers take by subsidizing it, and rewarding schools that serve students well. While the cohort default rate (CDR) is a critical metric for understanding the scope and scale of the most devastating repayment outcome a borrower can face, the current one-size-fits-all eligibility standard based on the CDR alone provides little incentive for colleges to improve unless they are on the verge of losing eligibility for federal funds, and provides no rewards for schools serving low-income students well. It also may unintentionally provide incentives for institutions with low borrowing rates to withdraw from the federal student loan program, resulting in federal loans being out of reach for nearly one million community college students. To address these shortcomings, we recommend that Congress use a simple metric that accounts for a school’s borrowing rate to establish clear, fixed thresholds for rewards, risk-sharing payments, and loss of eligibility. Penalties should be targeted at the worst performers, and rewards designed to protect against unintended consequences of decreased access for low-income students.

Strengthen policies to prevent waste, fraud and abuse

Stronger policies, oversight, and enforcement are urgently needed to prevent unscrupulous colleges from wasting taxpayer dollars and preying on vulnerable students and our nation’s veterans. Theseproblems 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 nine percent of college students but account for one-third of all student loan defaults. Nineteen states and the District of Columbia have filed a lawsuit against the weakening or ignoring of hard-won regulations that protect students and taxpayers form predatory schools. Thirty-seven state attorneys general have jointly investigated potential fraud by for-profit colleges, the Department of Justice, Securities and Exchange Commission, Consumer Financial Protection Bureau have sued major for-profit colleges, and two major chains closed after the Education Department took enforcement actions.

The  gainful employment rule went into effect in 2015 to enforce the longstanding statutory requirement that career education programs at public, nonprofit, and for-profit colleges receiving federal funding “prepare students for gainful employment in a recognized occupation.” The Education Department then launched a coordinated system for accepting and tracking public complaints against schools on July 1, 2016. Later that year, the Department also finalized the  borrower defense regulations to help ensure that defrauded students and students attending closed schools have an opportunity to gain a fresh start, and to prevent abuses and protect taxpayers. These hard-fought protections were never implemented; instead they were illegally delayed. The Department wrote a new borrower defense rule that would deny relief to virtually all wronged students and repealed the gainful employment rule entirely without adequate explanation or consideration. These rules should be enforced more aggressively, not rolled back or gutted. Congress must do its part, including by enacting legislation (S.1908, H.R. 4109) to prohibit any type of college from using federal financial aid dollars for marketing, advertising, and recruitment, legislation (S, 2037H.R. 4181) to prohibit schools receiving Title IV funds from blocking students’ access to the courts, and legislation (S.2272, H.R.4101) that prevents the exploitation of student veterans by for-profit schools. 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.