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Education Department’s Continued Effort To Rescind Critical Protections For Student Loan Borrowers

Wednesday, June 14, 2017
Whitney Barkley-Denney

WASHINGTON, D.C. – Today, the U.S. Department of Education announced its decision to rollback important rules that protect students from the abusive practices of predatory for-profit institutions—the Borrower Defense to Repayment and Gainful Employment regulations. The announcement detailed not just delays in implementation and enforcement of the current rules but an entirely new rulemaking process.

Center for Responsible Lending (CRL) Policy Counsel Whitney Barkley-Denney released the following statement:

We are deeply disappointed in the Trump Administration’s continued effort to put corporate interests ahead of struggling students. Over the past few years, and after a rigorous review process, the Obama Administration proposed and finalized two rules to ensure that higher education programs, funded by federal student aid dollars, provide an adequate education that will enable borrowers to pay back their loans upon completion.

The premises of the Gainful Employment Rule and the Borrower Defense to Repayment Rule are simple: 1) career training programs should provide sufficient education to enable graduates to obtain jobs and actually pay off their debt without a significant financial hardship and 2) students defrauded by their schools should be able to have their loans discharged.

These rules were created to shield students and taxpayers from deceptive acts like that of ITT Tech and Corinthian Colleges--for-profit college systems that abruptly closed their doors after widespread abuses put them on the brink of bankruptcy and jeopardized the futures of thousands of students. Though these are simple, pragmatic rules that protect not just students but also safeguard the taxpayer investment, Secretary DeVos today showed her willingness to place the devastating costs of the actions of these predatory institutions squarely on the shoulders of students and working families.

With student loan debt and defaults at an all-time high, it is extremely troubling that this Department, rather than increasing protections for students, has decided to delay and destroy these pivotal rulemakings. If the Department wants to take a more positive and impactful step, it should use these regulations as a starting point to further increase protections and create a higher education system that produces strong student results, not just debt and limited employment options. Based on its recent track record and substantial connections with the for-profit college industry, we are doubtful that this Department, under Secretary DeVos’ leadership, will produce rules that defend students and taxpayers from these predatory institutions.

In the face of this clear dereliction of duty, we commend the Attorneys General in several states who are taking steps to hold the Department of Education accountable to its current regulations and statements. As the federal government continues to prioritize private interests, state actors are and should continue to be an important line of defense for defrauded students. There are a number of ways to make our higher education system more fair and equitable, including increasing our investment in skill development and college and career readiness, creating more pathways to loan forgiveness, and working to stem the exponentially rising cost of college. Instead, the Trump administration is prioritizing wealthy executives and for-profit colleges over the needs of the next generation of leaders and innovators.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at ricardo.quinto@responsiblelending.org.