How Biden Can Keep Student-Loan Borrowers From Huge Debt Loads Post-Grad

  • The Congressional Progressive Caucus released its executive agenda for Biden last week.
  • It included reinstating and strengthening the gainful employment rule, which protects student-loan borrowers from unaffordable debt post-graduation.
  • Biden delayed implementation of the rule until 2024 and is expected to put out a proposal this month.

Protections for student-loan borrowers made the cut in progressive lawmakers’ extensive agenda they created for President Joe Biden.

Last week, the Congressional Progressive Caucus (CPC), led by Rep. Pramila Jayapal, released its 2023 executive action agenda for Biden, which called on him to use his executive authority to make progress in five areas: holding corporations accountable, raising workers’ wages, lowering costs of essential items, continuing investments in the climate, and advancing racial and gender equity.

When it comes to holding corporations accountable, student-loan borrowers entered the mix. The agenda called for Biden to crack down on predatory for-profit colleges, and doing so included reinstating and bolstering the gainful employment rule — an Obama-era regulation that cut off federal aid for schools that offer career and certificate programs that leave students with excessive student debt compared to their post-graduation earnings.

Former President Donald Trump’s Education Secretary Betsy DeVos repealed the rule in 2019, and lawmakers want Biden to reinstate it as soon as possible.

“The Department of Education should protect students by expediting and strengthening a reinstated Gainful Employment rule,” the lawmakers wrote in CPC’s agenda, adding that the department should also “inform applicants if they are applying to an institution on the low-value college list that risks leaving students with high debt and low earnings prior to administering financial aid.”

As Insider previously reported, Biden’s Education Department delayed reinstating the rule until July 2024 at the earliest, with a spokesperson saying at the time 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 or without good jobs.”

“The Gainful Employment rule is a cornerstone of our ambitious regulatory agenda,” the spokesperson said. “We look forward to publishing a notice of proposed rulemaking in Spring 2023 to produce the best, most durable rule possible to protect students and borrowers.” 

While the department’s proposal for the rule is expected in April, lawmakers and advocates want it put in place quickly to once again have a safeguard for student-loan borrowers as they enroll in programs they might not be able to pay off. In February, Massachusetts Sen. Elizabeth Warren and Vermont Sen. Bernie Sanders joined a group of Democratic colleagues in urging Under Secretary of Education James Kvaal in a letter to “take immediate action to publish and implement the rule as soon as practicable to ensure harmful actors are held accountable for enrolling students into low-quality programs.”

The bad actors the Democrats referenced are often for-profit institutions that have been accused of engaging in misleading behavior that led students into taking on unaffordable debt. For example, after major for-profit chains like ITT Technical Institute and Corinthian Colleges shut down, Biden’s Education Department wiped out student debt for the borrowers who attended those schools due to fraudulent behavior that left many with debt and no degree, or a useless degree.

Along with reinstating gainful employment, lawmakers and advocates have also called for the executives of for-profit schools to be held liable for costs when the school shuts down, rather than taxpayers and borrowers. That’s something the department has already made headway on — last month, it released new guidance on putting a rule in place to allow the Education Secretary to hold executives financially liable for the cost of unpaid debts defrauded students took on.

Now, lawmakers and advocates await the department’s gainful employment proposal. With limited resources and a lot on its plate, from implementing reforms to targeted repayment and forgiveness programs, it’s unclear when exactly the department will implement the new rule, but as Warren wrote in a recent letter, “further delay of the GE rule only will prolong the timeline for when poorly performing institutions could face penalties, exacerbating these institutions’ harmful impact on students who are enrolled in these schools.”

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