Education Dept. Rolls Back Rules Aimed at For-Profits

The U.S. Department of Education today announced plans to roll back two Obama-era regulations reining in for-profit colleges, reported Inside Higher Ed. The borrower-defense-to-repayment regulation—effective July 1—and the gainful-employment regulation—already in effect—aimed to hold for-profit colleges accountable and help students who may have been misled or defrauded by them.

The borrower defense regulation intended to allow borrowers who feel they have been defrauded by their college or program to have a simpler process for having their student loans forgiven by the federal government. Meanwhile, the gainful employment regulation sought to hold career-preparation programs accountable for the outcomes of their graduates. Specifically, if the estimated loan payments of a program's graduates exceed a certain percentage of their income over a period of years, then the program would risk losing federal student aid.

In a yet-to-be-published notice in the Federal Register, the department laid out plans to block the borrower defense rule and restart the rulemaking process for both regulations.

Education Secretary Betsy DeVos said fraud is unacceptable but that previous rulemaking efforts missed an opportunity to get the regulations right.

"The result is a muddled process that's unfair to students and schools and puts taxpayers on the hook for significant costs," she said. "It's time to take a step back and make sure these rules achieve their purpose: helping harmed students. It's time for a regulatory reset. It is the department's aim, and this administration's commitment, to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow."

Republican lawmakers have long been critical of both sets of regulations and made clear their intentions to roll them back after the election, Insider Higher Ed reported. Although gainful employment affects non-degree programs at many community colleges and borrower defense applies to all higher education institutions, the for-profit sector pushed back hard against both regulations.

Advocates for consumers and many Democratic members of Congress have argued that the rules are essential to ensure that degree programs do not take advantage of taxpayers and students and urged the Trump administration to preserve the regulations.


Related Links

Inside Higher Ed

U.S. Education Department Press Release