The Department of Education continues negotiated rulemaking, or “NegReg,” this spring, where it will define the rules governing how schools access federal student aid.
Here’s what Arnold Ventures Director of Higher Education Kelly McManus sees as the top five priorities for NegReg starting late January and why.
#1 Protect students and taxpayers from worthless programs by adopting a strong Gainful Employment rule.
The Gainful Employment rule is meant to protect students from debt that far outstrips their earning potential after graduation. Institutions and their programs are rated according to the rule. While 535 educational institutions had over half of their programs designated as “zone” or “fail” under the 2014 Gainful Employment rule, 340 (64%) continued to operate in 2020. These institutions are still running 1,953 programs, or 51% of the programs that were found to fail or fall in the zone previously. Also, there are 482,000 students attending nonprofit, public or for-profit schools where over half of the programs had previously been designated as in the zone or failing, including 189,000 Black and Latino/Hispanic students. Students and taxpayers deserve better than to have programs like this operating and putting them into unmanageable debt. We need these baseline protections in place.
#2 Implement the law Congress passed with bipartisan support to protect veterans from being targeted by predatory colleges.
In 2021, Congress acted to close the 90⁄10 loophole that has allowed hundreds of for-profit colleges to skirt the Department of Education’s 90⁄10 requirements by counting military and veteran student benefits as non-federal revenue, thereby incentivizing the schools to aggressively target veterans and military-connected students with deceptive and fraudulent recruiting and enrollment practices. The statute sets Oct. 1, 2021, as the earliest date to begin rulemaking. The time is now to get it done.
#3 Finish work on Borrower Defense so students can benefit from it.
The Borrower Defense (BD) to Repayment rule is meant to help students who have been cheated by predatory schools to get their debt released as easily as possible. The Department of Education should release a Notice of Proposed Rulemaking (NPRM) that includes a strong BD rule that makes BD easier to understand and more accessible for borrowers; deters misconduct by institutions; lets stakeholders — particularly attorneys general and public interest law organizations — file claims on behalf of borrowers; sets a clear timeline for the Department to act on a claim; requires the Department of Education to take action to recoup funds from an institution when it finds a valid BD claim; and includes a strong definition of aggressive recruitment. It should also include a closed school discharge rule that deters sudden closures and a total and permanent disability rule that provides relief to the 517,000 borrowers who currently qualify for relief and haven’t received it.
#4 Improve the Department of Education’s data structure and system so the Gainful Employment rule can be well-implemented.
The Department of Education has to upgrade its data system so that it can properly implement the Gainful Employment rule and better identify programs with a low return on investment for students. The department should also prioritize reinstating the data-sharing Memo of Understanding with the Social Security Administration or the IRS. Having access to this data would ensure students, families, and policymakers have better information about the return on investment institutions are providing to students.
#5 Strengthen protections against risky schools that might harm students by requiring greater proof of financial institutional responsibility
Students and taxpayers should not be the ones on the hook when a school closes precipitously. The Department of Education needs better information about schools’ financial status, and they need to act smartly to ensure schools are able to meet their financial obligations.
