This Week In Washington
Following up on last Friday’s news that the U.S. Department of Education (ED) planned to scrap the Gainful Employment (GE) regulations, on Tuesday ED officially announced its intention to rescind the GE regulations. Earlier this year, ED engaged in a series of negotiated rulemaking to craft a set of new GE regulations.
In its notice of proposed rulemaking, ED argues that eliminating the GE regulations is necessary because the metric used to evaluate institutions (debt to earnings ratio) was flawed, there were inconsistencies in how institutions reported some findings, the required disclosures were burdensome to institutions, and GE had a disparate impact on similarly situated institutions.
In its place, ED plans to add additional program-level data for all Title IV institutions to its College Scorecard or some future replacement for the Scorecard. ED, however, does not detail what that program-level data would be and how it would be disclosed. ED suggests it could be graduates’ median debt and median earnings, net program price, completion rates, or “other data.” ED is considering requiring these new disclosures be placed “on [institutions’] program web pages.”
Reaction to the plan to rescind GE follows standard partisan breakdown. The chairman of the Senate education committee, Lamar Alexander (R-TN), praised the decision, calling the old rule “clumsy” and suggested Congress should “focus on repayment rates.” The ranking member of that same committee, Patty Murray (D-WA), slammed the repeal efforts, saying that for-profit colleges would benefit while “leaving students and taxpayers to foot the bill.” You can submit written comments online to ED about rescinding GE or on which potential new disclosures should be required by September 13, 2018.
Earlier this week, ED launched a new app that allows students to apply for federal financial aid from their mobile devices. ED first introduced a new mobile-friendly website as part of its Next Gen financial aid system designed to be more user friendly. The myStudentAid app currently allows students to fill out the Free Application for Federal Student Aid (FAFSA) for the 2018–2019 school year. The app is expected to be updated on October 1st when the 2019–2020 FAFSA becomes available. More features, like the ability to manage student loan monthly payments, are expected to be added in the future. You can download the app from the Apple App Store or the Google Play Store.
Last Friday, the federal judge overseeing the Consumer Financial Protection Bureau’s (CFPB) lawsuit against Navient ruled that Navient must turn over documents to the CFPB regarding how it manages federal student loan borrower payments. Recall, the CFPB asked the court to intervene after ED had stonewalled its requests for information on how Navient serviced loans. We will keep you abreast of any new developments.
News You Can Use
Repealing Gainful Employment and simply providing more information to students may not result in the intended “market-based accountability” ED claims it will.
Urban Institute’s report, Underwater on Student Debt, which examined the relationship between a borrower’s credit history and the probability of default on student loans, found that borrowers who owed less than $5,000 were more likely than those with higher debt loads to default within four years.
The American Enterprise Institute released a new report, Federal Student Loan Defaults: What Happens After Borrowers Default and Why, that found, among other interesting things, that 70 percent of borrowers brought their loans into good standing within five years after defaulting.
According to an annual study, Student Loan Debt by School by State Report, conducted by LendEDU, the average individual student loan debt for 2017 is now $28,288, up $313 from the previous year. The report also indicated that as of 2012 the average combined undergraduate and graduate degree debt of law degree holders was $140,616.
No relevant student aid bills have been recently introduced for consideration by the 115th Congress (2017-2018).