The Trump administration’s proposal to repeal Obama-era requirements for recipients of federal student aid comes with a price tag of about $5.3 billion over a decade, a figure that is already giving critics ammunition as the Senate prepares to turn to Education Department appropriations this week.
The administration’s proposed rulemaking would rescind 2014 regulations requiring colleges and universities to ensure graduates have low debt-to-income ratios or risk losing access to loans and grants that help students afford to attend their programs. The proposal will be open for a 30-day comment period once it’s published in the Federal Register on Tuesday before the department can turn to drafting a final rule.
Quickly after the notice was posted Friday, Sen. Patty Murray, D-Wash., slammed the move as a giveaway to for-profit colleges that would cost taxpayers billions of dollars. Murray is the top Senate Democrat both on the Health, Education, Labor and Pensions Committee and the Labor-HHS-Education Appropriations Subcommittee. She’ll be leading debate for her side of the aisle next week when the $179.3 billion Labor-HHS-Education measure comes to the floor, as part of a package with the $675 billion Defense spending bill.
At issue are rules attaching strings to aid distributed to undergraduate, graduate and professional degree programs at for-profit institutions, as well as to nondegree programs at public colleges and universities. Broadly, the standard that the Education Department is proposing to eliminate sets a benchmark for how graduates’ incomes have to match up against their student debt as a justification for certain schools to give out federally backed loans and Pell Grants for lower-income students. The regulation prevents federal aid from going to colleges where students rack up a high percentage of debt and lack the income to pay it off when they enter the workforce.
In its reasoning for the repeal, the department cited reports from participating colleges that the regulations were more burdensome than anticipated, as well as what the department said were “research results that undermine the validity” of data that helped form the basis of the regulation finalized in 2014.
But Murray characterized the move as an abandonment of a rule designed to “protect students from predatory career training programs” and slammed the move on fiscal grounds. The proposed rule documents cite estimates that under the existing regulations, some 123,000 attendees of for-profit schools that can’t meet the new standards could be expected to drop out on average over the next decade, saving the government some $3,649 per Pell Grant recipient, or $4.5 billion over 10 years. Combined with declining volume in federal direct student loans to for-profit institutions under current rules that would save $848 million, the net effect of reversing the gainful employment rule could be to leave taxpayers on the hook for up to $5.3 billion.
Murray said the “extreme proposal to rescind this rule is further proof that there is no line (Education) Secretary (Betsy) DeVos won’t cross to pad the pockets of for-profit colleges — even leaving students and taxpayers to foot the bill.” Murray didn’t say whether she’d offer an amendment to prohibit the agency from proceeding with the rulemaking when the Labor-HHS-Education bill hits the floor.
The department in its cost analysis said they view the $5.3 billion figure as a ceiling, which assumes student aid recipients would simply drop out rather than choose to enroll in other programs that meet the gainful employment rule’s standards. The agency also said the costs could ultimately “be offset by student and institutional behavior in response to disclosures in the College Scorecard and other resources,” referring to the department’s website enabling students to compare schools and potential federal aid they’d be eligible for.
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