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Congress rejects reversal of student loan forgiveness rule

For-profit colleges termed the “coronavirus of higher ed”

By Charele Crowell

While much of the nation grapples with multiple adjustments attributed to the coronavirus pandemic, a rare bipartisan effort in recent days united lawmakers to reject an ill-advised Department of Education push against financial fairness for student borrowers. The lawmakers’ efforts were to allow a 2016 rule to stand unchanged.

Without the March 11 vote, hundreds of thousands of student loan borrowers would lose federal support on July 1 to seek the discharge of federal student loans incurred at fraudulent, mostly for-profit institutions. These students are deeply in debt for educations whose benefits never materialized due to misrepresentations like job placement rates, graduate incomes, and the ability to transfer credits earned.

Passing the upper chamber on a 53-41 roll call vote, 10 Republican members representing nine states joined their Democratic colleagues to preserve the federal student loan rule known as the Borrower Defense to Repayment (BD).

“We need a policy in place that will allow defrauded students the chance to have their loan debt forgiven,” noted Alaska Senator Lisa Murkowski, “while protecting good colleges and taxpayers.”

“These for-profit colleges are the coronavirus of higher education,” remarked Illinois’ Senator Dick Durbin, who is leading his chamber’s efforts to halt DeVos’ rule.

Echoing similar sentiments was New York’s Senator Chuck Schumer.

“With this vote, the message to the Trump administration and the predatory institutions Secretary DeVos is propping up is clear: you can’t cheat students and get away with it,” said Schumer.

Originally adopted by the Obama Administration, the rule was estimated to help relieve $17 billion in federal loans for defrauded college borrowers.

This sector has been characterized by its high tuition costs, as well as its targeting of distinct demographic groups — students of color, veterans, and low-incomes – that together led to large numbers of vulnerable students incurring unaffordable debt through a combination of private and federal loans to financially support the artificially high cost of their studies.

Many of the colleges that defrauded borrowers closed abruptly under the weight of investigations and sanctions – Corinthian Colleges, ITT Tech and Art Institutes. Other career colleges continue operating but with scant accountability from the Trump Administration and the Department of Education.

With few students actually graduating from largely for-profit career and technical institutions, debts incurred could not be repaid on the low earnings and lack of marketable skills and knowledge. According to a report by the nonprofit Institute for College Access & Success (TICAS), 53 percent of defrauded students’ debt was forgiven under Obama-era rules. That number fell to just three percent in Doverride that veto.

“We also encourage Congress to advance a comprehensive reauthorization of the Higher Education Act that holds true to its original values by opening the doors of higher education to low-income students and students of color,” said Harrington. “We need a higher education system that is truly affordable, reducing the need for students to borrow for college, and provides a pathway out of student debt and into economic security.”

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