- The education department starts negotiations on reform of the student loan industry.
- Rep. Rosa DeLauro requested that predatory schools to be used for profit be held financially liable for misdemeanors.
- Biden has already canceled $ 2.6 billion in student debt for some fraudulent students.
As the Department of Education begins negotiations on reforms of the student loan industry, House Grant President Rosa DeLauro wanted to make sure that it did not fail to hold association colleges financially responsible for misdemeanors.
“Predatory for-profit colleges should be aware that there will be straightforward, significant financial consequences for any unscrupulous behavior that leads to a successful borrower defense claim,” she wrote in a letter to Education Minister Miguel Cardona.
On Monday, the department started the negotiated rule-making process, which is when affected stakeholders and government representatives negotiate terms for a specific rule change. The department’s regulatory agenda includes reforms of loan forgiveness programs, including forgiveness for borrowers deceived by for-profit schools. DeLauro’s letter not only called for debt relief for these borrowers, but increased liability measures for the “predatory” colleges.
“The institute correctly recognizes that student borrowers who were injured should receive prompt relief without having to wait for potentially lengthy cases where institutions can challenge decisions,” DeLauro wrote.
So far, Cardona has canceled about $ 2.6 billion for profiteers deceived by profiteering schools, and he reversed a Trump-era policy that only partially eased student loan debt, with 99.4% of borrowers who applied for relief, was denied.
But as DeLauro noted, the institutions that forced borrowers to take on more debt than they could pay themselves do not have sufficient consequences. She wrote that as part of the rule-making process, Cardona should ensure that after borrowers receive the relief they deserve, the process of holding colleges financially responsible should be automatic and “include fines commensurate with the extent of the misrepresentations and misdemeanors”. committed by the institution. “
She also called for financial sanctions to apply for offenses committed before the implementation of the new rules to ensure profits remain on the hook for offenses, no matter when it happened.
A number of for-profit colleges have shut down in recent years amid allegations of fraud, misrepresentation and misleading students into taking on debts they cannot pay, and as Insider previously reported, DeLauro is not alone in asking colleges to be held financially responsible. The House’s education and working committee chairman, Bobby Scott, urged Cardona in August to hold owners, board members and leaders of now-defunct profit schools “individually responsible” for money the schools owe to the federal government.
“Given the significant burden currently borne by students and taxpayers when non-profit and converted non-profit institutions collapse, it is clear that the department has a responsibility to pursue all legal means of recovering money allocated through financial utilities, ”wrote Scott.
The department is continuing its negotiation process this week and is also expected to unveil a revision of the Public Service Loan Forgiveness program, which currently rejects 98% of civil servants applying for loan forgiveness.