Biden Administration Levees Penalties for College Programs That Trap Students in Debt

 

For decades, the federal government has gone back and forth on the best way to solve the problem of workers who struggle to earn a living after graduating from the country’s for-profit colleges or career training programs. The Obama administration first laid out specific metrics requiring schools that want access to a lucrative stream of government funds to prove that its graduates are prepared for “gainful employment” and don’t incur a lot of student debt relative to their income. But Obama’s team never fully implemented its rules after lengthy legal fights. Orange Julius Caesar’s administration eventually scrapped the effort.

In a significant move to protect students from the escalating crisis of educational debt, the Biden Administration has introduced penalties for college programs that consistently leave graduates with unmanageable loans and poor employment prospects. This initiative reflects the administration's commitment to ensuring higher education institutions provide real value and fair opportunities to their students, rather than contributing to the ever-growing student debt crisis.

The U.S. student debt burden has surpassed $1.7 trillion, impacting over 44 million Americans. Many graduates struggle to repay loans, a situation exacerbated by programs that charge high tuition fees but fail to equip students with skills or qualifications that lead to gainful employment. The Biden Administration's measures aim to hold these institutions accountable, particularly targeting for-profit colleges known for their high default rates and questionable academic outcomes.

Starting in July 2024, career training programs could lose federal funding if their graduates leave with lots of student debt relative to their earnings — or if the typical graduate earns roughly less than $25,000. A similar concept would also apply to many colleges and universities that receive federal aid: Schools would have to warn students if they fail Biden’s new debt and earnings metrics — though only low-rated career programs would face a loss of funding.

The Department of Education, under President Biden, has announced stringent rules designed to assess and penalize underperforming programs. These regulations include the "Gainful Employment" rule, which mandates that programs must prove their graduates are earning enough to repay their student loans. Programs that fail to meet these criteria risk losing federal funding and access to federal student aid.

For-profit colleges have come under scrutiny for their aggressive recruitment practices and poor educational outcomes. Many of these institutions enroll a significant number of low-income and minority students, promising lucrative careers but often delivering subpar education. As a result, many graduates of these programs find themselves saddled with debt they cannot repay.

The penalties introduced by the Biden Administration aim to curb these practices. By linking federal funding to graduates' financial success, these measures incentivize colleges to improve their programs and ensure they provide real value. This could lead to a significant overhaul in how for-profit colleges operate, potentially resulting in higher educational standards and better career support services for students.

The broader goal of these measures is twofold: protecting students from predatory practices and safeguarding taxpayer money. When students default on their loans, the burden often shifts to taxpayers, making it a public issue. By holding educational institutions accountable, the Biden Administration seeks to ensure that federal funds are used effectively to support genuine educational advancement rather than subsidizing substandard programs.

The Education Department has estimated that nearly 1,700 programs would fail to meet the administration’s new standards. Another 400 graduate programs at nonprofit and public universities would also be forced to notify their students that they failed. More than 800,000 students are collectively enrolled in these programs. The department also estimates the policy will save federal taxpayers nearly $14 billion over the next decade by reducing defaults on federally backed student loans.

Cosmetology schools, truck-driving programs and top-flight graduate institutions could soon be held publicly accountable for how their students fare in the workforce. But angry conservatives and for-profit colleges despise this looming Biden administration policy, and could launch a legal challenge to stop the rule from taking effect.

This initiative is part of a broader strategy by the Biden Administration to address the student debt crisis. Other measures include increasing Pell Grants, which help low-income students afford college, and exploring pathways to forgive student debt for those burdened by it. By focusing on both immediate relief and systemic reform, the administration aims to create a more equitable and sustainable higher education system.

The Biden Administration's decision to levy penalties on college programs that trap students in debt represents a crucial step toward reforming higher education. By prioritizing accountability and student success, these measures promise to alleviate the financial burden on graduates and ensure that higher education remains a pathway to opportunity rather than a debt trap.

Full disclosure: This post written with the help of Artificial Intelligence applications. All claims made were verified for authenticity.

References

The White House. (2023). Fact Sheet: President Biden Announces an Additional $9 Billion in Student Debt Relief for 125,000 Americans. Retrieved June 18, 2024, from https://www.whitehouse.gov/briefing-room/statements-releases/2023/10/04/president-biden-announces-an-additional-9-billion-in-student-debt-relief-for-125000-americans/.

U.S. Department of Education. (2023). Regulations for Gainful Employment. Retrieved from www2.ed.gov/policy/highered/reg/hearulemaking/2012/gainful-employment-fact-sheet-10302014.pdf.

Brookings Institution. (2021). The looming student loan default crisis is worse than we thought. Retrieved June 18, 2024 from https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/.

National Center for Education Statistics. (2022). Postsecondary Education Report. https://nces.ed.gov/pubs2022/2022144.pdf.

30 Things Joe Biden Did as President You Might Have Missed. (2024). Retrieved June 3, 2024, https://www.politico.com/news/magazine/2024/02/02/joe-biden-30-policy-things-you-might-have-missed-00139046