As a society, we promise that education is the key to a better life. But fulfilling that promise requires that institutions of higher education are held accountable, and that there are protections in place to guarantee that education doesn’t lead to a lifetime of indebtedness.
Rep. Virginia Foxx, R-Va., the chair of the House Education and the Workforce Committee, introduced a bill last week that fails on all counts, and instead sells out students to corporate interests ready to get rich off taxpayer-backed education dollars. A bill reauthorizing the Higher Education Act should be a real opportunity to help students; this one just makes their lives worse by raising repayment costs for struggling borrowers, letting institutions that scam students off the hook, and narrowing relief for defrauded students.
Foxx’s legislation, which pares the six available student loan programs to three (undergraduate, graduate and parental), completely eliminates subsidized loans for undergraduates, which means that students will pay more for their education over time. Currently, students with enough federally-determined financial need can qualify for subsidized Stafford or Perkins loans, in which the federal government pays the interest charged by service providers while the students are in school, which prevents students who qualify from facing more debt after graduation than they borrowed while attending classes.
The forgiveness Rep. Virginia Foxx denies to borrowers in her higher education bill is in abundant supply for proprietary, for-profit colleges.
The bill also fails to increase the maximum Pell Grant award for low-income students, and changes how they are paid out to students who receive them. And, at a time when the student parent population is growing and the cost of childcare continues to be out of reach for many working families and student parents, Foxx’s bill does nothing to increase investments to provide on-campus childcare.
Currently, outstanding student debt has reached $1.4 trillion and the Consumer Financial Protection Bureau has found that there are over 8 million borrowers in default on their student loans. But Foxx’s bill eliminates the $0 per month payment for which the lowest income borrowers qualify in certain income-driven repayment plans This change alone would push even more borrowers into default.
It’s not the only change that will hurt vulnerable borrowers. According to the National Consumer Law Center, the other changes the bill makes to income-based repayment plans mean that it could take a low-income borrower with just $30,000 in student loan debt an incredible 138 years to repay their student loans.
And beyond those issues, the bill also takes direct aim at those who’ve committed their careers to public service, by eliminating the Public Service Loan Forgiveness program, which forgives federal loans after 10 years for those who pursue work in emergency services, public education, social work, or other public sector jobs.
But the forgiveness Foxx denies to borrowers is in abundant supply for proprietary, for-profit colleges. The Obama-era “gainful employment” rule denies federal financial aid dollars to schools that consistently leave students worse off. Rep. Foxx’s bill eliminates the rule, letting schools continue to use taxpayer dollars no matter how bad the outcomes for their students are.
For-profit colleges leave far too many students worse off than when they started taking out loans and reporting to class.
The bill also rolls back a measure meant to ensure that for-profit schools are worth the tuition they charge. The 90-10 rule requires that for-profit colleges receive at least 10 percent of their revenue from a source other than federal student loans. Instead of making the rule stronger (as student and consumer advocates have been asking for years), Foxx’s bill eviscerates this simple protection altogether, paving the way to hand over even more taxpayer money to for-profit institutions with no questions asked.
But perhaps the most insulting part of this terrible legislation is the way it treats students who were defrauded by predatory schools. Two giant for-profit colleges, Corinthian and ITT, have collapsed in the last few years, and both schools faced numerous lawsuits and investigations for misrepresentation of job placement rates and other abuses. A decades-old rule known as borrower defense to repayment dictates that, if your school breaks certain laws, you’re entitled to a cancellation of your federal student loans.
Nearly 100,000 former students of Corinthian, ITT and other institutions have pursued this right to cancellation, but the Department of Education continues to sit on their applications. In the meantime, their lives remain on hold, with ruined credit and no job prospects, because employers see Corinthian and ITT as a stain, not a boon, on a resume.
Against this backdrop, Congress should be working to expedite relief; instead, Foxx wants to narrow these former students’ options even further. Her bill puts new and senseless limits on this relief by denying any help to scammed students who did not individually apply for a discharge within three years of when the misconduct by the school occurred — not when it's uncovered. Many students don’t know until long after graduation (often following a slew of rejections by employers) that their education was worthless, let alone that the schools had even committed misconduct or that they’re eligible for loan cancellation. Foxx’s legislation makes no allowances for these victims, even as it rolls out the red carpet for the types of schools that commit the sorts of abuses that would make students eligible for relief.
For-profit colleges leave far too many students worse off than when they started taking out loans and reporting to class. Foxx had the power to change that with this bill. Instead she turned her back on students to favor the corporate interests who abuse the federal financial aid system in which taxpayers invest in and on which millions of students rely.