WASHINGTON, D. C. – Attorney General Karl A. Racine is calling on U.S. Department of Education (ED) Secretary Betsy DeVos to stop holding back student loan information that helps states protect student borrowers and stop delaying disclosure rules that will help students avoid predatory schools. AG Racine and 20 states urged DeVos in a letter to reverse her decision to end a decades-old ED policy of sharing crucial information about student borrower complaints with state law enforcement agencies and regulators. In a second letter, AG Racine and 16 counterparts argue against ED’s latest attempt to delay portions of the Gainful Employment Rule, which requires schools to disclose important information about the value of their degrees to would-be borrowers. The letters urge DeVos to implement or return to policies that increase transparency in the nearly $1.5 trillion U.S. student debt market.
“Secretary DeVos is making it harder to protect student borrowers from predatory schools and fraud,” said Attorney General Racine. “DeVos’ mistaken policies put students at risk by blocking states and the District from information to help struggling borrowers, and by delaying disclosures to students at for-profit schools about costs, average debt load, and job prospects. We urge her to put student borrowers first and reconsider these harmful policies.”
According to federal statistics, Americans owe more than $1.5 trillion in student loans – nearly triple the amount owed just a decade prior. District residents have the highest student debts in the nation, with the average borrower in the District owing more than $46,000 in federal student loans. Approximately one in four student borrowers in the District owe more than $80,000 on their loans, and one in seven are past due on a federal student loan.
A recent analysis of federal statistics by the Brookings Institution shows that more than 25 percent of those who entered college 20 years ago have defaulted, at some point, on their student debt. Among African-American borrowers who entered college 20 years ago, more than 47 percent have defaulted. And the default rate is projected to grow significantly for those who entered college more recently. Many struggling borrowers report that they have a difficult time understanding their student loans and are unaware of federal student loan protections, including income-based repayment programs and forgiveness, consolidation, and forbearance.
ED Blocks States’ Access to Student Loan Data
Since at least 2000, under both Democratic and Republican administrations, ED’s policy has been to permit routine disclosure of student loan information to state authorities responsible for enforcing the law and protecting student borrowers from illegal, unfair, abusive, or deceptive practices by higher education institutions. This data includes complaints from student borrowers to ED as well as requests for relief under ED regulations. That ended June 13, when Education Secretary DeVos quietly inserted language in the Federal Register ending the policy of sharing this information with states.
In the multistate letter to ED, attorneys general assert they do not see a good reason for the “abrupt policy change” and that DeVos is “making a mistake” by reversing a long tradition of federal-state cooperation in protecting students and student loan borrowers. Further, the signatories raised concerns that “limited access to student loan information by law enforcement may hinder the ability of state attorneys general and other agencies to protect students.”
The letter also reminds DeVos of the important role that state attorneys general have played in protecting student loan borrowers. In 2016, OAG and 46 attorneys general worked with ED to secure millions of dollars in debt relief for former students at Corinthian Colleges, Inc., which misrepresented job placement rates to enrolled and prospective students and engaged in other illegal practices. That includes nearly 400 District residents.
The multistate letter to ED on sharing student loan information is available at: http://oag.dc.gov/sites/default/files/2018-07/DeVos_Student_Data_Letter.pdf
ED Delays Gainful Employment Disclosures for Students
The Education Department’s Gainful Employment Rule, which was established under President Obama and first went into effect in July 2015, requires that vocational programs at for-profit colleges and certain programs at community colleges meet certain standards. The standards aim to ensure that students’ debt-to-income ratio is sustainable after they complete their education, and discourage schools from trading in false promises about earning potential or average levels of debt associated with the degrees they offer.
Since DeVos took over the ED’s helm in early 2017, she has repeatedly delayed final implementation of the Gainful Employment Rule’s requirements for schools to disclose clearly to borrowers and prospective students the total cost of their degree programs, average debt load, student loan default rate, and average earnings of program graduates. Last fall, AG Racine and counterparts from 15 states sued ED over the delays. In today’s letter to DeVos, the attorneys general opposed ED’s third attempt to delay the requirements.
The multistate letter asserts that the delay will unnecessarily harm student borrowers by preventing them from making informed decisions about the schools they choose and earning prospects once they graduate. The state attorneys general also claim that ED did not provide required public notice and comment for the rulemaking and did not provide adequate justification for failing to implement provisions that have been part of the rule for three years.
Today’s letter to ED on the Gainful Employment Rule is available at: http://oag.dc.gov/sites/default/files/2018-07/Gainful_Employment_Letter_FINAL.pdf