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- Obama created a rule that punishes for-profit colleges with a high student debt-to-earnings ratio.
- Betsy DeVos repealed that rule in 2017; advocates want Biden to reinstate it to protect borrowers.
- But Biden is keeping the repeal in place for now.
President Joe Biden’s Education Department has the power to limit the amount of debt students at for-profit colleges take on — but it has yet to use that authority.
Former President Barack Obama instituted the “gainful employment” rule in 2014, which cut off federal aid to schools that left students with a large amount of debt compared to their earnings. In practice, this meant that students who attended those schools would be blocked from taking out excessive amounts of student loans and other forms of federal aid, preventing them from accumulating debt post-graduation that they would be unable to afford paying off.
President Donald Trump’s Education Secretary Betsy DeVos repealed that rule, and despite advocates’ concerns, Biden is keeping that repeal in place for now. If he were to reinstate the rule, schools would be required to provide prospective students with information on employment outcomes and demonstrate their graduates will earn enough to repay their loans by meeting a certain debt-to-income ratio, as ThirdWay explained in a recent memo. But DeVos argued in 2019 it held for-profit colleges to a higher standard than nonprofits. Higher education experts called her repeal of the rule “disturbing and shortsighted,” but it still remains in place under Biden.
The Education Department did not immediately respond to Insider’s request for comment. Under Secretary of Education James Kvaal told CNN in a statement that the department is “committed to restoring a strong gainful employment rule as quickly as possible.”
“While we respect and appreciate outside feedback on the best route to that goal, our judgment is that focusing on the regulatory process will produce the best, most durable rule to protect students,” Kvaal added.
This process, which can take years, involves negotiated rulemaking sessions in which experts gather to discuss changes to higher education policies they would like the department to implement. The sessions are resuming this month, and along with gainful employment, other issues concerning for-profit colleges, like restricting their revenue sources, are also on the table.
Biden’s Education Dept. filed a brief to leave the repeal in place
In 2020, the National Student Legal Defense Network filed a lawsuit requesting the Education Department reinstate the Obama-era gainful employment rule to protect students from taking on too much debt. But in October, Biden’s lawyers filed a brief explaining why they will leave the repeal in place and make changes through the regulatory route.
In an affidavit filed alongside the brief, Kvaal wrote that reinstating Obama’s policy would “cause considerable disruption and diversion of resources from the Department’s priorities, which include restoring the student protections in this rule.”
He explained that as the department is moving forward with implementing rule changes, re-instating the old rule could disrupt that process and it’s best to focus on “preparing to implement a new rule rather than attempting to resurrect past systems for a rule that would likely be in place only temporarily, until a new rule would go into effect.”
This decision had advocates disappointed the administration is not choosing a quicker route. Aaron Ament, president of the National Student Legal Defense Network, told CNN that “if the Biden administration is serious about protecting students, it makes no sense that they’re continuing to fight them in court.”
To be sure, Biden has taken a number of actions to protect students from accumulating significant debt from for-profit schools. As Insider has previously reported, a number of for-profits, like Corinthian Colleges and ITT Tech, have come under fire over the past decade for misleading students into taking on more debt than they could ever pay off.
As a result, Education Secretary Miguel Cardona has reversed a Trump-era policy that gave only partial relief to defrauded students, along with canceling over $2.6 billion in student debt for some of those borrowers.
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