Biden's Education Department just released a plan to prevent for-profit colleges from 'exploiting' veterans and loading them up with student debt
Education Departmentunveiled new regulatory proposals to protect veteransand service members.
- It proposed reforms to a rule that has led to aggressive for-profit recruiting of veterans.
On Tuesday, the Education Department released regulations that would reform the American Rescue Plan to better protect veterans and service members from predatory for-profit college practices.
The primary change in question relates to a provision known as the "90/10 rule," which requires that at least 10% of funds for a for-profit school come from sources other than any federal assistance, but federal aid for veterans and service members can count toward that 10%. This loophole has led to aggressive recruitment tactics because, as the department put it, "every $1 brought in from them meant they could receive $9 more in Department of Education aid without needing to secure any private investment." The proposals the department released aim to change that.
"Predatory, deceptive practices that target veterans and servicemembers have no place in higher education, period," Secretary of Education
Here's how the department plans to reform the 90/10 rule and better protect veterans, according to a fact sheet:
- For-profit colleges are required to include all federal aid — not just Title IV aid — in their 90/10 calculations
- For-profit colleges are restricted on when they can count institutional loans (debt owned by the school) and alternative financing (like income-share agreements) as non-federal revenue
- And for-profit colleges that fail the 90/10 rule are required to notify the department and its students "in a timely manner."
The department has already taken some steps to protect veterans from taking on
Along with 90/10 rule reforms, the department also proposed clarifications to ensure students and taxpayers are protected when schools undergo changes in ownership, like a conversion from a for-profit to a nonprofit, along with extending Pell grants to incarcerated individuals, in which they can access aid to enroll in postsecondary programs while in prison.
These proposals are set to enter a 30-day public comment period, with the goal of finalization this year and implementation no later than July 1, 2023. Insider previously reported on another set of proposals the department released to reform the student-loan industry – which is currently in the public comment period — that included reforms to the Public Service Loan Forgiveness program, debt relief for those determined totally and permanently disabled, and plans to prevent interest from building on debt, among other things.
Not included in the recent proposals were reforms to income-driven repayment (IDR) plans, but an Education Department spokesperson told Insider last week an IDR proposal will still be released soon with implementation still set for next year.
These proposed rules also come as Biden is coming closer to making a decision on broad student-loan forgiveness. He is reportedly considering $10,000 in debt cancellation for borrowers making under $150,000, and the relief will likely be announced before student-loan payments are scheduled to resume after August 31.
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