Defraud a student borrower and you’ll be paying up. That’s the message the U.S. Department of Education sent earlier this week when it announced a plan to establish regulations that would “claw back” taxpayer dollars from colleges whose borrowers have their loans forgiven due to fraud. As Education Undersecretary Ted Mitchell told Inside Higher Ed, “We want institutions to know, in no uncertain terms, that they are responsible for the malfeasance that they create.”
The Department’s announcement is just the latest indication that federal policymakers believe greater institutional accountability for loans is one key part of tackling the rising student debt crisis. The head of the Senate committee that tackles education issues has expressed a strong desire to adopt some form of “risk-sharing” that would require colleges to pay back some of the federal funds they receive when students cannot afford their loans. Earlier this month, a bipartisan pair of senators introduced a bill to do just that.