Washington, D.C. — Today, the U.S. Department of Education announced steps to change two important higher education regulations—a delay of borrower defense and a renegotiation of the gainful employment rule—and to conduct a new regulatory process to rewrite these rules.
Borrower defense was set to go into effect on July 1, which provides a path for defrauded students to have their loans discharged and get a fresh start, while making schools financially culpable for the costs of loan forgiveness. It also banned the use of mandatory arbitration in enrollment agreements, giving students their day in court. Gainful employment, meanwhile, went into effect in 2015. It cuts off federal financial aid for career training programs where the typical debt of graduates represents too high a share of income.
Ben Miller, senior director for postsecondary education at the Center for American Progress, issued the following statement:
Reopening the gainful employment rule will simply waste more taxpayer resources in an effort at a giveaway to poor-quality career training programs. This rule has been through two regulatory processes and multiple court cases. It’s shameful that the Trump administration wants to expend so much energy undoing this regulation rather than focusing on providing students with worthwhile educations.
Gainful employment is still a legal regulation on the books and we will be watching closely to ensure the administration follows the law.
About the gainful employment rule
The gainful employment rule ensures that programs must produce graduates whose earnings relative to their debt affords a reasonable shot at paying back their federal student loans. Programs that are unable to meet this standard are denied access to federal funds. The gainful employment rule saves not only students from defaulting on student loans tied to programs that didn’t deliver on their promises—but also taxpayers who would be burdened with the costs of unpaid or forgiven federal loans originating from these programs.
- How Gainful Employment Reduces the Government’s Loan Forgiveness Costs by CJ Libassi and Ben Miller
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