TRENTON – Acting to protect New Jersey residents from unmanageable student loan debt and costly for-profit school educations that yield few viable job opportunities, Attorney General Gurbir S. Grewal has called on the Trump Administration to scrap its plan to repeal the U.S. Department of Education’s (DOE) 2014 Gainful Employment Rule.
In a comment letter filed Thursday with U.S. Education Secretary Betsy DeVos, Attorney General Grewal joined Attorneys General from throughout the nation in demanding that DOE walk back its proposal to rescind the Gainful Employment Rule it adopted in October 2014.
The Gainful Employment Rule was intended to ensure that programs at for-profit colleges and career-focused, non-degree programs at other postsecondary schools only receive taxpayer-financed student loan funds if the programs actually “prepare students for gainful employment in a recognized occupation” -- as opposed to low-paying jobs that do not provide sufficient income for graduates to manage their student loan debt.
The rule was prompted by concerns that some career-focused programs leave students with unaffordable levels of debt relative to their earnings, leading to widespread loan default. The rule was designed to ensure that students attending career-focused programs receive an education that will allow them, at a minimum, to repay their federal student loans. It requires covered schools to demonstrate that graduates of their programs meet minimum benchmarks for loan repayment capacity, as reflect in graduate debt-to-earnings ratios. Programs that fail to meet the standard for debt-to-earnings ratios risk losing eligibility for federal financial aid.
The 2014 rule also contains disclosure requirements aimed at increasing “the quality and availability of information about student outcomes in covered programs. This transparency component was viewed as vital in 2014, because the Education Department had discerned that “many for-profit schools were engaging in deceptive marketing and recruiting practices” that included overstating their successes and obscuring information that might reflect poorly on their programs.
“Here in New Jersey, we want students who pursue higher education in order to improve their career prospects to see a return on their investments,” said Attorney General Grewal.
“The Trump Administration, on the other hand, seems determined to send even more taxpayer money to for-profit schools pushing high-cost, low-value ‘educational programs’ that saddle students with unaffordable debt,” Attorney General Grewal said. “I hope Secretary DeVos will reverse course and put the interests of students ahead of the pocketbooks of the Administration’s corporate friends.”
“Without protections like the Gainful Employment Rule in place, students will continue to be laden with hollow debt, perpetuating false hope,” said New Jersey Secretary of Higher Education Dr. Zakiya Smith Ellis. “Career schools that do well have nothing to fear, and should welcome this kind of accountability. Our residents deserve transparency in what they should expect from their time and financial commitment. Unfortunately, Secretary Devos and the Trump administration have decided that students and families should continue to remain in the dark about this kind of basic costs and outcome information.”
David Socolow, Executive Director of the New Jersey Higher Education Student Assistance Authority, said, “The goal of postsecondary career training is to prepare students for good jobs that increase their earnings and enable them to be contributing members of our state’s economy. New Jersey students need to know before they go to a career training program whether it will place them in a job that pays well enough to offer a return on their investment. Repealing the Gainful Employment rule would take away crucial consumer protections that New Jersey students and families deserve.”
According to the Attorney General’s comment letter, the federal Education Department’s plan to rescind the Gainful Employment Rule “ignores years of student loan defaults, predominantly by students at for-profit schools.”
The Administration’s proposed repeal of the rule would be “disastrous for students and taxpayers, and a windfall for low-quality, predatory schools,” the letter asserts. “Instead of cutting off federal aid and ensuring that future students do not attend failing programs, the Department now turns its back on the very people it is mean to protect.”
The letter reminds Secretary DeVos that, in adopting the Gainful Employment Rule in the first place, the Education Department in 2014 “recognized that students at for-profit programs were more likely than those at other institutions to rely on loans, including federal student aid, to finance their education.”
The letter also notes that, on average, students at for-profit schools have more debt than those who attend public or non-profit institutions. In addition, the letter observes, “students of color, low-income students, veterans and women” were particularly affected by “the high costs and commensurate high debt load” they incurred to attend for-profit institutions.
“The (Education) Department has improperly delayed and discarded the carefully considered and duly promulgated (2014 Gainful Employment) Rule,” the letter asserts. “The Department’s current proposal to rescind that rule would do nothing but harm students and taxpayers and allow predatory schools to thrive.”
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