Biden's Education Department just punted on a policy that could keep student-loan borrowers' debt from piling up after they graduate

President Joe Biden delivers remarks at the The White House on April 1, 2022.
President Joe Biden delivers remarks at the the White House on April 1, 2022.Demetrius Freeman/The Washington Post via Getty Images
  • Biden is pushing off implementing the "gainful employment" rule in his regulatory agenda.

  • The rule would prevent student-loan borrowers from taking on too much unaffordable debt post-grad.

  • Biden has opposed advocates' efforts to reinstate the rule that was repealed under Trump.

President Joe Biden's to-do list for the upcoming year has a lot of things on it, and a rule preventing for-profit student debt from growing isn't one of them.

In 2014, then-President Barack Obama established what was known as the "gainful employment" rule, which cut off federal aid for schools that offer career and certificate programs that left their students with a large of amount of student debt compared to their likely post-graduation earnings. The rule aimed to prevent students from borrowing an excessive amount that they wouldn't be able to pay off based on their career prospects after graduating.


Former Education Secretary Betsy DeVos repealed the rule in 2019, and despite advocates' calls for Biden to reinstate it, the president's latest regulatory agenda pushed it off to July 2024 at the earliest.

An Education Department spokesperson told Insider that the "administration is committed to preventing a future student debt crisis by holding colleges and universities accountable if they leave students with mountains of debt or without good jobs."

"That vision included strengthening the standards for career training programs and require that programs leave graduates earning more than those who never attended college, a move that would ensure students get value for their tuition dollars," the spokesperson said. "The Gainful Employment rule is a cornerstone of our ambitious regulatory agenda. We look forward to publishing a notice of proposed rulemaking in Spring 2023 to produce the best, most durable rule possible to protect students and borrowers."

The administration typically releases a list of proposed regulatory actions for federal agencies twice a year. But putting together the priorities for the Education Department can be a yearslong process that involves negotiated rulemaking sessions, in which experts gather to discuss higher-education policies they would like to see the department implement.

The gainful employment rule is one of the topics under discussion, and despite student-loan-borrower advocates pushing for the rule to be reinstated, representatives of the for-profit education industry didn't want that to happen quite so fast. For now, it looks like the latter won, and the administration is tapping the brakes.

Jason Altmire, the president and CEO of Career Education Colleges and Universities, which represents for-profit institutions, said in a statement that he is "pleased that the Department of Education is taking the time necessary to reconsider their ill-conceived plans to propose an accountability measure that exempts the vast majority of institutions of higher education."

"We look forward to working with the Department in the months ahead to craft a meaningful and fair rule that applies to all institutions in all sectors," Altmire said.

For-profit education-industry leaders have criticized the gainful employment rule for singling out for-profit schools, although the rule applies to almost all programs offered by for-profit schools and nondegree programs at public and nonprofit schools, where students can earn certifications for cosmetology, medical or legal assistant, and vehicle repair and maintenance, among others.

But advocates are confounded that the rule is being pushed off — especially as Biden's undersecretary of Education, James Kvaal, who helped shape the rule as the deputy undersecretary under Obama, called failure to implement it under former President Donald Trump "negligent" in 2018, when he was serving as the president of the Institute for College Access and Success.

"It's one thing to say we're struggling to implement this," Kvaal said at the time. "But to say we're going to ignore this regulation because we've encountered logistical problems, I think it's negligent and failing to carry out their responsibilities."

Biden has rejected advocates' efforts in court to reinstate the rule

The Education Department published data in 2017 about gainful-employment accountability measures — essentially a comparison of post-certification earnings versus student debt — and it found that more than 800 programs were set to fail the rule, with 98% of them for-profit colleges. After the rule was officially repealed, advocates went to court in an attempt to reinstate it and prevent bad outcomes for student-loan borrowers.

Student Defense, a group that advocates for borrowers' rights, filed a lawsuit in 2020 on behalf of the American Federation of Teachers, the California Federation of Teachers, and individual members requesting the Education Department reinstate the Obama-era gainful employment rule.

"This error-ridden repeal would be comical if the stakes weren't so high, but for borrowers confronting a lifetime of debt and worthless degrees, their lives are literally on the line," Randi Weingarten, the AFT president, said in a statement at the time. "We are confident the court will reject this illegal gambit and back the students DeVos has shafted over and over again."

But Biden's lawyers filed a brief in October opposing the request, and alongside the brief, Kvaal filed an affidavit saying that reinstating the rule would "cause considerable disruption and diversion of resources from the Department's priorities, which include restoring the student protections in this rule."

To be sure, Biden has taken a number of actions to help borrowers who attended and were defrauded by for-profit schools. His Education Department has approved over billions of dollars in relief for defrauded borrowers, and improving that process is on the department's regulatory agenda. Still, the department is delaying implementation of the gainful employment rule, and for now, it will go back to the rulemaking process with the potential of going into effect July 2024 at the earliest.

"Over the past few weeks, the Department has announced more than $11 billion in debt relief for defrauded students," Dan Zibel, vice president at chief counsel of Student Defense, told Insider. "This is great news and long overdue for those were scammed. But at the same time, the Department has now delayed moving forward with its signature proposal to ensure that students and taxpayers won't pay this price again. This is disappointing and could prove costly."

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