BY A.J. KRITIKOS
Education Secretary Betsy DeVos should be commended for her agency’s herculean work to roll back many harmful Obama-era regulations that targeted nonprofit and for-profit private colleges.
Many of these burdensome regulations were designed and implemented with a single purpose of running private for-profit and private nonprofit colleges and universities out of business.
Secretary DeVos’s efforts to protect private college education and robust student choice in higher education are far from complete, and with the recent election flip of the House to Democratic control, she’ll face yet more obstacles.
As an example, when DeVos took over at the Department of Education, she put the brakes on an Obama regulation that gave students attending private colleges the opportunity to walk away from their student loans if they were misled by their college’s advertising.
The Borrower Defense to Repayment regulation allowed tens of thousands of college students to claim fraud regarding their education and stop paying their student loans. Facing the prospect of billions of dollars of forgiven loans, the department stalled the implementation of the rule.
But last month, a federal court ruled against DeVos’s decision largely on a procedural matter, which leaves this costly regulation surviving on life support.
The court’s ruling on procedure demonstrates why conservatives are keen to implement permanent, legislative reforms that go well beyond the temporary orders of agency heads or the president’s executive pen.
DeVos sought to delay the implementation of Obama’s repayment rule but needed to show “good cause” to do so. As the court noted, good cause can be established if there will be serious harm to the public by not delaying the rule.
But the court wrongly focused on the harm to the regulated parties, rather than on the impact to the public at large. The court ignored the overall rationale for delaying the repayment rule, which was to protect millions of taxpayers from assuming the cost of billions in unpaid student loans.
That goal was also ignored by various putative public servants who sued DeVos in an effort to force her to implement the Obama rule. Nineteen state attorneys general filed a lawsuit seeking the reinstatement of the order.
California Attorney General Xavier Becerra, declared that, “Betsy DeVos and the U.S. Department of Education have been doing the bidding of for-profit colleges[.]”
However, Attorney General Becerra overlooked the fact that students who won’t benefit from the rule — the vast majority of students who have federal student loans — will actually be penalized twice.
First, the students who pay back their federal loans will do so at interest rates that are artificially inflated — higher rates caused by students who default. Second, students who honor their loans will also have to pay taxes that fund the forgiveness of loans of those who claimed fraud.
Students who have actually been defrauded by a college should have a path for reasonable recourse and appropriate loan forgiveness. But, the Obama-era rule goes too far and would saddle American taxpayers with billions in unnecessary debt relief.
Reasonable recourse for students who’ve been wronged by their college would include loan forgiveness proportional their damages, not blind and blanket debt relief.
The thrust of DeVos’s new rule was to require that students must have actually been harmed in order to have loans forgiven, and then apply any loan forgiveness in proportion to the actual harm. However, California AG Becerra was apparently too busy representing far-left education activists to care about the broader interests of millions of students.
The repayment regulation is just one example of a concerted effort waged during the Obama years to attack private colleges and force them out of business. But it makes no sense to shrink a market when students are raising legitimate concerns about traditional colleges, such as exorbitant tuition costs. Rather, the government should boost educational innovation instead of stymying it.
All college-bound students should have the freedom to choose a school that fits their learning and professional career needs. Students need diverse options in choosing a college or university that offers the learning and training needed for a rewarding career. Public, private, non-profit, for-profit schools should all be part of our educational mix.
Reforming many needless Obama-era regulations like the Borrower Defense to Repayment regulation is a critical step to ensuring choice in education and creating opportunities for students — not limiting them.