Trump Administration Stymies Release of Salary, Loan Debt Data from Certain Colleges, Advocates Say

Via CNBC

By: Annie Nova

At a recent conference on financial aid, Education Secretary Betsy DeVos said that every school should help its students graduate with high-quality career prospects and little debt.

Students should be equipped, she added, with information that allows them to be responsible consumers. “They need to have the best possible tools, data, advice and support,” DeVos said, at the Georgia World Congress Center in late November.

Yet at another session at the same conference, Cynthia Hammond, a top Education Department official, said the agency wouldn’t be releasing student debt information on certain programs. “We will not be doing another round of debt-to-earnings rates at this time,” Hammond said to the audience.

Career education programs, including most for-profit colleges, are required to disclose debt and earnings data to prospective and current students, as part of the so-called gainful employment regulation. Under the rule, poor-performing programs are at risk of losing their federal funding.

The regulation is intended to provide students, “with the best information possible when they’re making one of the biggest investments they’re ever going to make,” said Michael Itzkowitz, a senior fellow at Third Way, a think tank in Washington.

The Education Department under DeVos has proposed eliminating the rule. Yet the soonest any such change could go into effect is July 2020, and so advocates were alarmed by Hammond’s comments at the conference. The department has already pushed back the date that schools need to publicly share their gainful employment information.

Critics of DeVos say the delays in data disclosure are another example of her siding with the for-profit industry.

The department can’t access the debt-to-earnings data on different programs because its agreement with the Social Security Administration — which provides the information — has lapsed, said Education Department Press Secretary Liz Hill. She noted that a request to the agency to renew the agreement in March went unanswered.

A spokesman for the Social Security Administration said the agency notified the Education Department in May that it would not enter into a new agreement. He declined to comment further, citing ongoing litigation.

However, no official agreement between the Social Security Administration and the Education Department is needed for the agencies to exchange the gainful employment data, said Eileen Connor, the litigation director at Harvard University’s Project on Predatory Student Lending.

She called the department’s most recent explanation, “a complete smokescreen for DeVos to be able to accomplish the gutting of the gainful employment regulation.”

At the financial aid conference, Hammond explained that the new disclosures certain schools need to display on their websites no longer must include data on student debt or job placement rates.

Half of student loan borrowers from for-profit colleges wind up in default, according to the Brookings Intuition. In a recent report to Congress, the Department of Education’s Inspector General Kathleen S. Tighe said she disagreed with the department’s proposal to rescind the gainful employment regulation without an adequate replacement. She pointed out that for-profit schools have misrepresented their job placement rates and continue to be a place of fraud and abuse.

The Obama administration aggressively enforced the gainful employment regulation in an effort to hold for-profit schools accountable by forcing them to prove their graduates were able to repay their student debt.

The first round of debt and earnings data was released in 2017. More than 750 programs failed the test. For example, graduates with an associate’s degree in graphic design from the Art Institute of Pittsburgh typically earn less than $22,000 a year and have over $40,000 in federal student loan debt, the Education Department found.

Under the rule, schools which fail the test two years in a row are cut off from federal funding. Since the department is not conducting another debt-to-earnings analysis this year, however, no program has lost eligibility under this regulation.

The threat of losing government funding forced schools to improve their value, said James Kvaal, president of The Institute for College Access & Success.

Colleges slashed tuition, offered more scholarships, implemented free trials and worked harder to meet industry standards, he said.

“That’s why we’re very troubled that the Department of Education is turning a blind eye to its obligation to enforce this rule,” Kvaal said.