Before she took office, Secretary of Education Betsy DeVos’s political donations and activism suggested she’d be focused on K-12 policy when she assumed her post.
But over the past year, her Department has attempted to reverse some of the Obama administration’s higher education policies. And in the waning weeks of 2017, Congress took steps to also dramatically overhaul student loan and higher education policy. So as we head into 2018, the policies governing higher education and the way students pay for it are poised for change.
“Federal financial aid programs play an incredibly important role in helping students get to and through college and steer schools’ behavior towards practices that work for students,” said Debbie Cochrane, the vice president of the Institute for College Access and Success, a nonprofit organization focused on equity in higher education. “There’s a lot of important work to be done in the coming year on these issues.”
Here are a few issues experts are watching:
• The reauthorization of the Higher Education Act: Lawmakers are in the process of reauthorizing the statute that governs colleges and financial aid, known as the Higher Education Act. The HEA hasn’t been reauthorized since 2008 and House Republicans are seeking a major revamp.
Their bill, which advanced from the education and workforce committee to the full House on a straight party line vote earlier this month, includes proposals to get rid of several programs aimed at helping struggling borrowers manage their debt. The bill would: cut loan forgiveness for public servants, simplify the system borrowers use to repay their loans as a percentage of their income, and eliminate subsidized loans or loans where interest doesn’t accrue while a student is in school, among other provisions.
“Right now the House bill is a lousy deal for students,” said Ben Miller, the senior director of postsecondary education at the Center for American Progress, a left-leaning think tank.
But it’s unclear whether all of those proposals will make it into the final bill, given that the Senate requires more bipartisan cooperation to pass legislation, he said. Miller said he’ll be watching to see whether lawmakers look to pass the bill through a reconciliation, a process that allows lawmakers to push through certain spending provisions without making them subject to a filibuster in the Senate. If that’s the case, some of the more controversial proposals — like ending Public Service Loan Forgiveness — could remain in the bill, he said.
Conservative lawmakers have framed the House GOP proposal as a way to modernize the higher education system so it prioritizes innovation and pushes colleges and students to be more responsive to workforce needs. They say it also simplifies the student loan system, which stakeholders on all sides of the student loan debate have agreed may be overly complicated.
But borrower advocates say many of the proposals would hurt vulnerable students and borrowers if they make it into the final version of the bill. Persis Yu, who represents low-income borrowers as the director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, said she’s not optimistic about their fortunes as the bill winds its way through Congress.
“I’m not sure that with the current makeup” of Congress “our clients are going to fare very well in that process,” she said.
• The future of student loan servicing: Student loan servicers, or the companies the government hires to manage its student loan portfolio, are borrowers’ first point of contact when repaying their debts and/or trying to access repayment programs. And after years of uncertainty, the future of the student loan servicing system still remains unclear.
As we head into 2018, the Trump administration is in the process of receiving feedback from the student lending, financial services and other industries about the best ways to improve borrowers’ experiences as they repay their student loans. Ultimately, officials will incorporate the feedback into a request for proposals from companies interested in participating in what the Department has dubbed the “NextGen Servicing Environment.” The companies that submit proposals will be competing for a piece of the lucrative contract that governs student loan servicing.
Department officials have said they’re interested in a student loan system that’s mobile-friendly and feels more like the financial services experience people have when they interact with banks.
“That’s the big picture and the details are really important,” Yu said.
Yu added that she’s theoretically supportive of some of the objectives voiced so far by the Department, but it’s still too early to tell how well the new system will work in borrowers’ best interests. For example, Yu said she’ll be watching to see how the new system treats borrowers in trouble who are looking for help.
For the past several years, advocates like Yu have complained that student loan servicers don’t do enough to work in borrowers’ best interest in part because they’re not incentivized to do so by the government’s contract. In the last year of the Obama administration, officials tried to revamp the student loan servicing contract to push servicers to do more for struggling borrowers. The Trump administration rolled back two directives issued by Obama-era officials as part of the contract process and started embarking on a contracting process of their own.
Over the past couple of years, state lawmakers have also taken steps to regulate servicers in their jurisdiction, but a provision in the House GOP’s version of the higher education act would roll back those laws, if enacted.
The political and regulatory environment is likely to become more friendly to for-profit colleges this year. Throughout the Obama administration, officials took steps to crack down on these schools — an effort that accelerated following the 2015 collapse of Corinthian Colleges, a major for-profit college chain. Now, it appears the Trump administration and Republican lawmakers are eager to roll those restrictions back.
“A lot of groundwork has been laid in 2017 for gutting college accountability in 2018,” Cochrane said.
DeVos’s Department of Education has targeted two Obama-era rules in particular. One, known as gainful employment, requires that career training colleges prove through student loan repayment outcomes that they’re actually preparing students for a career. The other, known as defense to repayment, clarifies the process borrowers use to claim federal loan forgiveness when they believe they were misled by their schools.
DeVos has delayed the implementation of both rules, which was supposed to take place this summer. Her Department has also convened stakeholders in an attempt to rewrite the regulations — a repeat of processes that already took place during the Obama administration. What’s more, her Department is sitting on a backlog of request for relief from students who believe they were harmed by their colleges.
These developments worry borrower advocates, who say lax oversight of for-profit colleges resulted in a situation where thousands of students were lured by unscrupulous schools into taking on debt to pay for degrees that provided little value in the labor market. The result is students saddled with debt they’ll never be able to repay and taxpayers holding the bag, they say.
But Congress is also looking to roll back regulations targeting for-profit colleges. House Republicans’ HEA proposal includes provisions that would get rid of gainful employment and another rule focused on for-profit colleges, which require they get at least 10% of their funding from sources other than federal financial aid.
“Those are both rules designed to make sure that taxpayers investment and students investment pays off,” Cochrane said. “The gutting or elimination of those rules can only be seen as opening the door to waste fraud and abuse.”