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Biden administration clashes with consumer groups over the reinstatement of Obama-era career training regulation

The Education Dept. says time would be better spent drafting a new regulation than reviving the old one that Trump repealed

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Updated with comment from the Education Department.

Two years ago, when then-Education Secretary Betsy DeVos repealed an Obama-era rule curbing the debt students amass through career training programs, the move drew widespread criticism.

At the time, James Kvaal, an education adviser for President Barack Obama, co-wrote an op-ed in The Washington Post arguing that the rule helped “protect hundreds of thousands of students from unaffordable debts” and that the Trump administration had erred in striking it down.

“Agencies must have a rational basis for their actions, and this one misrepresents or ignores a substantial body of experience and research,” Kvaal and Arne Duncan, Obama’s education secretary, wrote in defense of the “gainful employment” rule.

Now Kvaal, the newly confirmed undersecretary of education, is asking the courts to keep DeVos’s order in place until the department can devise a new rule.

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The 2014 rule threatened to cut off federal student aid to vocational programs whose graduates consistently had high loan payments relative to their income. It sought to ensure students secured gainful employment, earning enough money to repay their federal student debt. And it forced institutions, especially for-profit colleges, to prove the value of their programs.

President Biden has pledged to restore the tenets of the regulation and hold career programs accountable for poor student outcomes. Yet fulfilling that goal isn’t simple.

The Biden administration is fighting a lawsuit the American Federation of Teachers, California Federation of Teachers and two teachers filed last year against DeVos and the Education Department to reinstate the 2014 regulation. It claims restoring the old rule would complicate the administration’s efforts to produce a new version of the policy.

“Putting all or part of the 2014 GE Rule back in place would cause considerable disruption and diversion of resources from the Department’s priorities, which include restoring the student protections in this rule,” Kvaal wrote in a recent affidavit.

The Education Department has previously said it cannot legally reinstate a rule that was explicitly rescinded. Instead, the department said it must convene a rulemaking committee to revisit the regulation. That process will get underway in the new year.

Justice Department attorneys representing the Education Department have asked a federal court to let the department handle the matter without striking down DeVos’s rescission. If the court vacates her repeal, attorneys say the department would have to figure out how to revive a thoroughly dismantled regulation.

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The rule stipulates that loan payments for a typical graduate cannot exceed 20 percent of discretionary income or 8 percent of total earnings. To determine that debt-to-earnings ratio, the department had a data-sharing agreement with the Social Security Administration. When the agreement expired in 2018, the SSA declined to renew it amid separate legal challenges to DeVos’s use of the data to deny student debt relief claims.

Department staff tasked with implementing the 2014 rule were reassigned to other projects, and the reporting system undergirding the rule became largely obsolete, according to Kvaal’s affidavit.

“It is no longer possible to use the Department’s systems in their current form to implement the disclosure and eligibility provision of the 2014 GE Rule,” Kvaal said. “It would be burdensome and time consuming to modify the Department’s system to make such operations possible again.”

The federal judge in the case, U.S. District Judge Edward Davila, had previously agreed that without the Social Security Administration data, reviving the 2014 rule would not produce much new information.

But attorneys at the National Student Legal Defense Network, the group representing the teachers, argue there are other components of the rule that would help students right now. If the regulation were restored, schools would have to disclose whether their program meets state licensing requirements or was at risk of failing the rule.

In a court filing, Dan Zibel, chief counsel at Student Legal Defense, questioned Kvaal’s claim that the department doesn’t have the operational capacity to revive elements of the 2014 rule.

“It strains credulity to suggest that a cabinet-level agency managing a $1.6 trillion loan portfolio does not have the capacity to … disseminate a template that institutions, not the Department, must use to disclose information to prospective and enrolled students,” Zibel wrote.

He went on to argue that because of the lengthy rulemaking process, it could take nearly two years before a new version of the regulation could go into effect, leaving students and taxpayers vulnerable in the meanwhile.

Davila set a hearing for March to allow attorneys to argue the motion, but he could rule on it before then.

In a statement to The Washington Post on Thursday, Kvaal, who helped develop the gainful rule as part of the Obama administration, reiterated the Education Department’s commitment to restoring a strong rule as quickly as possible.

“While we respect and appreciate outside feedback on the best route to that goal,” Kvaal said, “our judgment is that focusing on the regulatory process will produce the best, most durable rule to protect students.”

The gainful-employment rule has courted controversy from its inception. It took nearly five years to implement the regulation as for-profit colleges petitioned the courts to prevent what they regarded as an attack on their sector. The industry found an ally in DeVos, who criticized the rule for targeting schools based on their tax status.

She delayed enforcement of key provisions of the regulation, suspended the rule, then proposed a rewrite before deciding to rescind it in August 2019. Her actions spawned a series of lawsuits, including one filed by a coalition of 19 Democratic state attorneys general seeking to reinstate the rule.

Advocacy groups and Democratic lawmakers have rallied for the restoration of the 2014 rule, which they say could help prevent another case like Corinthian Colleges or ITT Technical Institute. The closure of those chains, felled by charges of lying about job placement and graduation rates, resulted in hundreds of millions of dollars in taxpayer-funded loan forgiveness.

Congressional Republicans contend that the rule is burdensome, and should apply to all schools and not seek to hobble a sector of higher education that serves many low-income adults.

Although the rule covered vocational education at a variety of institutions, for-profit colleges voiced the loudest objections because a number of their programs were at risk.

When the Obama administration issued the rule in October 2014, it had identified 1,400 programs serving 840,000 students that would not meet its accountability standards; 99 percent of them were at for-profit colleges.

Soon after the rule took effect, many colleges eliminated their worst-performing programs, froze tuition or instituted other reforms to improve graduate outcomes. Without the threat of sanctions, supporters of the regulation worry there will be no accountability.