The U.S. Department of Education’s inspector general is cautioning Congress against provisions in the House Republican higher education bill that would repeal regulations holding colleges and universities accountable for the use of federal student aid.
“Eliminating various accountability provisions without a proven substitute would increase the risks to students and taxpayers,” the inspector general said, in a report released Monday. It “could result in higher costs to offer credit through loans due to excessive borrowing, could increase defaults, and increase the use of [income-driven repayment plans] and loan discharges that could negatively impact the long-term viability of the programs.”
The inspector general’s critique centers on several measures in the Promoting Real Opportunity, Success and Prosperity through Education Reform Act, the legislation House Republicans introduced in December to overhaul the federal law governing almost every aspect of higher education. The 590-page bill, sponsored by Reps. Virginia Foxx (R-N.C.) and Brett Guthrie (R-Ky.), proposes to end the 90/10 rule, which bars for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid.
It would also get rid of the gainful employment regulation that threatens to withhold student aid from vocational programs that have graduates who consistently end up with more debt than they can repay. The bill would also eliminate a host of standards for the private organizations that accredit universities, including those involving curriculum, faculty and program length. Doing that, the inspector general argues, would stymie meaningful oversight of the quality of education.
“We weren’t surprised to learn of OIG’s concerns since they have historically resisted innovation, but this is why the legislative process is an open and public one, and their concerns have been heard,” said Michael Woeste, a House Education Committee spokesman.
Many of the accountability measures at issue target for-profit colleges, which have complained of being singled out in rules promulgated by Democrats. The House Republican bill addresses those concerns by not only doing away with many of those regulations, but eliminating separate definitions of nonprofit and for-profit colleges. But the inspector general argues that for-profit colleges present too much of a risk for the Education Department to treat the sector the same as all other types of schools.
Seventy-nine percent of the inspector general’s cases that involved a school or its employees committing fraud have been tied to for-profit colleges since fiscal year 2016, according to the report. The inspector general noted that such schools have also reported a larger share than their counterparts of people not making payments on federal student loans within three years of leaving college.
“The sector continues to present itself as a high-risk area for the department,” the report says. “This sector, unlike public and nonprofit schools, must produce profit for owners and stockholders, which can create an incentive to evade compliance with obligations to students and taxpayers.”
Rather than getting rid of accountability measures, many of which the inspector general says have significant shortcomings, the Education Department’s watchdog is imploring Congress to strengthen them.
“Independent analysis continues to confirm what we have said about [the bill] from the beginning: It makes college more expensive for students and is a wish list for for-profit schools,” said Rep. Bobby Scott (D-Va.), ranking member of the House Education Committee. “I again urge the majority to abandon this legislation and work with House Democrats on meaningful higher education reform in a way that makes sense for students, taxpayers and employers.”
The legislation cleared the House Committee on Education and the Workforce in December, without hearings and despite calls from the higher education community for more input and time to analyze the bill. It has received mixed reviews, with some policy analysts applauding provisions that use grants to provide incentives for students to graduate in four years, eliminate student loan origination fees and expand work-study opportunities for low-income students.