Senate and House Democrats are accusing Education Secretary Betsy DeVos of exacerbating racial disparities in student debt by failing to help defrauded borrowers, enforce consumer protections and examine the root causes of debt inequity.
They point to the rewriting of Obama-era regulations intended to guard against predatory for-profit colleges, highlighting two rules known as borrower defense to repayment and gainful employment. As originally conceived, those regulations would benefit students of color, who at higher rates enroll in for-profit schools, take out loans, fail to graduate and default on the debt.
Lawmakers also say the U.S. Department of Education has done a poor job of monitoring rising debt, delinquency and default levels among African American college students throughout higher education.
The Education Department did not immediately respond to a request for comment.
Sixty-two congressional Democrats, including Sen. Elizabeth Warren (D-Mass.) and Rep. Mark Takano (D-Calif.), sent DeVos a letter Monday urging her to create a task force to study the challenges facing borrowers of color and to propose solutions to help them get out of debt. They want the Education Department to collect and report annual data on loan default rates, repayment rates and loan delinquency by race, ethnicity, sex, loan type, school and the company handling the loan.
“This Administration has not committed to releasing aggregate student loan program data disaggregated by race and ethnicity,” the congressional Democrats wrote. “The Department’s unwillingness to share this information has made it more difficult for Congress to conduct meaningful oversight and propose thoughtful policy solutions to the student debt crisis facing diverse borrowers of color.”
African American families, after decades of being shut out of traditional ladders of economic opportunity, have the least amount of resources to buffer against the risk of borrowing. The same is largely true for Hispanic families. As a result, African Americans and Hispanics are disproportionately falling behind on student loan payments, a body of research has shown.
The Education Department does not routinely collect information on the race or ethnicity of student loan borrowers. Racial disparities among borrowers and in who struggles with education debt have been documented through surveys conducted every few years by the Federal Reserve and the Census Bureau.
While that information has helped economists, academics and policy analysts create a framework for discussion, many of them have complained that the Education Department has a bigger role to play in identifying and addressing inequalities in student lending. The argument has gained traction amid a growing body of research on the disparate impact of student loans on African American college graduates.
Education Department data released in October showed that the typical African American college student who enrolled in college in 2003-2004 owed more on their federal student loans after 12 years because their payments were going toward interest even as the balance ballooned. Nearly half of African American borrowers defaulted on their federal loans within 12 years. That’s more than twice the rate for white students during the same time.
The federal data also showed that default rates at for-profit college are high for all racial groups, though nearly two-thirds of African American attendees wind up defaulting on their loans. The figure was even more striking for those who did not graduate: Seventy-five percent of those African American borrowers wound up defaulting.
Congressional Democrats say this dismal data not only warrants more attention from the Education Department, but also illustrates the need for strong consumer protections, especially for students attending for-profit colleges. They are urging DeVos to fully enforce the borrower defense to repayment and gainful employment rules as written during the Obama administration.
The gainful employment regulation threatens to withhold federal student aid from vocational programs whose graduates consistently end up with more debt than they can repay. The borrower defense statute, a revised version of a law on the books since the 1990s, wipes away federal loans if a school used illegal or deceptive tactics to persuade students to borrow money for college. Both rules are facing an overhaul that consumer advocates say favors industry to the detriment of all borrowers, though Congressional Democrats argue that the pain could be most acute for students of color.
“Given the scope of the student debt crisis, the Department is moving backwards by delaying and rewriting the very policies designed to protect students and mitigate the racial divide among student loan borrower outcomes,” Congressional Democrats wrote.