Recent federal regulations enacted to protect student loan borrowers against fraudulent higher education institutions may be in jeopardy. To date, though, Congress has made no official move to undo the borrower defense to repayment rules.
But in November, Inside Higher Ed asked Rep. Virginia Foxx, R-NC, head of the House Committee on Education and the Workforce, what approach Republicans would take in regard to the higher education regulations the Department of Education released under John King’s leadership. She responded, “I think you’ll see us do everything we can to roll back those rules and regulations.”
[Read about what DeVos might do with student loans.]
Even before the recent threat of undoing these rules on the federal level, however, some individual states were ramping up their own protections for higher education consumers. In 2013, Oklahoma passed the Private Student Loan Transparency and Improvement Act, which requires private or alternative student loan providers to release clearer disclosures prior to issuing a loan.
In 2015, Connecticut became the first state to pass a borrower’s bill of rights. The bill established a student loan ombudsman in the Connecticut Department of Banking, as well as an educational financial literacy course for college students.
It also requires student loan servicers to be licensed by the state banking department and prohibits them from defrauding or misleading borrowers. Similar legislation has been filed in Massachusetts, Michigan, Washington and Rhode Island.
In addition to bills of rights, states are also stepping up to address student debt in new and creative ways. According to the National Conference of State Legislatures, California, Connecticut, Maine, Minnesota, North Dakota, Iowa and Rhode Island have all passed or drafted legislation that allows state residents to refinance their existing education debt at lower interest rates, often through state student loan authorities.
In 2015, New York enacted the “Get on Your Feet” loan forgiveness program, which pays up to two years of federal student loan bills for state residents who graduated from a New York college or university after 2014, earn less than $50,000 and are enrolled in an income-based repayment plan.
While New York is the highest profile state to offer this type of program, the conference reports that at least 35 states have rules on the books whereby residents can get partial or full student loan reimbursement if they agree to live or work in certain regions. Borrowers can download a list of state-specific forgiveness programs.
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For prospective student loan borrowers, another threat can be shoddy or fraudulent distance learning programs that pile on the debt but don’t produce job opportunities as promised. States may now have more control over schools that operate in their states via distance learning frameworks.
Currently, states form an important piece of the higher education oversight triad that also includes the Department of Education and accreditors. States generally only have the authority to approve — or not approve — schools with a physical presence in that state.
Under the new state authorization rule, schools would need approval from a state that any of their students are located in. This means that if a school has a distance learning program, which these days most do, they will need to get authorization from all 50 states to ensure they are complying with federal financial aid rules.
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The rule does allow states to use reciprocity agreements, meaning they can accept another state’s approval as their own approval, but the rule also allows states that use these reciprocity agreements to still hold a school to their individual state laws. This rule has been in the making for several years but was struck down in court when initially published.
Since this version of the final rule was published within a month of President Donald Trump’s inauguration, it’s possible that the new administration will table it rather than implement it in July 2018 as currently planned. Additionally, many state attorneys general are scrutinizing for-profit higher education institutions in general and their accreditors more closely than ever before.
If you have a student loan or are thinking of borrowing and want to know more consumer protections and programs that help alleviate education debt that your state offers, contact your state attorney general, department of higher education or department of banking.
You may also want to review Generation Progress’ 2016 report “We Can’t Afford to Wait: How States and Municipalities Can Help Curtail the Student Debt Crisis” to see case studies of what states have already implemented. It may also inspire you to contact your state representatives and suggest similar legislation in your region.
Ultimately, overcoming the nation’s student debt challenge will require solutions by colleges and universities, the federal government, employers, students and parents, and others. It’s nice to see states stepping up to help do their part.
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Individual States Try to Address Student Debt originally appeared on usnews.com
