Student record

U.S. student debt freeze goes against industry norms

The Biden administration’s prolonged freeze on federal student loan debt — and the prospect of outright forgiveness — has reached the point of threatening quality protections for new students, experts have warned.

The concern stems from a variety of monitoring tools led by a known as the cohort default rate, which reflects the share of an institution’s borrowers considered to be in good standing on their progress towards loan repayment.

The CDR metric is important both for prospective students and for the government to avoid working with low-quality institutions, the Congressional Research Service told lawmakers in a new analysis. The service is the official policy research institute of the US Congress, and it reminded politicians that CDR is the “primary federal institutional accountability mechanism” related to student loans.

Yet with interest accrual and payment requirements on federal student loans suspended since the early days of the pandemic in March 2020, he noted, the CDR measure – already considered vulnerable to gambling – has completely disappeared as a useful tool.

“There is a danger from a student protection perspective,” acknowledged Kristin Blagg, senior research associate at the Center on Education Data and Policy at the Urban Institute, a research organization focused on social equity.

The Biden administration has taken steps to close this accountability gap. In an effort to guide prospective students, he tried to improve the Department of Education’s College Scorecard, an online database for comparing colleges and programs on student achievement. For the government’s own accountability efforts, he worked to reinstate federal paid-employment rules, which denied aid to institutions if their former students didn’t earn enough money to repay their loans.

In both areas, however, even the administration’s allies agree that it hasn’t made enough progress, raising the risk that it will harm current students while pushing to cancel student loans. former borrowers.

A new gainful employment rule would go a long way to closing protection gaps left by the erosion of the CDR, said Robert Shireman, who served as deputy assistant secretary for education in the Obama administration.

But for a variety of reasons, Shireman said, the Biden administration was slow to draft paid employment regulations that would replace the original 2014 version, which was reversed by the Trump administration in 2019.

“We would like to see this administration move faster than it is on its accountability measures, especially paid employment,” said Shireman, now a senior fellow at the Century Foundation, a progressive think tank.

The original structure of paid employment applied only to for-profit colleges and non-degree programs elsewhere. The Biden administration has sought to keep it that way, though Republicans have long advocated for any new version to be applied more broadly in higher education.

The College Scorecard, meanwhile, is increasingly improving its accumulation of data on institutional and program performance from various employment records, making CDR less necessary, Shireman said. He and others, however, criticized the College Scorecard for an interface that students find inherently difficult to use.

Mr Biden was elected in 2020 on campaign promises to forgive $10,000 (£8,000) of college loan debt for all borrowers and make two-year institutions available free of charge. Some of his political allies have warned that unilateral forgiveness is regressive, helping wealthier Americans who don’t need it.

The idea nevertheless remains politically attractive. Congressional Republicans have a strong chance of retaking the U.S. House of Representatives in this year’s election, and their leaders on the chamber’s education committee have just released a legislative proposal to reform the system. student loans. It contains a series of debt cancellation provisions, but with targeted benefits to those in need.

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