More and more Democrats are urging the White House to scale back a proposal aimed at preventing loan defaults among career college students.
Sens. Herb Kohl (D-Wis.), Roland Burris (D-Ill.) and Bill Nelson (D-Fla.) — as well as Rep. Michael McMahon (D-N.Y.) — have all sent letters to the Education Department in the last week warning that the rule will limit education opportunities for low-income and minority students, who tend to attend for-profit schools in disproportionate numbers.
Some new limits on for-profit educators are appropriate to rein in abusive recruitment and lending practices, the lawmakers argue, but the current proposal goes too far, they say.
The lawmakers join dozens of House Democrats who had weighed in against the proposal in formal comments earlier in the month.
Although the agency on Friday extended its timeline for finalizing the most controversial parts of that rule, the scheduled effective date remains unchanged: July 1, 2012.
The pushback from Democrats — combined with a fierce lobbying effort by the for-profit education industry — has upped the pressure on the administration to scale back the proposed limits as officials draft the final rule, scheduled for release early next year.
The issue is significant in the healthcare world because a large number of medical professionals are trained at for-profit schools.
The Education Department’s so-called "gainful employment" proposal is designed to ensure that career and professional college students will earn enough in their fields to pay back their federal loans. The rule would require for-profit programs to show that graduates’ annual loan payments don’t exceed 8 percent of their starting salaries. Programs failing to meet that debt-to-income ratio could lose access to federal financial aid — an enormous stick for an industry that benefited from roughly $24 billion in federal loans and grants last year.
The rule is one of 14 White House proposals aimed at combating two troublesome trends in the for-profit education industry: The rising rate of student loan defaults; and the emergence of aggressive recruiting practices that, in many cases, have misled students about the nature of their training and employability.
Even so, the industry says, the metrics proposed in the gainful employment rule are too strict — a message being echoed by Kohl, Burris, Nelson, McMahan and scores more members.
Some lawmakers, though, are fully behind the White House proposal. Earlier in the month, a group of liberal upper-chamber Democrats — including Sens. Tom Harkin (Iowa), chairman of the education panel, and Majority Whip Dick Durbin (Ill.) — urged the Education Department to adopt the new guidelines as quickly as possible.
"High student loan debt coupled with low repayment rates signal a questionable investment for students and taxpayers," the Democrats wrote. "We encourage swift implementation of the gainful employment regulation and would be concerned with any efforts to weaken the proposal."