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WEDNESDAY BUZZ: Senate Committee Hearing Looks at For-Profit Student Debt

June 08, 2011

 

​The Senate Health, Labor, Education and Pensions Committee held its fifth hearing yesterday on the for-profit education sector, this time focusing on student debt loads and the new “gainful employment” rule intended to ensure students in career programs will earn enough money to repay their loans.

Chairman Tom Harkin (D-IA) characterized the new rule as “an important but modest first step,” claiming that it did not go far enough to protect students who often take on crippling debt.

“At a time when Congress is single-mindedly focused on our federal debt, how can we blindly maintain policies that foot the bill for students to attend schools that have proven to be such a bad investment?” he said in his opening statement. “In 2009 for-profit colleges received $18 billion in guaranteed student loans. If trends continue we can expect nearly half of those loans to default. This should not be acceptable to those of us who are stewards of taxpayer dollars. High default rates mean ruined credit and garnished wages for students and more spending for taxpayers.”

Martha Kanter, undersecretary for the Department of Education, defended the rule as giving career colleges “every opportunity to reform themselves” while not letting them “off the hook.”

She also announced two pilot programs: The first would provide institutions with guidance on creating tuition-free trial periods so students can sample a course of study before making a financial commitment, and the second would give colleges more discretion over how much their students borrow. (See The Chronicle of Higher Education on how this plan will affect the so-called 90/10 Rule.)

Republican committee members boycotted the hearing, believing that the “continuation of this investigation is motivated in part to embarrass” for-profit colleges, as Ranking Member Mike Enzi (R-WY) wrote in a May 31 letter to Harkin (see The Washington Times).

Also see:

Another Round
Inside Higher Ed

 

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