Do College Students Need "Borrower Defense"?

COMMENTARY Education

Do College Students Need "Borrower Defense"?

Aug 15th, 2018 2 min read
COMMENTARY BY
Mary Clare Amselem

Policy Analyst

Mary Clare is a Policy Analyst at The Heritage Foundation.
Many students take on burdensome debt for decades, betting that they will assuredly learn the skills needed to compete in the marketplace and pay off their loans. Vasyl Dolmatov/Getty Images

Key Takeaways

Policymakers must take a closer look at how accreditation has failed to ensure that taxpayer dollars are not wasted.

A better way to measure quality among colleges and universities would be to relegate the accrediting process to the states.

Ultimately, the “borrower defense” regulation is redundant.

To receive federal taxpayer money, colleges and universities must first be accredited. This assures us that every taxpayer dollar spent on higher education goes toward providing a worthwhile, valuable education, right?

Unfortunately, that’s not how it works. In fact, the accreditation system does such a poor job at determining quality and protecting students from fraud that the Obama administration promulgated a regulation called “borrower defense to repayment.”

Unfortunately, that regulation did not fix the problem. Moreover, it placed an undue burden on American taxpayers.

Expanding on an existing policy, the Obama-era regulation allowed students who felt they had not received the education they were promised to claim their school committed fraud, allowing their student loans to be discharged.

Education Secretary Betsy DeVos succinctly described the problem with this approach: “All one had to do was raise his or her hands to be entitled to so-called free money.”

The Education Department now proposes revising this problematic regulation, significantly raising the qualification threshold for students seeking to have their loans discharged. Students would now have to prove that a school intended to commit fraud. Additionally, the current draft proposal shrinks the budget for borrower defense claims — a move projected to save Americans $12.7 billion over the next 10 years. This is a move in the right direction.

Unfortunately, the Trump administration’s version of the borrower defense is not without its drawbacks. This draft proposes that only students who default on their student loans may qualify to have their loans discharged. This may have the unintended consequence of encouraging students who could repay to default on their loans simply to qualify for “borrower defense.”

While this rewrite certainly offers improvements, borrower defense in any form merely puts a Band-Aid over deeply rooted problems facing higher education in America. We do need borrower defense, but not through lofty Education Department regulations, such as those promulgated under the Obama administration.

Students all across America are not getting the education they hoped for. It is a failure on many levels. Professor Richard Vedder has written that much of this failure lies within our accreditation system:

“It is 5.3 miles from the U.S. Capitol to the University of the District of Columbia (UDC). … Only 5.7 percent of full-time students at UDC graduate in four years at this fully accredited school. … Why does UDC receive the same level of accreditation as, say, nearby Georgetown or Johns Hopkins? Shouldn’t a school with such high levels of loan default face some negative consequences?” he wrote in 2015.

Policymakers must take a closer look at how accreditation has failed to ensure that taxpayer dollars are not wasted. Today, many students take on burdensome debt for decades, betting that they will assuredly learn the skills needed to compete in the marketplace and pay off their loans.

Incorporating the needs of the business community with higher education is essential for the well-being of the economy, future students and taxpayers alike. With Americans holding $1.5 trillion in outstanding student loan debt, many students are walking away wishing they learned more about computer science and less about the philosophy of gender.

A better way to measure quality among colleges and universities would be to relegate the accrediting process to the states. State officials have better knowledge of the higher education and employment landscape within their borders and can recognize accreditors who would be best at determining excellence. This could open up countless opportunities for businesses, nonprofits, research institutions, etc. to become involved in higher education and evaluate programs or courses.

Ultimately, the “borrower defense” regulation is redundant. If higher education accreditation functioned the way it is supposed to, students would rest assured that they are protected not only from fraud but also from an education with little practical use. Policymakers should consider ways in which the accreditation system can be reformed to make sure that quality comes from the free market rather than a bloated government bureaucracy.

This piece originally appeared in The Washington Times