The Chronicle: Will the U.S. Dept. of Education Loan-Forgiveness Plan Lead to Greater Scrutiny and Oversight!

Dear Commons Community,

Last week’s U.S. Department of Education’s loan-forgiveness plan for students who attended Corinthian Colleges’ closed campuses will very likely have ramifications that extend to all of higher education. The U.S. Department of Education’s actions are unprecedented in scope, opening the door to the possibility that thousands of defrauded students could see their federal loan debts wiped away in one fell swoop, at a potential cost to taxpayers of hundreds of millions of dollars. By many accounts, the move could also change how accreditors, states, and the federal government handle quality assurance of college programs. As reported in The Chronicle of Higher Education (subscription required):

“If we are going to be discharging a significant amount of debt, it means we have to pay much more attention” says David A. Bergeron, a senior fellow at the Center for American Progress who long served as an Education Department official.

Pauline Abernathy, vice president of the Institute for College Access and Success, says the move represents a shift in responsibility, making the government, not just the students, financially liable for loans used at colleges that defraud their students.

“The stakes to the students have been very clear for a very long time,” says Ms. Abernathy. Now the Education Department, state regulators, and accreditors will face pressure “to all act much sooner” to prevent abuses that could justify a loan discharge, she adds…

In some cases, the parties might not believe they are even justified to act.

That was made visible on Wednesday, during a testy face-off at a Capitol Hill hearing that left several Democratic senators exasperated by the stance of one of the accredition-agency leaders invited to testify.

Sen. Elizabeth Warren, in particular, grilled the president of the Corinthian campuses’ accreditor for leaving their accreditations intact “right up to the minute they closed.” She also questioned why his agency continued to accredit the campuses of another for-profit-college company, ITT Educational Services, despite the accusations it faces from state attorneys general, the Consumer Financial Protection Bureau, and the U.S. Securities and Exchange Commission.

“How many federal and state agencies need to file lawsuits” before the accreditor takes action? asked Ms. Warren, a Democrat from Massachusetts. “The accrediting agency continued to look the other way, and now students and taxpayers are stuck with the bill.”

It will be interesting to see how this plays out. I believe that the states and accreditation agencies will indeed have to be more scrupulous in their assessments of financial aid procedures as well as program completion and quality.



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