In the rush to help aggrieved borrowers from the now-defunct Corinthian Colleges, policymakers have two key challenges.First, can they flesh out a clear legal standard that draws bright lines around what qualifies for loan relief and what does not? Second, and more important, what structural reforms can help us avoid more Corinthians in the future?
The Department of Education’s “defense to repayment” rule is quite vague, citing any “act or omission” of the college that “would give rise to a cause of action against the school under applicable state law” as grounds for a claim for loan discharge.
In cases where borrowers can conclusively prove that a college knowingly misled them using inaccurate data or false advertising, loan relief is a straightforward remedy. Considerable evidencesuggests that many Corinthian campuses were cooking the books, and borrowers who attended those campuses have a legitimate claim to relief.
But other cases are not likely to be so cut and dried. We do not have a consistent legal definition for how schools must collect and calculate job placement rates, for example, but schools are required to self-report the data anyway — a recipe for incomplete and inaccurate information.
Without consistent measures, how can the Department of Education judge which numbers are inaccurate due to incomplete data collection and which are fraudulent? In the absence of clear evidence of wrongdoing, these decisions will get murky quickly, creating room for any student who feels dissatisfied with their education to petition for relief.
Clarifying the legal standard of fraudulent behavior will be hard enough, but policymakers can’t stop there. The truth is, the implosion of Corinthian is the sad result of a federal student aid system that provides institutions with every incentive to enroll as many students as possible and little reason to worry about whether they are successful. We need reforms that will increase transparency and better align the incentives of students and schools.
Leaders should use state or federal wage databases to calculate and standardize measures of labor market outcomes — taking that responsibility out of the hands of the colleges. Comparable data would reduce legal ambiguities and provide students with clearer outcome information that could help them avoid low-quality programs in the first place.
Colleges also must have “skin in the game” when it comes to student loan repayment. If an institution’s students cannot pay back their loans, the school should be on the hook to pay back a portion of the loan balance that goes unpaid. Taking on even a small amount of risk would encourage institutions to think twice before charging too much for a shoddy product.
from AEI » Latest Content http://ift.tt/1IkFKzC
0 التعليقات:
Post a Comment