Should taxpayers be required to pick up the bill for students who made bad loan decisions?
We’re not talking about students who were defrauded by a school.
Rather, they took out $100k in student loans to get that underwater basketweaving degrees, and now cannot get a job or pay back the loan.
Why should I (as a taxpayer) be on the hook for their stupidity?
Under the proposal, students would be eligible for loan relief if they can prove their schools knowingly misled them with statements or actions that directly led them to take out loans or enroll at the school.
That would be a higher bar than the borrower defense rules finalized under Obama in 2016 after the collapse of two for-profit schools, Corinthian Colleges and ITT Technical Institute, which had a campus in Spokane. Those rules allowed relief in a wider range of cases dealing with breach of contract.
Education Department documents supporting DeVos’ proposal argue that, while students should be protected from fraud, they also have an obligation to do their research before picking schools.
“Postsecondary students are adults who can be reasonably expected to make informed decisions if they have access to relevant and reliable data about program outcomes,” the department said.
The new proposal is estimated to save nearly $13 billion over the next decade compared with spending estimates under the Obama rules, primarily by reducing the amount of loan relief awarded to students.