Student Loan Crackdown: Elizabeth Warren Pushes Sweeping Overhaul of College Debt System — and Even More Forgiveness

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U.S. Sen. Elizabeth Warren (D-Mass.), who just announced that she will seek re-election in 2024 for a third term, also made headlines this week for rolling out an expansive plan to protect student loan borrowers and reduce their debt loads.

The eight-part plan was detailed in a March 26 letter to U.S. Secretary of Education Miguel Cardona. It was sent amid a period of uncertainty about the Biden administration’s loan forgiveness plan, which is under attack both legally and politically and might never see the light of day.

Warren, an outspoken advocate for progressive causes, took particular aim at for-profit colleges that don’t deliver on their educational promises to students. In her letter, the senator wrote that she supports reestablishing the Office of Enforcement within the Office of Federal Student Aid to conduct oversight of “bad actors” in the higher education industry. Schools that don’t comply would lose their accreditation and access to federal aid.

Beyond that, Warren offered her support for a Biden administration proposal that would expand loan forgiveness for lower-income students by making changes to income-driven repayment plans.

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That proposal, announced in January, would allow undergraduate borrowers to pay no more than 5% of their monthly discretionary income on undergrad loans. It also would raise the amount of income that is considered non-discretionary and is consequently protected from repayment.

“Under this proposed rule, no borrower earning under 225% of the federal poverty level would have to make a monthly payment,” Warren wrote in the letter. “When this rule is finalized and implemented, the Department should collect and publish information from institutions on their percentage of graduates who make $0 monthly payments. This information can be useful to borrowers in determining the return on investment of an educational institution.”

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Here is a rundown of the eight actions Warren said the Education Department should take:

  • Ensure that institutions that fall below standards are subject to provisional Program Participation Agreements that set out “strong corrective conditions” with closely supervised, measurable benchmarks for improvement. Schools that fail to improve would have their Title IV funding revoked.
  • Strengthen enforcement of for-profit colleges’ “manipulation of cohort default rates.”
  • Review college conversions to ensure “co[n]vert for-profit” colleges are not redirecting funds to benefit private parties at the expense of students.
  • Use the Education Department’s authority to hold for-profit college owners and executives personally financially liable when the colleges they run “fail or lie” to students who take on massive student loan debts.
  • Improve oversight of online program management companies and their incentive compensation arrangements with colleges.
  • Conduct more stringent oversight of school accreditors, including terminating Education Department recognition of accreditors.
  • Conduct fair lending risk assessments and ensure all stakeholders in the federal financial aid programs are complying with fair lending and civil rights laws.
  • Re-institute and strengthen Gainful Employment rules and ensure that low-quality programs are “swiftly held accountable.” The goal is to prevent “further financial harm” to students who might end up in low-wage jobs or with debts that are not affordable relative to their actual incomes.
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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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