In connection with the second session of the Department of Education’s (ED) negotiated rulemaking on the 90/10 rule and Institutional and Programmatic Eligibility, the Center for Responsible Lending (CRL) and the Student Borrower Protection Center (SBPC) sent a memo to ED warning about the risks of counting institutional loans a revenue.
Predatory institutions have long sought out loopholes in the regulations in order to continue to extract federal and other public funding for programs that would not otherwise be capable of meeting 90/10 requirements. While we applaud ED for finally closing the GI Bill loophole in this proposal, the current proposal leaves open a path for proprietary schools to exploit and abuse their students through predatory lending. We warn that ED’s inclusion of payments on institutional loans may have the unintended consequence of incentivizing the issuing of burdensome debt and unscrupulous practices by schools as lenders and debt collectors.
Read the advocates’ letter to ED here: One Door Closes & Others Remain: Institutional Loans and the 90/10 Formula