Student loan borrowers will be better protected against sudden school closures under the rules, the DOE says.
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The Biden Administration issued final regulations aimed at bolstering oversight and accountability for higher education institutions and improving protections for student borrowers.
The new rules, which go into effect on July 1, 2024, strengthen the Department of Education's (DOE) ability to protect students and taxpayers from sudden college closures, the Biden administration said in a statement. They include several requirements for colleges including the creation of warning signs that make it easier for DOE to secure letters of credit or other forms of upfront financial protections.
The rules also mandate that colleges provide clearer and more comparable information on financial aid; prohibit the withholding of transcripts for federally funded courses; require adequate career services; and limit the employment of individuals with a history of risky management of the federal student aid programs.
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The move comes as several schools were ordered to cancel various amounts of student loan debt after being charged over misleading practices by the Biden administration. These include Sollers College, which last week agreed to cancel $3.4 million in student loans to resolve a Federal Trade Commission charge of deceptive and misleading loan practices.
“Too many students have been abandoned by shady colleges that close their doors and leave borrowers with unaffordable debt and little hope of completing their educational journeys and embarking on rewarding careers,” U.S. Secretary of Education Miguel Cardona said. “We are raising the bar for accountability and making sure that when students invest in higher education, they get a solid return on that investment and a greater shot at the American dream.”
The DOE said it has approved $127 billion in relief for nearly 3.6 million students, including record amounts of relief for borrowers whose colleges took advantage of them or closed suddenly.
After a three-year pause, student loan repayments resumed this month. But there are some tax breaks that can help.
If you believe you are a victim of fraud by your school, visit borrower defense loan discharge for assistance.
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ContributorJoey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
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