The Obama administration’s latest assault on for-profit colleges—a broadened borrower-defense-to-repayment rule from the Department of Education—could have quite a few collateral victims. First of all, the rule is broad enough to rain down costly lawsuits on traditional, nonprofit colleges as well as for-profits. Furthermore, the cost of discharged loans under the new rule would fall to everyday Americans, most of whom have no stake in the postsecondary education system.
Yes, our local taxes fund public K-12 education and public universities. But should the American taxpayer really be footing the bill for a college grad’s useless degree? Conservatives think not.
Big government watchdogs and taxpayer defenders are scrutinizing this administration’s all too typical overreach on student debt forgiveness. The likes of Heritage Action, American Commitment and Grover Norquist’s Americans for Tax Reform oppose “BDTR” because of the burden of discharged student loan debt it would drop onto taxpayers.
In an open letter to Education secretary John King, the advocates warn:
There was already a rule to regulate the loan forgiveness process, but it required a higher standard of proof—intentional misrepresentation. Under the rule proposed in June, proof of perceived misrepresentation would suffice. Considering the sunny sales pitches colleges put out for wide-eyed prospies, a “stampede to file claims” sounds about right.
Members of the public may “comment” on the proposed rule before an August 1 deadline, a “rushed timetable” according to the Washington Post‘s editorial board. And assuming it’ll advance in its current form, despite the public’s cutting commentary, the next step is for conservatives in Congress to try to snatch back the purse strings via a Congressional Review Act vote. The Congressional Review Act lets Congress, under Article I, check the authority of federal agencies doing the executive’s bidding. But, judging by federal agencies’ successful subversion of a Republican congress under this overreaching administration, a CRA vote will most likely fall to a lame duck veto and a stunted override action.
At least that’s the projection of taxpayer defense group American Commitment: “If they go forward with anything that looks like this proposal, we are going to push for Congress to step in and stop it,” America Commitment’s Phil Kerpen told THE WEEKLY STANDARD Tuesday. “Although with that we’ll run into the same problem we had with the last five Congressional Review Act actions, which is a presidential veto and, you know, government by a super minority.”
Tellingly, the cost of the breathlessly broad rule is inestimable. It’s so vague the best the Congressional Budget Office can do is imagine a range of how freely claimants might interpret it. If debt-ridden grads and dropouts realize the extent of what they could claim, discharging federal loans could cost as much as 43 billion dollars or as “little” as 2 billion, according to the CBO.
Distilling the question of widespread student debt discharges to a big government debate distracts from the proposed rule’s likely damage to non-profit colleges. The defense-of-taxpayers angle against BDTR even seems to carry with it an underlying sense that higher ed had it coming. Highlighting the projected cost to taxpayers, many of whom never went to college in the first place, brings to mind a 2012-era argument from former senator and presidential candidate Rick Santorum, his view a perfect foil to 2016’s “free college” fantasia.
Before his speech at a Young Americans for Freedom conference in D.C. on Tuesday, Santorum took a couple minutes to weigh in. The burden of college costs will fall to the 70-percent majority of low and middle income American taxpayers who don’t have a college degree, he said: “What are we saying when we already provide a huge subsidy to those who go to college, and by the way those who go to college end up doing economically better than those who don’t, that’s pretty clear, and so we’re saying those who don’t go to college who do economically worse, who are the majority in this country, are going to pay money now for people who are going to do economically better, who are the minority, to have a cheaper college experience? How’s that fair?”
He argued that those who incur debt to go to college would have been better off learning a trade. Similarly, It’s reasonable to assume many of those plaintiffs who will seek debt forgiveness under BDTR, claiming they were misled by colleges, should have forgone the degree. Colleges, of course, won’t embrace this argument—but they should resist BDTR all the same. Kerpen told TWS, concerning the colleges’ role in bucking the repayment rule, “As self-interested institutions, they should be concerned that it increases their legal exposure, that it will costs them a lot of money that they can’t pay themselves.”
And yet, in an interview in Forbes earlier this month, lawyer Katherine Lee Carey testified to colleges’ widespread denial. Carey, special counsel in the law firm Cooley LLP, which advises postsecondary schools and has been actively instructing them to get ahead of BDTR, all but diagnosed boiling frog syndrome:
While more schools have committed to the advised common sense legal preparations in the last couple weeks (since the panel Carey described), their resistance may yet prove insufficient defense against such an overreaching authority, which the administration has timed to take effect this fall. Considering higher ed’s recent history in this country, the familiar pattern suggests common sense will once again surrender.
