Latest Borrower Defense to Repayment Numbers (US Department of Education)

The Higher Education Inquirer has received information today from the US Department of Education about Borrower Defense to Repayment claims.  Here are the results from ED FOIA 25-02047-F.  

 

Delinquent and Disillusioned: The Student Loan Crisis Reignites Amid Economic and Policy Failures

Millions of student loan borrowers in the United States are falling behind on payments now that the COVID-era federal loan pause has ended—and the economic and personal consequences are mounting fast. The recent Wall Street Journal article “Millions of Americans Had Their Student-Loan Payments Put on Pause During the Pandemic. Now They Are Back on the Hook Again” paints a sobering picture of what happens when borrowers, many already living paycheck-to-paycheck, are reinserted into a punitive debt system with little warning or preparation.

According to the WSJ report, 5.6 million borrowers were marked newly delinquent in just the first quarter of 2025, as credit reporting resumed and wage garnishment letters started showing up in mailboxes. Delinquency rates surged from 0.7% to 8%, returning to pre-pandemic levels with alarming speed. While this may be a statistical “reversion to the mean” in economic terms, for those affected, it's a hard shock that could derail financial stability for years to come.

A System Ill-Equipped for Restart

The Biden administration’s temporary on-ramp expired in the fall of 2023. Since then, servicers, borrowers, and regulators have all struggled with the logistical and psychological whiplash of rebooting a system that had been on hold for over three years. Meanwhile, the Trump administration—eager to reassert austerity and fiscal discipline—has resumed the aggressive collections practices that defined the pre-pandemic era: wage garnishments, tax refund seizures, and Social Security offsets.

For millions, this reactivation has not come with transparency or support. Many received letters from unfamiliar loan servicers, the result of reshuffling in the student loan servicing industry during the pandemic. As University of Cambridge economist Constantine Yannelis told WSJ, borrowers who graduated during the payment pause may not have ever experienced repayment, and are now blindsided by bureaucratic demands and crumbling credit.

Credit Collapse and Economic Spillover

Among the most concerning revelations: borrowers with once-strong credit profiles are being dragged down. Nearly 2.4 million people with near-prime or prime credit ratings experienced sharp score declines—up to 177 points for those with scores over 720. That drop could shut borrowers out of mortgages, car loans, and even rental opportunities, extending the economic pain well beyond student debt.

Morgan Stanley economists warn that monthly student loan payments will rise by $1 billion to $3 billion, potentially shaving 0.1 percentage point from the 2025 U.S. GDP. While modest at the macroeconomic level, that drop represents hundreds of thousands of families tightening budgets, delaying major purchases, or skipping payments on other essentials.

And the demographic picture of who is struggling directly refutes tired stereotypes. University of Chicago economist Lesley Turner emphasized that those falling behind are not entitled Ivy League grads but disproportionately working-class Americans—especially those who attended for-profit or two-year colleges, or dropped out before earning a degree. Mississippi, where 45% of borrowers are delinquent, stands out as a cautionary tale in both poverty and policy failure.

A Fractured Policy Landscape

What’s happening now is not just a predictable economic phenomenon—it’s the result of a fractured and politically volatile policy environment. Biden’s efforts to implement broad debt relief through the SAVE plan and other targeted forgiveness efforts have been challenged in court and undermined by executive overreach claims. That legal uncertainty left many borrowers falsely optimistic that repayment would be permanently suspended or forgiven, influencing their financial planning.

Meanwhile, the ideological pendulum continues to swing: progressive reforms like income-driven repayment and borrower defense to repayment have been inconsistently applied, undercut by administrative churn and legal ambiguity. Now, under a returning Trump administration, the Department of Education is once again prioritizing collections over compassion.

What Happens Next?

There’s no clear trajectory forward. As Duke economist Michael Dinerstein noted, the path could go in either direction. If borrowers respond to delinquency warnings and enter into income-driven repayment (IDR) plans like SAVE, we may see stabilization. But without real outreach, forgiveness, or structural reform, millions more may default—and carry the economic scars for decades.

At the Higher Education Inquirer, we see this moment as a pivotal test—not just of financial resilience, but of our society’s willingness to reckon with an education system that has long promised mobility while delivering debt. The student loan system was broken before COVID. The pause merely masked the underlying rot. Now, with repayments back in motion, the cracks are widening into chasms.

If the U.S. is serious about building a stable middle class, supporting higher education access, and ensuring economic mobility, it must move beyond temporary pauses and court-contested forgiveness. We need durable reform, not debt servitude masquerading as opportunity. Until then, millions of Americans will remain caught in the crossfire between broken promises and broken policies.

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For ongoing investigations into student debt, contingent labor, and the collapse of trust in U.S. higher education, follow the Higher Education Inquirer. 

The Higher Education Racket

 "Every great cause begins as a movement, becomes a business, and turns into a racket." Eric Hoffer

American higher education, once a ladder to opportunity, has become a vast machine of wealth extraction. Debt burdens students for decades. Professors and campus workers are trapped in precarious jobs. Entire communities are pushed out by campus expansions. And a select few elite universities sit atop fortunes that rival hedge funds—all while claiming tax-exempt status and public goodwill.

This is the higher education racket: a sector that has turned away from its public mission and now operates with the logic of capital accumulation, enabled by deregulation, political influence, and privatization.

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From Movement to Market: Postwar Expansion and Privatization

The 1944 G.I. Bill launched a golden age of public higher education, providing veterans access to tuition-free college and transforming American society. Enrollment surged, inequality shrank, and community colleges became lifelines for working-class students. Colleges were seen as civic institutions, essential to democratic life.

That vision began to erode in the 1980s, as neoliberal policymakers slashed state funding, forcing institutions to raise tuition, court corporate donors, and cut labor costs. By 2020, public universities received less than half the state funding (per student) they did in 1980, adjusted for inflation (Center on Budget and Policy Priorities).

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Trump Administration: Deregulating the Racket

Under Donald Trump, the Department of Education, led by billionaire Betsy DeVos, launched an all-out campaign to roll back protections for students and favor the worst actors in higher ed:

• Gutted Borrower Defense rules, making it harder for defrauded students to cancel loans.

• Eliminated the Gainful Employment rule, allowing for-profit colleges to peddle useless degrees.

• Weakened accreditors' oversight, enabling bad schools to access federal aid with little accountability.

• Backed anti-union efforts, including trying to strip grad students at private universities of their employee status.

This deregulatory spree enriched predatory schools, student loan servicers, and debt collectors—while stripping students and workers of protections.

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The Academic Underclass

While university presidents earn seven-figure salaries, and campuses build luxury dorms and biotech labs, the people doing the teaching are increasingly disposable. More than 70% of college faculty now work off the tenure track, many as adjuncts earning below minimum wage on a per-course basis (AAUP).

Campus workers—grad students, maintenance staff, food service employees—are organizing for better wages and benefits, but often face union-busting tactics. From Columbia to the University of California, administrators stall negotiations and outsource labor to avoid union contracts (The Guardian, 2022).

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Universities as Urban Developers

Historian Davarian Baldwin has documented how universities function as engines of gentrification in cities like New Haven, Chicago, and Philadelphia. In In the Shadow of the Ivory Tower, Baldwin argues that universities have become "shadow governments", gobbling up real estate, policing their neighborhoods, and reshaping urban economies—all without democratic accountability.

These “anchor institutions” claim to uplift communities, but their expansion often displaces low-income Black and brown residents, raises housing costs, and erodes the local tax base—since universities are typically exempt from property taxes.

“Higher education is not just about learning anymore. It’s about real estate, policing, health care, and urban planning—all under the control of tax-exempt institutions.” —Davarian Baldwin

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Endowment Empires

Nowhere is the inequality of U.S. higher education more glaring than in university endowments. Harvard, Yale, Stanford, and Princeton each have endowments exceeding $30 billion, managed like hedge funds with investments in private equity, real estate, and offshore accounts (NACUBO 2023 Endowment Study).

Despite their wealth:

• These universities often provide limited financial aid to working-class students.

• They pay no federal taxes on endowment income under $500,000 per student.

• They resist efforts to contribute to municipal budgets, even as they consume city resources.

During the COVID-19 pandemic, many elite institutions furloughed workers and froze wages—despite posting strong investment returns and sitting on endowments worth more than the GDP of some nations.

Critics argue that these funds should be tapped for student debt relief, housing support, or public education reinvestment—not hoarded like private wealth.

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The Price of the Racket

The numbers are staggering:

• $1.7 trillion in student debt

• Tens of thousands of adjuncts living in poverty

• Campus police forces more militarized than local law enforcement

• Communities displaced by campus-led gentrification

• Universities with endowments larger than some countries' national budgets

The higher education racket isn’t just an economic problem. It’s a betrayal of public trust.

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Reclaiming the Public Good

If higher education is to serve the people—not private interests—structural reforms are necessary:

• Cancel student debt and offer tuition-free public college

• Mandate living wages and fair contracts for all campus workers

• Tax large endowments and require community reinvestment

• Reinstate regulations to hold predatory institutions accountable

Higher education once expanded opportunity. It can again—but only if we dismantle the racket.

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Sources:

• Baldwin, Davarian L. In the Shadow of the Ivory Tower (Bold Type Books, 2021)

• AAUP – Contingent Faculty Data

• NACUBO – 2023 Endowment Study

• The Guardian – University Union-Busting

• NPR – DeVos Deregulation

• Center on Budget and Policy Priorities – State Funding Cuts

• College Board – Trends in Tuition

Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Comment Request; Borrower Defense to Loan Repayment Universal Forms

A Notice by the Education Department on 05/19/2025

Department of Education[Docket No.: ED-2025-SCC-0002]

AGENCY:

Federal Student Aid (FSA), Department of Education (ED).

ACTION:

Notice.

SUMMARY:

In accordance with the Paperwork Reduction Act (PRA) of 1995, the Department is proposing a revision of a currently approved information collection request (ICR).

DATES:

Interested persons are invited to submit comments on or before June 18, 2025.

ADDRESSES:

Written comments and recommendations for proposed information collection requests should be submitted within 30 days of publication of this notice. Click on this link www.reginfo.gov/​public/​do/​PRAMain to access the site. Find this information collection request (ICR) by selecting “Department of Education” under “Currently Under Review,” then check the “Only Show ICR for Public Comment” checkbox. Reginfo.gov provides two links to view documents related to this information collection request. Information collection forms and instructions may be found by clicking on the “View Information Collection (IC) List” link. Supporting statements and other supporting documentation may be found by clicking on the “View Supporting Statement and Other Documents” link.

FOR FURTHER INFORMATION CONTACT:

For specific questions related to collection activities, please contact Carolyn Rose, 202-453-5967.

SUPPLEMENTARY INFORMATION:

The Department is especially interested in public comment addressing the following issues: (1) is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.

Title of Collection: Borrower Defense to Loan Repayment Universal Forms.

OMB Control Number: 1845-0163.

Type of Review: A revision of a currently approved ICR.

Respondents/Affected Public: Individuals and Households.

Total Estimated Number of Annual Responses: 83,750.

Total Estimated Number of Annual Burden Hours: 217,750.

Abstract: On April 4, 2024 the U.S. Court of Appeals of the Fifth Circuit granted a preliminary injunction against 34 CFR 685.400 et seq. (“2023 Regulation”) enjoining the rule and postponing the effective date of the regular pending final judgment in the case. The current Borrower Defense to Repayment application and related Request for Reconsideration are drafted to conform to the enjoined provisions of the 2023 Regulation. This request is to revise the currently approved information collection 1845-0163 to comply with the regulatory requirements of the borrower defense regulations that are still in effect, 34 CFR 685.206(e) (“2020 Regulation”), 34 CFR 685.222 (“2016 Regulation”), and 34 CFR 685.206(c) (“1995 Regulation”) (together, the “current regulations”). These regulatory requirements are distinct from the 2023 Regulation's provisions. The revision is part of contingency planning in case the 2023 Regulation is permanently struck down. The Department of Education (“the Department”) is attaching an updated Borrower Defense Application and application for Request for Reconsideration. The forms will be available in paper and electronic forms on studentaid.gov and will provide borrowers with an easily accessible and clear method to provide the information necessary for the Department to review and process claim applications. Also, under the current regulations, the Department will no longer require a group application nor group reconsideration application.


Dated: May 13, 2025.

Brian Fu,

Program and Management Analyst, Office of Planning, Evaluation and Policy Development.


[FR Doc. 2025-08857 Filed 5-16-25; 8:45 am]

BILLING CODE 4000-01-P
Published Document: 2025-08857 (90 FR 21296)

House Republicans Push Sweeping Student Aid Cuts, Threatening Access for Millions

In a dramatic reshaping of the federal student aid system, House Republicans have introduced a 103-page legislative package that could raise the cost of college for millions of Americans while slashing $185 billion in federal spending over the next decade.

The legislation, a centerpiece of the GOP's budget reconciliation strategy, takes direct aim at key financial aid programs that have historically supported low-income, working-class, and underrepresented students. Education advocates and consumer protection groups warn the proposed cuts would deepen existing inequities in higher education and saddle a new generation of students with greater debt and fewer protections.

Tighter Pell Grant Requirements

Among the most contentious provisions is a proposal to tighten eligibility for the Pell Grant, the federal government’s primary need-based aid program. Under the bill, students would be required to complete 30 credit hours per academic year—up from the current 24—to receive the full grant. Those taking fewer than six credit hours would become ineligible altogether, even if they need just one class to graduate.

“While we support initiatives to reduce the time it takes for students to attain a degree, this approach may jeopardize time to completion for students who work part time,” said Kim Cook, CEO of the National College Attainment Network. “By increasing students’ unmet financial need, this proposal will also drive up student borrowing for millions.”

Cook’s organization estimates the new requirements would affect roughly 25% of current Pell Grant recipients, many of whom balance school with jobs or caregiving responsibilities.

Elimination of Subsidized Loans and Loan Access Limits

The bill also proposes to eliminate subsidized federal loans, which currently allow undergraduates to avoid interest accrual while in school. A limited three-year exemption would apply to students enrolled as of June 30, 2026.

“House Republicans propose charging low-income students more interest by ending the subsidized loan program for students with financial need,” said Abby Shafroth, co-director of advocacy at the National Consumer Law Center (NCLC).

Additionally, the bill would eliminate the PLUS Loan program for graduate students, capping lifetime borrowing at $100,000 for master’s degrees and $150,000 for law and medical students—figures that fall short of the actual cost of many programs.

Sweeping Changes to Repayment Plans

Perhaps the most far-reaching changes involve student loan repayment. The bill would consolidate the current four repayment options into just two: a standard 10-year plan and a single income-driven repayment (IDR) plan. The move would dismantle President Biden’s Saving on a Valuable Education (SAVE) plan, which is already facing legal challenges.

The new IDR plan would require borrowers to pay 15% of their discretionary income—defined as income above 150% of the federal poverty line. That represents a sharp increase over current IDR plans, where many borrowers pay 5% to 10%.

According to the NCLC, this change could more than triple monthly payments for borrowers enrolled in SAVE and force impoverished families to divert funds from essentials like food, rent, or medication.

The repayment timeline would also lengthen, with forgiveness arriving only after 20 years for undergraduate debt and 25 years for those with graduate loans. A new "Repayment Assistance Plan" would extend repayment to 30 years for many borrowers before they become eligible for forgiveness.

“These changes will add to the growing number of low-income older adults still burdened by student loan debt,” said Kyra Taylor, a senior attorney at NCLC. “It’s entirely possible that low-income Americans will still be paying off their own college debt when their children are entering college themselves.”

Rollback of Borrower Protections

The legislation also weakens borrower defense and school closure discharge rules, which offer relief to students defrauded by predatory institutions or impacted by sudden school closures.

The NCLC notes that the bill “rolls back common-sense regulations that would streamline relief for borrowers where the Department of Education has evidence that the school lied and used deception to enroll students in low-quality programs.”

Political and Economic Context

This legislation is part of a broader GOP initiative to slash $1.5 trillion in federal spending to fund former President Donald Trump’s proposed tax cuts, military expansion, and border security initiatives. House Education and Workforce Committee Chairman Tim Walberg (R-MI) has been charged with identifying $330 billion in cuts—placing higher education directly in the crosshairs.

The bill may clear the Republican-controlled House, but its prospects in the narrowly divided Senate remain uncertain. Nonetheless, its introduction signals a renewed ideological clash over the federal role in expanding access to higher education.

Dr. Jamal Watson, author of the forthcoming book The Student Debt Crisis: America’s Moral Urgency, argues the legislation would disproportionately harm students of color, first-generation college-goers, and adult learners.

“The policies in this bill reflect a profound misunderstanding—or disregard—for the lived realities of today’s students,” said Watson. “If passed, it will exacerbate inequality and leave millions further behind.”

The Haves and Have Nots of Higher Education and Student Loan Debt

In a move that has raised eyebrows across Washington and beyond, President Donald Trump recently announced a plan to transfer the U.S. Department of Education’s vast student loan portfolio—totaling a staggering $1.8 trillion—to the Small Business Administration (SBA). This bold step is ostensibly designed to streamline the management of federal student loans, but it is also seen by many as the first move in a larger effort to dismantle the Department of Education entirely, reduce federal oversight, and privatize key aspects of the student loan system. Alongside this plan, there are growing discussions about eliminating essential borrower protections, including programs like Public Service Loan Forgiveness (PSLF), Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and the Borrower Defense to Repayment program, all of which have offered critical relief to millions of students. Additionally, the rollback of Gainful Employment regulations—which were designed to protect students from predatory for-profit institutions—further signals a shift toward private sector control, which has historically benefited lenders over borrowers.

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The Alleged 'Rescue' of the Loan Portfolio

The White House has framed the transfer of the student loan portfolio to the SBA as a necessary step to relieve the Department of Education (ED) of a heavy burden, positioning the SBA as the new “caretaker” of the nation’s student debt. According to President Trump, the SBA—under the leadership of Kelly Loeffler—will now handle the $1.8 trillion student loan portfolio, while the Department of Education focuses on other key educational initiatives.

For some, the move seems like a fresh approach to a problem that has long plagued U.S. higher education: the overwhelming student debt crisis. However, a deeper look into the mechanics of the transfer suggests that this could be the first step toward a far more troubling goal: the dismantling of the federal student loan system and the privatization of debt, a shift that could harm millions of consumers in the process.

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The SBA’s Inexperience with Student Loans

The SBA, traditionally tasked with managing small business loans, lacks the expertise to effectively manage the complex structure of federal student loans, which include income-driven repayment plans, loan forgiveness programs, and various protections for struggling borrowers. With the agency also facing significant staffing cuts, it’s highly unlikely that the SBA will be able to competently handle such a vast and complicated portfolio—especially when 40% of these loans are already in default or behind on payments.

This raises an obvious question: is the SBA being set up to fail? Some insiders suggest that the failure of the SBA to properly manage the student loan portfolio could be deliberate—creating a crisis that would justify selling off the portfolio to private companies, thus privatizing the entire system.

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The Planned Failure: A Strategy for Privatization?

According to several former senior officials within the Department of Education, the transfer of the student loan portfolio to the SBA could be a calculated move to destabilize the federal loan system. The apparent failure of the SBA to manage the loans would then serve as a justification for transferring the loans to the private sector. This mirrors tactics used in other sectors where privatization was pursued under the guise of government inefficiency. The fear is that this move could ultimately lead to for-profit companies taking over the loan system, with borrowers facing higher interest rates, stricter repayment terms, and the loss of essential protections.

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Who Stands to Gain from Privatizing Student Loans?

The shift toward privatizing student loans stands to benefit several key players in the financial and educational sectors, particularly for-profit companies and private lenders who have long pushed for deregulation and profit-driven management of student debt. The primary beneficiaries would include:

1. Private Lenders and Financial Institutions: Banks, investment firms, and loan servicing companies are the most obvious winners in a privatized student loan system. With the federal government stepping back, these entities would gain control over the $1.8 trillion portfolio, allowing them to set higher interest rates, stricter repayment terms, and impose fees on borrowers. This would turn student loans into even more lucrative financial products for the private sector.

2. For-Profit Educational Institutions: For-profit colleges, which often rely on student loans to fund their operations, could also stand to gain. These institutions—many of which have faced significant scrutiny for high tuition costs and poor student outcomes—would benefit from a less regulated environment. Without the Gainful Employment regulations, which were designed to hold these institutions accountable for their job placement and earnings data, they would face fewer restrictions on their recruitment practices and financial dealings, potentially allowing them to continue enrolling students in expensive, low-quality programs.

3. Servicers and Debt Collection Agencies: Loan servicers and debt collection agencies that would likely take over the management of student loans in a privatized system stand to profit greatly. By controlling the servicing of student loans, these companies can increase their fees and aggressively pursue defaulting borrowers, further exacerbating the financial hardship for many students. These entities would benefit from a less regulated environment where the focus would shift toward profitability, often at the expense of borrowers.

4. Political Donors and Lobbyists: Financial institutions and for-profit education providers have historically been major political donors and lobbyists, particularly to policymakers who have pushed for deregulation of student loan systems. Privatization could provide these stakeholders with the opportunity to consolidate their power over the student loan industry, influencing policy decisions in their favor and ensuring continued access to profits from the student loan market.

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A History of Struggles: Lack of Oversight and Privatization Since the 1980s

The idea of privatizing student loans and dismantling federal oversight is not entirely new. In fact, the U.S. student loan system has been struggling for decades due to a lack of oversight and a trend toward privatization dating back to the 1980s. The federal government’s role as a guarantor of student loans—starting with the creation of the Guaranteed Student Loan (GSL) program in the 1960s—was eventually scaled back, leading to a rise in private student loans. As private lenders entered the student loan market, particularly during the 1990s and 2000s, the system became increasingly unregulated, leading to rising debt levels and predatory lending practices.

By the 1980s, the federal government’s reliance on private institutions to handle student loans led to a lack of transparency, accountability, and consumer protections. In particular, private lenders began to offer loans with fewer safeguards, contributing to the explosion of student loan debt and the proliferation of for-profit colleges that preyed on vulnerable students. The government, despite its involvement, increasingly stepped back from actively managing the loan system, leaving students with limited options for relief when they fell into financial distress.

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The Consequences of Deregulation: Elite Colleges and the Growing Educated Underclass

One of the most significant byproducts of the shift toward privatization and deregulation in U.S. higher education has been the growth of a growing educated underclass. While elite colleges have continued to thrive, expanding their endowments and increasing their tuition fees, a large segment of the population is left with a degree and overwhelming debt that fails to deliver on its promise. Over the past several decades, prestigious universities have only gotten wealthier, with many now sitting on endowments of billions of dollars. These institutions benefit from the student loan system, which allows students to take on more debt to afford high tuition costs, all while their wealthy alumni networks and expansive endowments only grow larger.

At the same time, a growing number of students from lower-income backgrounds—many of whom attend for-profit or underfunded public colleges—are graduating with significant debt and few prospects for stable, high-paying careers. This has created a growing “educated underclass,” where graduates with degrees struggle to find employment that pays enough to manage their loan repayment, further exacerbating wealth inequality.

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The Dangers of Future Issues: AI, Automation, and the Loss of Good Jobs

Looking to the future, the privatization of student loans and the increasing burden of student debt could be exacerbated by emerging technological shifts, particularly in the fields of artificial intelligence (AI) and automation. As industries evolve and more jobs become automated, many middle-class careers traditionally accessible to graduates may disappear or evolve into low-wage, low-security positions. This could lead to an even larger divide between the "haves" and "have-nots" in society, where only those with connections or elite educational backgrounds can secure stable, high-paying employment.

For students entering the workforce with massive student loan debt, this would present a troubling scenario where their ability to repay their loans becomes even more difficult as fewer well-paying jobs are available. This, in turn, would increase the financial strain on future generations of students who are already navigating a rapidly changing job market. For many, student loans could become an insurmountable barrier, keeping them trapped in cycles of debt that are impossible to escape.

Moreover, the increasing reliance on private companies to manage student loans, with their focus on profitability, could exacerbate these issues by offering fewer opportunities for income-driven repayment plans or relief options that account for the economic realities of an AI-powered, automation-driven economy. As the job market continues to shrink and evolve, the need for federal programs to support borrowers through tough economic times will only grow.

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The Impact of Eliminating Borrower Protections

The elimination of borrower protections—such as PSLF, PAYE, ICR, and Borrower Defense to Repayment—would significantly worsen the student loan crisis. Public Service Loan Forgiveness, for example, allows individuals working in essential public service careers to receive loan forgiveness after ten years of qualifying payments. Without this program, many public servants would face a lifetime of insurmountable debt. Similarly, income-driven repayment programs allow borrowers to repay loans based on their income, making it easier for those in low-paying fields to manage their debt.

The Borrower Defense to Repayment program provides vital relief to students who were defrauded by their institutions. Without strong enforcement of this program, students may have no recourse to seek relief from predatory schools. The rollback of Gainful Employment regulations could further expose students to the risks of attending for-profit institutions that fail to deliver on their promises.

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The Long-Term Fallout: A Dangerous Precedent

The long-term consequences of privatizing student loans could include exacerbating wealth inequality, widening the racial wealth gap, and creating an economic landscape where education debt is a permanent burden on a generation of students. If privatization moves forward, the financial burden of education will likely become a far more persistent and overwhelming problem, especially for those who can least afford it.

What’s particularly concerning is that in past crises, it’s the elites—wealthy colleges, financial institutions, and large corporations—that have consistently received the bulk of government bailouts. The same institutions that contribute the least to solving the country’s educational inequities continue to benefit from taxpayer-funded relief. If privatization moves forward, we cannot allow the same pattern to repeat itself. The majority of relief should go to those most burdened by student debt, not those who already have the means to navigate the system with ease.

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The Future of Higher Education Debt: A Call to Protect Federal Loan Programs

At the Higher Education Inquirer, we stand in full support of federal student loan forgiveness and repayment programs, including PSLF, PAYE, and ICR, as they offer essential pathways for borrowers, especially public service workers and low-income individuals. These programs provide vital relief to borrowers, allowing them to focus on their careers without the burden of overwhelming debt. We urge policymakers to protect, enhance, and expand these vital initiatives to ensure that education remains accessible and equitable for all.

As we continue to face challenges in higher education financing, it is crucial to learn from past mistakes and advocate for systems that prioritize the well-being of students, not profit. The proposed privatization of the student loan system threatens to undo decades of progress and burden future generations with lifelong debt. It is essential that we protect these programs and work toward a solution that prioritizes education and fairness over corporate interests.

HEI's Public Comment to ED Regarding Public Service Loan Forgiveness, Pay As You Earn, Income Contingent Repayment, Gainful Employment, Borrower Defense to Repayment and Other Rules and Regulations

[Editor's note: We are asking Higher Education Inquirer readers to submit their public comments regarding the Department of Education's plan to eliminate student loan forgiveness and income-based repayment programs. You can submit your comments here.]

As a publication committed to covering critical issues in the higher education landscape, we at the Higher Education Inquirer wish to express our full support for federal student loan forgiveness and repayment programs, such as Public Service Loan Forgiveness (PSLF), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) programs. These programs play an essential role in ensuring equitable access to higher education, supporting public servants, and empowering graduates to contribute meaningfully to their communities and the economy.

With the rising cost of higher education, many students are burdened with overwhelming debt that limits their financial freedom and career choices. PSLF, PAYE, and ICR offer vital pathways for loan repayment and forgiveness, particularly for individuals working in essential public service fields or pursuing careers with modest salaries. By providing these programs, the federal government ensures that public servants, teachers, social workers, healthcare professionals, and other essential workers can focus on their vocations without the paralyzing weight of unmanageable student loan debt.

Public Service Loan Forgiveness, for example, offers a critical incentive to individuals who dedicate themselves to public service careers, enabling them to receive loan forgiveness after ten years of qualifying payments. This program not only supports individuals but also ensures that important sectors such as education, healthcare, and nonprofit organizations continue to attract passionate and committed professionals. It is a win-win for both the workers and the communities they serve.

Furthermore, income-driven repayment programs like PAYE and ICR allow borrowers to repay their loans based on their income and family size, providing a more sustainable and manageable path to loan repayment. These programs have proven particularly effective in reducing defaults, helping borrowers stay current on their payments without compromising their quality of life.

In addition to supporting these repayment and forgiveness programs, we also urge stronger regulatory protections for students to ensure that they are not misled by predatory institutions that prey on their aspirations. The enforcement of stronger Gainful Employment regulations is necessary to ensure that educational programs lead to viable career opportunities with reasonable earnings potential. This is especially important for students who enroll in for-profit institutions that often promise high-paying jobs but fail to deliver adequate outcomes. Without such protections, students may find themselves saddled with debt and little to no ability to repay it.

Equally important is the Borrower Defense to Repayment program, which offers a critical safeguard for borrowers who have been misled or defrauded by institutions. Strengthening this program and ensuring its accessibility is essential for protecting students from predatory practices that exploit their financial futures. The government must continue to offer these borrowers a clear and fair path to debt relief, allowing them to move forward without the burden of loans incurred due to false or misleading claims made by their schools.

We believe that these initiatives, in tandem with loan forgiveness programs, are essential for the continued prosperity of our nation. By alleviating the financial burden of student loans, promoting stronger accountability in higher education, and supporting those who dedicate themselves to public service, we can ensure that more graduates have the opportunity to thrive in their careers and make meaningful contributions to society.

At the Higher Education Inquirer, we encourage policymakers to protect, enhance, and expand these vital programs to support a diverse range of students and professionals. We look forward to working alongside others in the higher education community to ensure that students are not held back by the weight of insurmountable student loan debt, but are empowered to pursue their dreams and make a positive impact on society.

Thank you for your attention to this important matter.

Sincerely,

Dahn Shaulis
Senior Editor
Higher Education Inquirer

Trump’s Education Department is Closing. And Also Starting A Long Rulemaking Process. (David Halperin)

Although President Donald J. Trump last month signed an executive order directing Secretary of Education Linda McMahon “to the maximum extent appropriate and permitted by law, take all necessary steps to facilitate the closure of the Department of Education,” and although DOGE efforts and layoffs have cut the Department staff by half, the Department announced today that it will embark on an extensive round of meetings to draft new regulations governing student financial aid.

Unlike most federal agencies, the Department is generally required to engage in an elaborate process called negotiated rulemaking before it can issue or cancel regulations. This has meant — on issues from campus sexual assault to performance standards guarding against predatory college abuses — years of public hearings, formal convenings of rulemaking panels, written public comments and meetings on draft regulations, and more. It also has produced a decades-long ping pong match of final regulations made by one party and overwritten by the other, from the Obama to Trump I to Biden, followed by years of court challenges.

The first Trump administration staffed its higher education jobs with former executives of predatory for-profit colleges, and they eliminated both regulations and enforcement efforts aimed at protecting students and holding predatory schools accountable.

Today’s notice, signed by James P. Bergeron, Acting Under Secretary of Education, says the first round of Trump II negotiated rulemaking will likely include consideration of Public Service Loan Forgiveness and other loan repayment programs “or other topics that would streamline current federal student financial assistance programs.”

Other language in the notice suggests the Department may go deep, perhaps working to cancel the Biden rules creating performance standards for for-profit and career college programs (the gainful employment rule) and providing debt relief for students scammed by their colleges and government recoupment of funds from dishonest schools (the borrower defense rule). The notice opines that current regulations “may be inhibiting innovation and contributing to rising college costs” and that it wants to “streamline” the rules “while maintaining or improving program integrity and institutional quality.” “Innovation,” while a great thing for education when it can really happen, has been a buzzword used by the for-profit college industry to fight against rules aimed at protecting against predatory programs. Gutting the Biden rules would increase the vulnerability of both students and taxpayers to billions in waste, fraud, and abuse from deceptive, poor quality schools — even though the stated purpose of DOGE is to halt government excess.

When pro-student Democratic members of the House of Representatives  held a press conference outside the Department headquarters yesterday after they met with McMahon to discuss such concerns, she followed them. But she quickly fled when Rep. Mark Takano (D-CA) asked her when she would shut down the building.

The Department’s rulemaking process begins with public hearings on April 29 and May 1, the first in-person at Department headquarters and the second online. Advocates for students and taxpayers should register to speak and show up to make their voices heard.

[Editor's note: This article originally appeared on Republic Report.]

 

Higher Education Inquirer continues to follow IPO/sale of University of Phoenix

On March 6, 2025, Apollo and Vistria publicly announced a possible IPO or sale of the University of Phoenix.  These companies have been trying to sell the University of Phoenix since 2021, but there have been no takers. The owners claim the school is worth $1.5B to $1.7B, but we (and experts we know) are skeptical, given the financials we have seen so far. The University of Phoenix was previously on sale for about $500M-$700M but the University of Arkansas System, the State of Idaho, and apparently other colleges declined the offers. 

The University of Phoenix offers subprime education to folks, historically targeting servicemembers, veterans, and people of color. While some students may profit from these robocollege credentials, one wonders what these workers actually learn. The current student-teacher ratio at the University of Phoenix, according to the US Department of Education, is 132 to 1.   

The University of Phoenix has faced a number of scandals, sometimes getting away with no penalty, and other times paying large fines.  

In 2023 we made a Freedom of Action (FOIA) request to the US Department of Education (ED) to get Phoenix's most recent audited financials. In March 2025, more than 20 months later, we were provided with a 35-page report, audited by Deloitte, with numbers from 2021 and 2022. 

HEI has filed a number of FOIAs with ED and discovered that almost 1 million former University of Phoenix students owe approximately $21.6 Billion in student loan debt. In addition, about 19,000 borrowers have had their student loans forgiven as a result of the Sweet v Cardona Borrower Defense to Repayment case.  According to ED FOIA 23-02373-F, more than 73,000 have filed fraud claims against the school. 

This month the Higher Education Inquirer followed up with a Freedom of Information request with the ED to obtain more up-to-date financial numbers for the University of Phoenix. We hope they will be responsive and timely enough to get the word out to the public.   

Borrower Defense Case Goes to US Supreme Court. How will it decide?

On January 10, 2025, the U.S. Supreme Court granted the Department of Education’s petition for a writ of certiorari to review the U.S. Court of Appeals for the Fifth Circuit’s decision in Career Colleges and Schools of Texas v. Department of Education. The Fifth Circuit had preliminarily enjoined the 2022 Borrower Defense to Repayment (BDR) final rule on a nationwide basis. This rule, published on November 1, 2022 (87 Fed. Reg. 65,904), is a key component of the Biden administration’s broader student loan forgiveness efforts.

The Supreme Court’s review will focus on one pivotal question: whether the court of appeals erred in holding that the Higher Education Act does not permit the assessment of borrower defenses to repayment before default, in administrative proceedings, or on a group basis. Notably, the Court will not address the second question posed by the Department: whether the appeals court erred in ordering the district court to grant preliminary relief on a universal basis.

Background and Legal Battle

The lawsuit originated on February 28, 2023, when the Career Colleges and Schools of Texas (CCST) filed in the United States District Court for the Northern District of Texas. CCST sought to enjoin and vacate the 2022 BDR rule, arguing that it creates unlawful processes, serves no legitimate purpose under the Higher Education Act, and constitutes executive overreach by the Biden administration, violating the Department’s statutory authority and the Constitution’s separation of powers.

After the U.S. District Court for the Western District of Texas denied the preliminary injunction, CCST pursued an interlocutory appeal to the Fifth Circuit. On April 4, 2024, the Fifth Circuit overturned the lower court’s decision and, despite the Department’s objections, postponed the effective date of the 2022 BDR rule pending final judgment. The Department’s petition for rehearing was denied, prompting its appeal to the Supreme Court.

What’s at Stake

The Supreme Court’s decision will likely have significant consequences for both borrowers and institutions. If the Court rules against the Department of Education, it could severely limit the scope of borrower defense claims, especially on a group basis, making it harder for defrauded students to receive relief. For-profit colleges and other institutions might feel emboldened to challenge similar regulations and forgiveness measures.

A ruling in favor of the Department, while seemingly less likely given the Court’s conservative majority, would affirm the Biden administration’s approach to processing borrower defenses and may secure loan forgiveness for thousands of borrowers who attended predatory institutions.

The Political Dimension

The timing of this case is crucial. Just days before the Supreme Court granted certiorari, the Biden administration announced the cancellation of loans for 150,000 borrowers—most of which were through the borrower defense process. Shortly afterward, additional forgiveness for income-based repayment plan borrowers and individual borrower defense approvals was announced. However, the future of these forgiveness efforts remains uncertain, as the second Trump administration has signaled intentions to rollback or revise Biden’s loan forgiveness policies.

A Conservative Court’s Approach to Executive Power

Given the Supreme Court’s current composition and its recent track record in cases like West Virginia v. EPA, it seems likely that the justices will scrutinize the executive authority wielded in crafting the BDR rule. The conservative majority may favor a narrow interpretation of the Higher Education Act, signaling that large-scale forgiveness should come from Congress rather than executive agencies.

Conclusion

The Supreme Court’s ruling on the 2022 BDR rule will set a precedent that could define the future of student debt relief and the Department of Education’s authority. For borrowers hoping for widespread relief, the outcome could mean the difference between long-awaited forgiveness and a protracted legal battle. For institutions, particularly for-profits, a ruling against the Department could bolster their resistance to accountability measures.

Judge William Alsup Orders Trump to Reinstate Probationary Workers

Ninth Circuit Judge William Alsup has ordered the Trump Administration to reinstate tens of thousands of fired probationary workers.  In 2022, Judge Alsup presided over a $6 Billion settlement between 200,000 student loan debtors and the Department of Education in a landmark Borrower Defense to Repayment case (Sweet v Cardona). In 2023, the US Supreme Court declined to take the appeal by three schools.  

For-Profit College Barons Backed Trump, But Now May Be Scared (David Halperin)

Many top for-profit college industry owners supported Donald Trump’s bid to return to the White House. They had benefitted when, during Trump’s first term, his education secretary, Betsy DeVos, largely ended federal regulatory and enforcement efforts to hold for-profit schools accountable for deceiving students and ripping off taxpayers. But some industry barons, having contributed to the Trump 2024 campaign, now may be scared by efforts of the new Trump administration, including Elon Musk’s DOGE team, to disrupt operations of the U.S. Department of Education. Both Trump and his new Secretary of Education Linda McMahon publicly suggested last week that the Department will be abolished.

Although the for-profit college industry endlessly complained that the Biden and Obama education departments were unfairly targeting the industry with regulations and enforcement actions, they now seem concerned about the possibility that the Trump administration will shutter the Department entirely, abandon the federal role in higher education oversight, and leave regulation to the states. They likely are even more frightened that the proposed gutting of the Department will interfere with the flow of billions in federal taxpayer dollars to their schools.

The Chronicle of Higher Education reports that Jason Altmire, the former congressman who is now the CEO of the largest lobbying group of for-profit colleges, Career Education Colleges and Universities (CECU), says that his schools are worried about the potential disruption of funding for federal student grants and loans. Altmire apparently also expressed concern that turning regulation over to the states could create problems for online schools that operate in multiple states, especially because some states have relatively strong accountability rules.

Many for-profit colleges receive most of their revenue — as much as the 90 percent maximum allowed by U.S. law — from federal taxpayer-supported student grants and loans. For-profit schools have received literally hundreds of billions in these taxpayer dollars over the past two decades, as much as $32 billion at the industry’s peak around 2010, and around $20 billion annually n0w.

But many for-profit schools have used deceptive advertising and recruiting to sell high-priced low quality college and career training programs that leave many students worse off than when they started, deep in debt and without the career advancement they sought. Dozens of for-profit schools have faced federal and state law enforcement actions over their abuses.

CECU (previously called APSCU and before that CCA) has included in its membership over the years many of the most abusive, deceptive school operations, including Corinthian Colleges, ITT Tech, Education Management Corp., Perdoceo, Center for Excellence in Higher Education, DeVry, Kaplan (now called Purdue University Global), and Ashford University (now called University of Arizona Global Campus). (Republic Report highlighted the bad actors on CECU’s membership list for many years; CECU removed the list from its website about four years ago.)

Florida couple Arthur and Belinda Keiser are among those who have benefited the most from CECU lobbying and taxpayer funding. The Keisers run for-profit Southeastern College and non-profit Keiser University, which collectively have received hundreds of million in federal education dollars over the years. They also are among the most politically active owners in the career college industry.

While Belinda Keiser has run, unsuccessfully, for the state legislature, Arthur Keiser has been one of the most aggressive lobbyists for the career college industry in Washington. He has been a dominant figure on the board of CECU, and he hired expensive lawyers to go all the way to the U.S. Supreme Court in a failed effort to block a settlement that provides debt relief to students who attended deceptive colleges, including Keiser University. During Trump’s first term, Arthur Keiser chaired NACIQI, the Department of Education’s advisory committee reviewing the performance of college accreditors.

The Keisers created controversy and were eventually penalized by the IRS for a shady 2011 conversion of Keiser University from for-profit to non-profit, in a deal that allowed the couple to continue making big money off the school. Keiser University has also settled cases with the Justice Department and the Florida attorney general over deceptive practices.

In the two years leading up to the November 2024 election, according to Federal Election Committee records, Belinda Keiser donated more than $250,000 to various Republican candidates and political committees, including $35,000 to the Trump 47 Committee, $10,300 to the Trump-affiliated Save America PAC, $3300 to the Trump Save America Joint Fundraising Committee, and $33,400 to the Republican National Committee.

Ultra-wealthy college owner Carl Barney was another big Trump 2024 donor. Barney operated the Center for Excellence in Higher Education, another troubling conversion from for-profit to non-profit that kept taxpayer money flowing into his bank accounts, for schools including CollegeAmerica and Independence University. Barney’s schools lost their accreditation, and then their federal aid, after the Colorado attorney general in 2020 won a lawsuit accusing CollegeAmerica of deceptive practices. (The case is still pending after an appeal.)

Amid a torrent of donations to Republican committees last fall totaling over $1.6 million, Barney donated $924,600 to the Trump 47 Committee, $74,500 to the Trump-supporting Make America Great Again PAC, and $247,800 to the Republican National Committee, according to federal records.

In a September post on his personal website, Barney explained that he liked that Trump “wants to work with Elon Musk to reduce spending, regulations, waste, and fraud in the federal government.”

What exactly waste, fraud, and abuse seems to mean in the context of the Trump/Musk effort is troubling. There is little evidence that what DOGE has found and shut down relates to actual fraud, abuse, or corruption.

Instead it appears that much of what Musk and DOGE have focused on is weakening or eliminating either (1) federal agencies that have been investigating Musk businesses, or businesses of other top Trump donors; or (2) agencies that work on priorities — such as equal opportunity for Americans or alleviation of poverty or disease overseas — that Trump or Musk dislike.

And the Trump team has been firing, across multiple federal agencies, the inspectors general, ethics watchdogs, and other top officials actually charged with rooting out waste, fraud, and abuse — further undermining the claim that the Trump team is trying to bring about more honest and efficient government.

It’s doubtful that even the heaviest sledgehammer DOGE attack would eliminate the federal student grants and loans that Congress has mandated to give low and moderate income Americans of all backgrounds a better chance to improve their lives through higher education. Assuming such financial aid will continue, then if Trump, Musk, and DOGE truly wanted to root out waste, fraud, and abuse, and save big money for taxpayers, one thing they could do is strengthen, rather than abolish, the Department of Education — not to keep the money flowing to all for-profit colleges, as CECU seems to want, but to advance efforts to ensure that taxpayer dollars go only to those colleges that are creating real benefits for students and for our economy.

That would mean enforcing and building on, not destroying, the Department of Education rules put in place by the Biden administration, including: the gainful employment rule, which creates performance standards to cut off aid to for-profit and career programs that consistently leave graduates with insurmountable debt; the borrower defense rule, which cancels the debts of students scammed by their schools and empowers the Department to go after those predatory schools to recoup the taxpayer money; and the 90-10 rule, which helps keep low-quality programs out of the federal aid program and reduces the risk that poor quality schools will target U.S. veterans and service members.

It would also mean continuing the Biden administration’s efforts to more aggressively evaluate the performance of the private college accrediting agencies that oversee colleges and serve as gatekeepers for federal student grants and loans.

Fighting waste, fraud, and abuse would also mean strengthening, not gutting, efforts to investigate and fight predatory college abuses by enforcement teams at the Department of Education, Federal Trade Commission, Consumer Financial Protection Bureau, Justice Department, Department of Veterans Affairs, and Department of Defense. Many deceptive school operations remain in business today, recruiting veterans, single parents, and others into low-quality, over-priced college programs; they include Perdoceo’s American Intercontinental and Colorado Technical University, Purdue University Global, University of Arizona Global Campus, DeVry University, Walden University, the University of Phoenix, South University, Ultimate Medical Academy, and UEI College.

Fighting waste, fraud, and abuse also would likely require a different higher ed leader at the Department than Nicholas Kent, the Virginia state official whom Trump has nominated to serve as Under Secretary of Education. Kent previously worked at CECU as a lobbyist advancing the interests of for-profit schools. Prior to that, he worked at Education Affiliates, a for-profit college operation that faced civil and criminal investigation and actions by the Justice Department for deceptive practices.

Diane Auer Jones, who held the same job in the first Trump administration, had a career background similar to Kent’s, and she twisted Department policies and actions to benefit predatory colleges. That is presumably the world CECU and its for-profit college barons want to restore: All the money, none of the accountability rules.

In the end, the predatory college owners may get what they want. Given the brazen self-dealing, and fealty to corporate donors, of the Trump-Musk administration, and the sharp elbows of paid-for congressional backers of the for-profit college industry like Rep. Virginia Foxx (R-NC), we will probably end up with the worst of all outcomes: the destruction of the Department of Education but a continued flow of taxpayer billions to for-profit schools, without meaningful accountability measures to ensure that everyday Americans are actually protected from waste, fraud, and abuse.

Americans should demand from Trump and Secretary McMahon a different course — one that provides educational opportunity for all and strengthens the U.S. economy by investing in higher education, while removing from the federal aid program the abusive colleges that rip off students and scam taxpayers.

[Editor's note: This article originally appeared on Republic Report.]  

The Future of Federal Student Loans

The U.S. student loan system, now exceeding $1.7 trillion in debt and affecting over 40 million borrowers, is facing significant challenges. As political pressures rise, the management of student loans could be significantly altered. A combination of potential privatization, the elimination of the U.S. Department of Education (ED), and a new role for the Department of the Treasury raises critical questions about the future of the system.

U.S. Department of Education: Strained Resources and Outsourcing

The U.S. Department of Education (ED) is responsible for managing federal student loan servicing, loan forgiveness programs, and borrower defense to repayment (BDR) claims. However, ED has faced ongoing issues with understaffing and inefficiency, particularly as many functions have been outsourced to contractors. Companies like Maximus (including subsidiaries like AidVantage) manage much of the administrative burden for loan servicing. This has raised concerns about accountability and the impact on borrowers, especially those seeking loan relief.

In recent years, ED has also experienced staff reductions and funding cuts, making it difficult to process claims or maintain high-quality service. The potential for further cuts or even the elimination of the department could exacerbate these problems. If ED’s role is diminished, other entities, such as the Department of the Treasury, could assume responsibility for managing the student loan portfolio, though this would present its own set of challenges.

Potential for Privatization of the Student Loan Portfolio

One of the most discussed options for addressing the student loan crisis is the privatization of the federal student loan portfolio. Under previous administration discussions, including those during President Trump’s tenure, there were talks about selling off parts of the student loan portfolio to private companies. This would be done with the aim of reducing the federal deficit.

In 2019, McKinsey & Company was hired by the Trump administration to analyze the value of the student loan portfolio, considering factors such as default rates and economic conditions. While the report's findings were never made public, the idea of transferring the loans to private companies—such as banks or investment firms—remains a possibility.

The consequences of privatizing federal student loans could be significant. Private companies would likely focus on profitability, which could result in stricter repayment terms or less flexibility for borrowers seeking loan forgiveness or other relief options. This shift may reduce borrower protections, making it harder for students to challenge repayment terms or pursue loan discharges.

The Department of the Treasury and its Potential Role

If the U.S. Department of Education is restructured or eliminated, there is a possibility that the Department of the Treasury could step in to manage some aspects of the student loan portfolio. The Treasury is responsible for the country’s financial systems and debt management, so it could, in theory, handle the federal student loan portfolio from a financial oversight perspective.

However, while the Treasury has experience in financial management, it lacks the specialized knowledge of student loans and borrower protections that the Department of Education currently provides. For example, the Treasury would need to find ways to process complex Borrower Defense to Repayment claims, a responsibility ED currently manages. In 2023, over 750,000 Borrower Defense claims were pending, with thousands of claims related to predatory practices at for-profit colleges such as University of Phoenix, ITT Tech, and Kaplan University (now known as Purdue Global). Additionally, some of these for-profit schools were able to reorganize and continue operating under different names, further complicating the situation.

The Treasury could also contract out loan servicing, but this could increase reliance on profit-driven companies, possibly compromising the interests of borrowers in favor of financial performance.

Borrower Defense Claims and the Impact of For-Profit Schools

A large portion of the Borrower Defense to Repayment claims comes from students who attended for-profit colleges with a history of deceptive practices. These institutions, often referred to as subprime colleges, misled students about job prospects, program outcomes, and accreditation, leaving many with significant student debt but poor employment outcomes.

Data from 2023 revealed that over 750,000 Borrower Defense claims were filed with the Department of Education, many of them against for-profit institutions. The Sweet v. Cardona case showed that more than 200,000 borrowers were expected to receive debt relief after years of waiting. However, the process was slow, with an estimated 16,000 new claims being filed each month, and only 35 ED workers handling these claims. These delays, combined with the uncertainty around the future of ED, leave borrowers vulnerable to prolonged financial hardship. 

Lack of Transparency and Accountability in the System

While the U.S. Department of Education tracks Borrower Defense claims, it does not publish institutional-level data, making it difficult to identify which schools are responsible for the most fraudulent activity. 

In response to this, FOIA requests have been filed by organizations like the National Student Legal Defense Network and the Higher Education Inquirer to obtain detailed information about which institutions are disproportionately affecting borrowers. 

In one such request, the Higher Education Inquirer asked for information regarding claims filed against the University of Phoenix, a school with a significant number of Borrower Defense claims.

The lack of transparency in the system makes it harder for borrowers to make informed decisions about which institutions to attend and limits accountability for schools that have harmed students. If the Treasury or private companies take over management of the loan portfolio, these transparency issues could worsen, as private entities are less likely to prioritize public accountability.

Conclusion

The future of the U.S. student loan system is uncertain, particularly as the Department of Education faces the potential of funding cuts, staff reductions, or even complete dissolution. If ED’s role diminishes or disappears, the Department of the Treasury could take over some functions, but this would raise questions about the fairness and transparency of the system.

The possibility of privatizing the student loan portfolio also looms large, which could shift the focus away from borrower protections and toward financial gain for private companies. For-profit schools, many of which have a history of predatory practices, are responsible for a disproportionate number of Borrower Defense claims, and any move to privatize the loan portfolio could exacerbate the challenges faced by borrowers seeking relief from these institutions.

Ultimately, there is a need for greater transparency and accountability in how the student loan system operates. Whether managed by the Department of Education, the Treasury, or private companies, protecting borrowers and ensuring fairness should remain central to any future reforms. If these issues are not addressed, millions of borrowers will continue to face significant financial hardship.

What now for the US Department of Education?

What happens now with the US Department of Education now that Elon Musk claims that it no longer exists? It's hard to know yet, and even more difficult after removing career government workers that we have known for years.  

We are saddened to hear of contacts we know who have been fired: hard working and capable people, in an agency that has been chronically understaffed and politicized. 

We also worry for the hundreds of thousands of student loan debtors who have borrower defense to repayment claims against schools that systematically defrauded them--and have not yet received justice. 

And what about all those FAFSA (financial aid) forms for students starting and continuing their schooling? How will they be processed in a timely manner?

Without funding and oversight, the Department of Education looks nearly dead. But with millions of poor and disabled children relying on Title I funding and IDEA and tens of millions more with federal student student loans, it's hard to imagine those functions disappearing for good.  

Let's see how much slack is taken up by private enterprise and religious nonprofits who may benefit from the pain. With student loans, much of the work has already been contracted out. It would not be out of the question for the student loan portfolio to be sold off to corporations who could profit from it. And that may or may not require Congressional approval.  

Major updates: student debt relief progress and new fact sheets (SBPC)

The fight for student loan borrowers continues! In the last remaining days of the Biden-Harris Administration, the U.S. Department of Education (ED) is pushing some final relief through for student loan borrowers, new Income-Driven Repayment (IDR) Account Adjustment payment counts are live, and we have new fact sheets shedding light on the impact of the student debt crisis on borrowers. Here’s a roundup of the latest: Over 5 million borrowers have been freed from student debt. In a major win for borrowers, ED announced that the Biden-Harris Administration has now approved $183.6 billion in student debt discharges via various student debt relief fixes and programs. This relief has now reached over 5 million borrowers and includes new approvals for Public Service Loan Forgiveness (PSLF) relief, borrower defense relief, and Total and Permanent Disability Discharge relief. This relief is life-changing for millions of families, proving the power of bold, decisive action on student debt. Yet, there is much more work to do. Every step toward relief underscores the need to continue fighting for policies that reduce the burden of student debt and ensure affordable access to higher education. Final phase of the IDR Account Adjustment is underway—take screenshots! In tandem with the latest cancellation efforts, ED has also finally started updating borrower payment counts on the Federal Student Aid dashboard. Providing official payment counts will help borrowers receive the credit they have earned towards cancellation under IDR, and ensure that all borrowers who have been forced to pay for 20 years or longer are automatically able to benefit from relief they are entitled to under federal law. ***If you are a borrower with federal student loans, we recommend that you check your dashboard on studentaid.gov, screenshot your new count, and save it in your records. Previously, many borrowers—including those who work in public service jobs and low-income borrowers struggling to afford payments—were steered into costly deferments and forbearance, preventing them from reaching the 20 years or longer for IDR relief or the 120 payments necessary for PSLF cancellation. Under the IDR Account Adjustment, these periods are now counted, even if borrowers were mistakenly placed in the wrong repayment plan or faced servicing errors.

New SBPC fact sheets on the student debt crisis are live. As the new administration and conservative congressional majority considers proposals that would roll back critical protections for student loan borrowers and make student loan debt even more expensive, we’re committed to protecting borrowers. We’ve released statewide and congressional-level snapshots of the student debt crisis to shine a light on the impact of student debt across the country.

These fact sheets provide granular data on: The number of borrowers and total student debt in each area Constituents benefiting from affordable repayment plans The life-changing impact of debt relief over the past four years We hope these snapshots offer critical context to help ensure new and returning policymakers understand the toll of student debt on their communities—and the urgent need for bold action to alleviate this crisis.

The fight to protect student loan borrowers continues. The new political dynamics of the 119th Congress raise the stakes for borrowers. Proposals to roll back protections, gut affordable repayment plans like the Saving on a Valuable Education Plan, and shift costs onto working families, threaten the progress we’ve made. But our coalition and community of borrowers and advocates are ready to stand strong together and continue protecting our wins while fighting for more.

Standing together, Persis Yu Deputy Executive Director & Managing Counsel Student Borrower Protection Center