Biden-Harris Administration Releases Final Rules that Strengthen Accountability for Colleges and Consumer Protection for Students

“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,” said U.S. Secretary of Education Miguel Cardona. “With these final rules, the Biden-Harris Administration is fixing a broken system, which failed to protect students and families, and addresses abuses in higher education that have cost taxpayers billions of dollars in recent years. 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.”

In particular, the rules address the Department’s concerns about the substantial number of colleges that have closed abruptly, the largest of which were private for-profit institutions, leaving students in the lurch with few if any options to complete their programs elsewhere and taxpayers on the hook for student loan discharges. Beyond abrupt closures, there have also been many instances in which students struggle to find employment due to their programs not meeting licensure requirements or providing inadequate career services.

The final rules cover four areas. (1) Financial responsibility, which relates to situations where the Department can more swiftly obtain financial protection like a letter of credit when a college exhibits warning signs. (2) Administrative capability, which lays out additional areas where institutions must show they have sufficient resources and procedures in place for areas like career services and financial aid communication to participate in the Federal student aid programs. (3) Certification procedures, which addresses the conditions the Department can place in the written agreements it has with colleges to participate in the Federal student aid programs, and (4) Ability to benefit, which lays out a process for States to approve postsecondary programs that serve students who do not have a high school diploma.

“Today’s regulations prioritize students and taxpayers and continue our work to fix a broken student loan system,” said Under Secretary of Education James Kvaal. “They will help prevent fly-by-night colleges from leaving students and taxpayers holding the bag for shoddy educations. They will give students some common-sense protections like clear information on the true cost of college and access to their transcripts when their courses were federally funded.