President Biden’s $400 billion student loan bailout is an implicit admission that colleges and universities have failed to deliver the reliable return on investment they promised their students. If no changes are made to the federal student loan program going forward, Uncle Sam will disburse $1 trillion in new student loans over the coming decade. But if today’s students are struggling to repay their loans without forgiveness, it follows that some of those future loans should not be made.
While the Biden administration has shown little interest in comprehensive limitations on new lending, it is likely to subject a small subset of higher education programs to at least some accountability. The proposed Gainful Employment rule, which would terminate career-oriented programs’ eligibility for federal student aid when their graduates’ earnings are too low or their debts are too high, is a welcome contribution to the higher education accountability conversation. But there are some significant problems with the rule as currently proposed.
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