Higher Education and the U.S. Department of Education

I write about higher education.

The cost of a four-year college education has risen 500% in 30 years, while median family income has increased only 20%.  Total student debt tops $1.3 trillion—twice the level of ten years ago—and now surpasses the total debt for cars and credit cards combined.  Over 40 million Americans owe money on student loans, and Minnesota has the 5^th highest student loan debt in the country. 

Student loan debt is one of the primary reasons younger people delay marriage, children, and home ownership.  The income of people ages 25 to 34 has fallen every year since 2007 in every field but healthcare.  About 25% of millennials with a bachelor’s degree move back home due to financial hardship, and 60% get financial help from their parents. 

In addition to the ever-spiraling tuition rates, students have been exploited by a number of other factors:

• The dramatic increase in “for profit” schools that peddle dubious degrees. In 2013, for-profit schools enrolled 11% of students, received 25% of federal financial aid, and accounted for 44% of loan defaults. Almost ¾ of their graduates earn less than a high school dropout.  The average tuition at for-profit schools is about double that of a four-year public college

• No underwriting standards. At one time, student loan debt was treated like any other debt, even being dischargeable in bankruptcy. This is not the case today.  The result is that student loan companies impose virtually no underwriting standards in granting loans.

• Aggressive and deceitful activity in the marketing of college degrees and in the loan repayment process by private lenders.

As Attorney General, I have tried to use my limited authority to curb financial abuse of students. I recently concluded what is believed to be the first trial in the country by a state attorney general against a for-profit college, which ended up resulting in the decertification of the college. The college has been ordered to repay the students.

I have filed actions against companies that operate bogus “student loan forgiveness programs.” At the federal level, my office petitioned the U.S. Department of Education to develop guidelines to: 1) require predatory for-profit colleges to post collateral to pay for the discharge of student loan debt for students who were the victims of deceit by the college, and (2) de-bar dishonest student loan companies from participation in student loan programs. Simply put, a company should not participate in student loan servicing if it has a shoddy record in advising students on their best alternatives in taking out and repaying student loans.

Unfortunately, U.S. Secretary of Education Betsy DeVos recently announced that she is looking at junking these reforms.

I encourage you to write to Secretary DeVos and let her know your thoughts on the getting rid of these reforms that protect students.

As an aside, I should also note that some states have initiated “Hope Scholarships,” where a state resident who maintains a “B” average gets a scholarship to attend a state university.  When I went to college, the cost was affordable.  This meant that, with some help and by working three jobs in college, I was able to get a college degree without being laden-down with mountains of impossible debt. I hope that the Legislature might take a look at what other states have done surrounding “Hope Scholarships" and similar efforts. We need to make sure that our next generation of Minnesotans can dream of meaningful opportunities in our economy.