In addition to lifting the ban on Pell Grants in prisons last week, the U.S. Department of Education (ED) announced much-awaited regulations that will have a big impact on for-profit colleges and universities. Here’s our quick overview of three of them:
- An updated 90/10 rule that expands the definition of federal revenue that is counted toward the 90% limit for for-profit institutions. For-profit colleges are prohibited from receiving over 90% of their revenue from federal student aid programs, and this new rule now includes GI bill funding toward that threshold.
- New rules for colleges and universities undergoing changes in ownership, specifically around for-profit institutions’ conversion to non-profit institutions. The rule updates the definition of a non-profit institution and requires institutions going through a change of ownership to notify ED and the institution’s students at least 90 days before the conversion. Institutions must also provide additional financial protection or comply with additional conditions to protect against the risk of the conversion transaction.
- New Borrower Defense to Repayment rules and regulations announced on October 31, create targeted forgiveness of federal loans for learners at any institution of higher education if the institution misleads borrowers or engages in fraudulent behavior. The new rule identifies five categories of school misconduct that can lead to a claim, allows ED to provide individual or group relief, and entitles borrowers to full (instead of partial) relief claims.
- The new rules are the latest pendulum swing coming after the Obama and Trump Administrations each approved a different set of regulations.
Additional final rules expand targeted debt relief programs for borrowers with a total and permanent disability, set standards for interest capitalization, and provide benefits to borrowers seeking Public Service Loan Forgiveness.
