Lyndon Baines Johnson Department of Education building in Washington, D.C.
While the nation focuses on the President’s failed health care reform bill, drama develops in the student loan sector. Judicial Watch, a conservative, non-partisan educational foundation, recently filed a Freedom of Information (FOIA) lawsuit against the United States Department of Education, demanding that all information regarding the Obama administration’s student loan-related coding error be available.
The lawsuit was filed in the U.S. District Court for the District of Columbia after the department failed to respond to an FOIA request submitted on January 29, 2017.
Judicial Watch claims that the Obama administration used inaccurate scorecard data to “target for-profit competitors of liberal-controlled ‘public’ universities.” The federal stance on for-profit colleges is well-known, and its data sheds some negative insight on the industry. In recent years, several different for-profit colleges closed down as a result of government action and more colleges faced troubles from regulation. It wants the Trump administration to quickly respond to the lawsuit by intervening and eradicating expensive taxpayer subsidies put on by the Department of Education.
The Education Department admitted at the beginning of the year that the coding error resulted in highly inaccurate College Scorecard repayment rates. That information not only appeared in College Scorecard, a government consumer tool released in 2015 as a replacement of the failed college ratings system, but it also was in a data attachment to the Financial Aid Shopping sheet.
The fix in the coding error revealed some startling data. The three-year repayment rate is now at 46 percent which means that less than half of undergraduate borrowers are paying their debt. Experts wanted the federal government to focus more on repayment rates instead of default rates, saying that colleges should be judged on whether students they educate are able to make progress paying down their debt. It turns out that student borrowers on the national scale are both struggling with default as well as repayment success.
The developments from this story compound on the already nasty backlash from the Government Accountability Office’s report on cost of income-driven repayment programs and loan forgiveness programs. A figure that eclipsed the Department of Education’s cost projections. At any rate, the student loan issue is more than serious with over a trillion in outstanding debt left on the table.
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