The U.S. Department of Education announced Thursday that it has finalized rules to to help stop colleges and universities from charging exorbitant amounts in tuition, paid for by taxpayers.
“For 20 years, colleges and universities have been able to charge virtually unlimited tuition for their programs, despite the fact that many graduates see very little or no return on investment, the results of this decades long policy on American graduates are staggering,” Nicholas Kent, Under Secretary of Education, said on a press call Thursday. “American families live within their means, and it’s time for colleges and universities to do the same.”
It has been a decades-long reality that colleges and universities have increased their tuition costs knowing Department of Education loans — funded by the American taxpayer, regardless of their education status — will foot the bill. Meanwhile, students are stuck for years with mountains of debt and a degree that does not yield jobs that pay a sufficient amount to justify the debt.
The current student loan portfolio under the Department of Education is $1.7 trillion, and it is estimated that fewer than 40 percent of borrowers are in repayment, while nearly 25 percent are in default.
College loans have skyrocketed 343 percent since 2005, and tuition has “increased faster than any other household expense,” Kent said. According to the department, 71 percent of college graduates delay major life milestones, like buying a home, because of student loan debt. While graduate students hold over one-third of student loan debt, 40 percent of master’s programs have a negative return on investment.
Meanwhile, colleges and universities “raked in billions of dollars at the expense of students and taxpayers over the past 20 years, and today, that era is over,” Kent said.
The final rule, set to take effect July 1, has four primary provisions, including borrowing caps for graduate and professional students. The department is eliminating the Grad PLUS program, which allowed graduate and professional students to borrow up to the full cost of attendance.
Graduate students will be limited to an annual cap of $20,500, with a lifetime cap of $100,000, while professional students will have an annual cap of $50,000 and a lifetime cap of $200,000.
The rules also alter the definition of “professional” degrees to pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology, and clinical psychology.
Some programs, like postgraduate nursing, are no longer eligible.
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