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# Biden-Harris Administration Releases Final Rules that Strengthen Accountability for Colleges and Consumer Protection for Students

# Biden-Harris Administration Releases Final Rules that Strengthen Accountability for Colleges and Consumer Protection for Students

October 24, 2023

**Contact:  **press@ed.gov

                                    -        
The Biden-Harris Administration today  announced final regulations to significantly enhance oversight and  accountability for institutions of higher education and strengthen consumer  protections for student borrowers. The new rules will strengthen the U.S.  Department of Education’s (Department) ability to protect students and  taxpayers from the negative effects of sudden college closures, will restrict  colleges from withholding course credits paid for with Federal money from  students’ transcripts, and require colleges to clearly communicate to students  how much financial aid they will receive—a common source of confusion and  error. The regulations, which will go into effect July 1, 2024, directly answer  President Biden’s agenda to make college more affordable, hold colleges  accountable, and protect taxpayers and consumers.

“Too many students have been abandoned by  shady colleges that close their doors and leave borrowers with unaffordable  debt and little hope of completing their educational journeys and embarking on  rewarding careers,” said U.S. Secretary of Education Miguel Cardona. “With  these final rules, the Biden-Harris Administration is fixing a broken system,  which failed to protect students and families, and addresses abuses in higher  education that have cost taxpayers billions of dollars in recent years. We are  raising the bar for accountability and making sure that when students invest in  higher education, they get a solid return on that investment and a greater shot  at the American dream.”

In particular, the  rules address the Department’s concerns about the substantial number of  colleges that have closed abruptly, the largest of which were private  for-profit institutions, leaving students in the lurch with few if any options  to complete their programs elsewhere and taxpayers on the hook for student loan  discharges. Beyond abrupt closures, there have also been many instances in  which students struggle to find employment due to their programs not meeting  licensure requirements or providing inadequate career services.

The final rules cover four areas. (1)  Financial responsibility, which relates to situations where the Department can  more swiftly obtain financial protection like a letter of credit when a college  exhibits warning signs. (2) Administrative capability, which lays out  additional areas where institutions must show they have sufficient resources  and procedures in place for areas like career services and financial aid  communication to participate in the Federal student aid programs. (3)  Certification procedures, which addresses the conditions the Department can  place in the written agreements it has with colleges to participate in the  Federal student aid programs, and (4) Ability to benefit, which lays out a  process for States to approve postsecondary programs that serve students who do  not have a high school diploma.

“Today’s regulations prioritize students  and taxpayers and continue our work to fix a broken student loan system,” said  Under Secretary of Education James Kvaal. “They will help prevent fly-by-night  colleges from leaving students and taxpayers holding the bag for shoddy  educations. They will give students some common-sense protections like clear information  on the true cost of college and access to their transcripts when their courses  were federally funded.”

The final regulations make the following  changes:
- Financial Responsibility : The final rules establish       warning signs from colleges that make it easier for the Department to       secure letters of credit or other forms of upfront financial protection.       These include situations such as an institution showing financial risk due       to paying a debt, lawsuits by Federal or State actors, or being in danger of       losing access to Federal student aid due to having a high cohort default       rate. Such changes are critical to both dissuade risky behavior and ensure       taxpayers are better protected from the cost of sudden closures. From       2013-2022, the Department sought more than $1.6 billion in liabilities       from institutions, but collected only $344 million from institutions       during that time period.
- Administrative Capability : The Department is responsible       for ensuring that institutions have the administrative capability to effectively       administer the Federal student aid programs. However, when an institution       exhibits problems, the Department often lacks the ability to hold       institutions accountable. The final rules add several requirements for       colleges including: clearer, more comparable information on financial aid,       including distinguishing between scholarships and loans that must be       repaid; prohibiting colleges from withholding transcripts for Federally       funded courses; requiring adequate career services; and limiting the employment       of individuals with a history of risky management of the Federal student       aid programs.
- Certification Procedures : The final rules lay out       additional conditions the Department can place on institutions when they       exhibit warning signs, such as requiring a teach-out plan or agreement or       limiting the addition of new programs and locations. The rules also take       steps to ensure that student aid is only available for career-training       programs that are no longer than State requirements for certification or       licensure, including through reciprocity agreements or provisional       licensure. Finally, the rules require that institutions certify that       institutions operating through distance education will abide by any State       laws related to the closure of postsecondary institutions, such as rules       for teach-outs, record retention, and tuition recovery or surety       bonds.
- Ability to Benefit : The final Ability to Benefit       rules establish clearer processes for access to Federal aid for students       who do not have a high school diploma or its recognized equivalent. The       rules will increase access to postsecondary education for more students.

Today’s announcement builds on the  Biden-Harris Administration’s ambitious efforts to hold colleges accountable,  protect students and taxpayers, and ensure that all students can afford to get  the education and skills they need after high school. Earlier this month, the  Department revitalized the gainful employment rule to ensure institutions do  their part to deliver real financial value to students and taxpayers. The  Department has also approved $127 billion in relief for nearly 3.6 million  students, including record amounts of relief for borrowers whose colleges took advantage  of them or closed suddenly. President Biden has also championed the largest  increase to Pell Grants in a decade and is fighting to put the grant on a path  to doubling the maximum award by 2029, while proposing tuition-free community  college and new tuition assistance at Historically Black Colleges and  Universities and Minority-Serving Institutions.

The Department developed these final rules in response to public comments received following the publication of the draft rules in May. The final regulations was published in the Federal Register on October 31, 2023. View the official copy of final regulations here and a fact sheet on the final rule can be found here.
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