New Jersey Advocates Urge AG Grewal to Fight Back Against DOE Secretary DeVos’s Repeal of Gainful Employment Rule Critical to Preventing Student Debt

Newark– New Jersey Citizen Action (NJCA)  the American Federation of Teachers New Jersey (AFT-NJ) and Health Professionals and Allied Employees (HPAE) sent a letter to Attorney General Gurbir Grewal urging him to take action against Education Secretary Betsy DeVos for violating federal law and pushing through a deeply flawed repeal of the US Department of Education’s (DOE) Gainful Employment rule. The rule provides critical protections for students attending, or considering enrolling in, for-profit and career college programs.

“More than a million New Jerseyans, young, old and from all walks of life, owe $40 billion in student debt and are saddled with enormous loans dubbed ‘houseless mortgages’,” said Phyllis Salowe Kaye, Executive Director of New Jersey Citizen Action.  “It is unconscionable that Secretary DeVos has repealed the Gainful Employment rule, making it harder for students and their families to understand what a for-profit college or career school will truly cost, and more difficult to make informed decisions about where and what to study.”

The Gainful Employment rule, which took effect in 2015, established a DOE standard for most for-profit colleges and vocational programs based on a “debt-to-earnings ratio.”  Under the rule, a program meets the DOE standard if annual student loan payments are no more than 8% of graduates’ annual earnings, or 20% of their discretionary income. The ratio is critical to understanding the affordability of schools and their programs.  By eliminating the rule in 2019, Secretary DeVos has left potential students at the mercy of for-profit schools with a documented history of leaving borrowers with worthless degrees and tens of thousands of dollars of debt.

On January 22^nd, the National Student Legal Defense Network (Student Defense) filed a landmark federal lawsuit (attached) on behalf the American Federation of Teachers, the California Federation of Teachers and individual members, targeting the Trump administration’s illegal repeal of the rule. The New Jersey advocates urged the Attorney General to take a similar action, or join the Student Defense lawsuit.

“We have reached a point in time where the Federal government is standing with for-profit and career college programs, putting our students in massive debt,” said Donna M. Chiera, President, American Federation of Teachers New Jersey. “The American Federation of Teachers is part of a landmark lawsuit fighting back against the Trump administration’s stripping of important protection that put our students at the mercy of these for-profit predators.  We are calling on Attorney General Grewal to sign on to the lawsuit, making a fair and stronger future for all New Jersey children.”

“Healthcare is an area of continued job growth due to an increasingly aging population,” said Debbie White, RN and HPAE President. “Thus, healthcare professionals are in demand.  New Jersey must protect the interests of students seeking degrees in healthcare-related fields to ensure they will not become victims of predatory lending practices. HPAE urges New Jersey Attorney General Grewal to sign on to these efforts and stop the Trump Administration from protecting the for-profit lending industry.”

NJCA AFT-NJ and HPAE applauded Attorney General Grewal for his leadership nationally in defending students and holding predatory and abusive student loan servicers, for-profit colleges and vocational schools accountable through enforcement actions and lawsuits. Grewal has taken vocal stances against the Trump administration, Secretary DeVos, Consumer Financial Protection Bureau Director Kathy Kraninger and her predecessor, Mick Mulvaney, when they have rolled back protections and implemented policies that have hurt students. But they also urged Grewal to take swift action against the repeal of the Gainful Employment rule.

“The student debt crisis in this country does not amount to dreams deferred, its amounts to dreams destroyed,” said Salowe-Kaye. “We call on Attorney General Grewal now to stand up once again on behalf of the millions of New Jerseyans who want an education that will lead to prosperity, not financial ruin.”

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New Jersey Citizen Action is a statewide advocacy and social service organization that fights for social, racial and economic justice for all while also meeting the pressing needs of low and moderate income New Jerseyans through education and direct service.