Education Department may soon tell more colleges to set aside money to cover federal loan discharges and other costs.

Inside Higher Ed reports.

As federal loan forgiveness jumps, Education Department may require more risky colleges to post letters of credit

As the U.S. Department of Education forgives thousands of loans students took out to attend Corinthian Colleges and sets up a new federal debt relief process for other colleges, one pressing issue is how much it will cost taxpayers.

“It’s very hard for us to wrap our arms around how much this is going to cost,” Gail McLarnon, the department official leading a rule-making panel that is working out the details of that debt relief process, told the committee this week.

Taxpayers will largely be stuck with the bill from millions of dollars’ worth of forgiven loans relating to the collapse of Corinthian Colleges, because the company is bankrupt. But moving forward, department officials say they want to expand their ability to guard federal money before a college goes under — in part so the feds can recoup from colleges the loans they cancel when institutions close or large numbers of borrowers prove they were defrauded.