For-Profit College Lawyer Suggests DeVos Draft Matched Industry Wish List
As discussions grew contentious at the Department of Education’s meetings to repeal and replace the Obama administration’s rule to protect defrauded students, an apparently exasperated for-profit college industry lawyer seemed to admit that a draft rule proposed by the Department closely matched the wish list of schools in her industry.
The 2016 Obama borrower defense rule created standards and procedures for students who were deceived or defrauded by their colleges — colleges approved for federal aid by the Department — to have their federal loans cancelled. The rule also gave the Department tools to recoup cancelled loan amounts from bad-behaving schools, and prohibited colleges from taking away from students their rights to sue schools directly for misconduct. The for-profit college industry fought intensely to block or weaken the Obama rule, and is now taking advantage of the coming to power of Trump University operator Donald Trump and for-profit education investor Betsy DeVos to get rid of it.
Linda Rawles, who serves as outside regulatory counsel for for-profit Bridgepoint Education and is a negotiator on the panel, told the meeting today that the for-profit schools she represents were satisfied with the January draft rule distributed by the DeVos Department for purposes of discussion. This echoed her repeated refrain since that draft was offered: “I like the rule as written.”
Rawles complained today that the for-profit negotiators on the panel have been pressured by pro-student negotiators and “have moved a lot” and “gone beyond 50% to the other side.” Her complaint — that every departure from the draft rule would move it in a pro-consumer direction — seemed to confirm what was patently obvious from its provisions: the draft DeVos rule gave the for-profits basically everything they wanted.
Among other things, the initial DeVos draft would have required students seeking debt relief to prove that a school intentionally deceived them and to do so by “clear and convincing” evidence. “Clear and convincing” is a level of proof so demanding that it been imposed, for example, by the Supreme Court on a state where it sought to take away a child from her natural parents. To impose such a high barrier on broke students is unconscionable. Rawles at one session proudly took credit for suggesting this requirement, one of many barriers to student success included in the rule. Bludgeoned by complaints from negotiators representing students, veterans, and consumers, the Department has now dropped the “clear and convincing” standard, but Rawles, as well as for-profit college lawyer Chris DeLuca, have continued to push for imposing that burden on students.
Despite complaints from pro-student panelists, the latest DeVos draft still eliminates the Obama rule’s ban on small-print mandatory arbitration clauses and instead affirms the ongoing practice of predatory schools to bar students from suing them for deception and other bad behavior.
During the Obama administration, negotiations over these rules were equally contentious, but week by week the draft regulations offered by the Department represented a pushing and pulling on the Department by determined advocates for students on one side and powerful lobbyists for the for-profit college industry on the other. The Obama Department never offered a proposal that was nearly as one-sided as the DeVos drafts.
Rawles’ client Bridgepoint, which operates mostly-online Ashford University, has a well-documented record of deceiving and abusing students and has faced significant law enforcement investigations and actions. Bridgepoint is also where top DeVos lieutenant Robert Eitel worked until he joined the Department last year.
While Rawles and fellow industry lawyer Aaron Lacey pressed the hard-line position of big for-profit players, Mike Busada, of 100-student Ayers Career College in Shreveport, Louisiana, tried a different tack. He repeatedly responded to arguments for strengthening the rule by raising concerns that a single borrower relief claim filed by one of its former students could cause the demise of his school.
But as negotiators representing students, veterans, and consumers repeatedly reminded Busada, under any version of a borrower defense rule, weak or strong, and indeed under the 1994 law creating borrower defense rights, a student could file a claim against his school. Will Hubbard of Student Veterans of America further stressed that a strong borrower defense rule, like the one issued by the Obama administration, would help drive Busada’s bad acting for-profit competitors out of the industry and thus reward honest schools. Finally, as I stressed to negotiators in an earlier meeting, since the Education Department started taking borrower defense seriously after the collapse of Corinthian and ITT, it has received about 99,000 claims. 98.6 percent are from students who attended for-profit schools. But most of those come from a small cluster of predatory schools, and there are many for-profit schools, including apparently Busada’s, where not a single student has filed for debt forgiveness. Students who attended good schools, it seems, are not seeking loan relief.
Busada’s heartfelt pleas on behalf of his “good” school thus would seem to have little relevance to the question of whether the borrower defense rule should actually be crafted to help injured students, or whether instead, as predatory companies and the DeVos Department have so far urged, it should make student debt relief extremely difficult.
In addition, it’s harder for college operators to maintain a get-government-off-our-back stance when they’re getting most of their income from taxpayers. The most recent year of data shows that Ayers Career College got 85.6 percent of its revenue from Department of Education student grants and loans — barely under the federal limit of 90 percent. Ayers also has students who are veterans and thus may be providing the school with additional federal aid from the Pentagon and VA.
Faced with continued disagreement on numerous issues, Department representative AnnMarie Weisman is pushing the negotiators to reach consensus, reminding them that if they don’t agree on a borrower defense rule, the Department will write the rule itself. While her sharp warning was ostensibly directed to both sides, given the entirely one-sided anti-student nature of the Department’s proposals so far, it seemed clear where things are headed.
Rep. Mark Takano (D-CA) summed that up when he spoke during the public comments section of the meeting late Monday. He told the panel that with DeVos’s proposed rule, “the Department of Education is on the verge of betraying the students and taxpayers it is supposed to serve.”
You can catch the last few days of this proceeding on live stream. One of the for-profit college negotiators told the meeting today that he was sorry he had to miss yesterday’s meeting in person, but that he was able to follow it by live stream. At least one observer noted the irony: The live stream is provided by the student group Higher Ed Not Debt, which is able to offer the service only because it fought valiantly against efforts by for-profit college lobbyists and Department officials to shut it down, until Department lawyers said they could not justify such government censorship.