February 7, 2018

Watch Live: DeVos Minions Destroy Student Protections

Watch Live: DeVos Minions Destroy Student Protections

You can watch a live stream, right now, of the Donald Trump-Betsy DeVos Department of Education destroying government regulations aimed at curbing well-documented, egregious abuses committed against students by for-profit colleges.

The only reason you can watch this live stream of the DeVos Department doing the bidding of the for-profit college industry is because advocates for students are transmitting it, over the repeated objections of for-profit college lobbyists and the Department officials running these meetings; Department lawyers apparently concluded that public access couldn’t be stopped.

And the reason these meetings are happening is because the law requires DeVos to dismantle the agency rules by the same process that the Obama administration used to create them: day after day of meetings, with dozens of “negotiators” –representing colleges, students, etc. — around a table, 24 days of meetings, nearly 200 hours, because the DeVos Department wants to repeal and replace the gainful employment and borrower defense rules.

The scene gets kinda old: for-profit college owners and lawyers around the table insisting that any rule is bad if it inconveniences one of their “good” schools, even if the rule could protect millions of students and save taxpayers billions; some for-profit college lobbyists in the audience sneering at the remarks of student advocates and, during breaks, pressing the negotiators actually at the table not to get soft and consider compromise; the “neutral” government mediators who repeatedly allow for-profit college representatives to talk about how wonderful their schools are, or discuss the challenges their own companies face complying with rules, but interrupt when advocates for students provide specific examples of school misconduct — because such critical references to facts about actual colleges aren’t “collegial.”

Also at the table are the career Department of Education officials who, during the Obama years, were whipsawed back and forth between assertive advocates for students and powerful for-profit college lobbyists, and offered successive flip-flop, or compromise, draft regulations that reflected those pressures. Now these Department staff are siding squarely and consistently with the for-profit college industry’s demands. It’s not clear who exactly is calling the shots — translating industry wish lists into government directives — but DeVos has hired on her staff a number of people who previously worked at predatory colleges.

In this latest week of meetings, the task of justifying the DeVos Department’s abandonment of protections for students and taxpayers — most recently its release of draft gainful employment rules that eliminate all penalties, including loss of eligibility for Title IV federal student aid, for overpriced career education programs caught burying former students in debt — falls largely to a Department official named Greg Martin.

After the first round of meetings, there appeared to be general consensus among all the negotiators, including those for colleges, that there should be some sort of penalties for schools that consistently leave students with overwhelming debt. But the Department, remarkably, unveiled a draft rule that included no penalties at all, just mandated disclosures to students when a program’s graduates earn too little to pay down their loans.

After student advocates this week pressed the Department on the need for sanctions, Martin announced this morning that the DeVos Department would not go beyond some clear boundaries. It would consider adding sanctions, “but what we’re not willing to entertain” is sanctions that would cover only one sector of higher education, meaning career education and for-profit programs. Nor would the Department consider any formulation that would impose penalties solely based on a comparison of student debt levels to student earnings.

Context helps explain how awful the DeVos Department’s current position is.

First, the final 2014 Obama gainful employment rule allowed career education programs — whether at for-profit, non-profit, or public schools — as well as other for-profit college programs, to be penalized based solely on a bad debt-to-earnings comparison. But that was only after, under for-profit college industry pressure, the Obama Department included in the original 2011 version of the rule a second way for programs to comply with the rule, even if they flunked debt-to-earnings: by having a sufficiently high loan repayment rate. Once that 2011 rule was issued, the for-profit college industry hired expensive lawyers to sue the Department, attacking every aspect of the regulations; but the judge found fault with just one provision, the repayment rate, which he deemed not sufficiently explained. The Department, whose lawyers are cautious in the extreme, decided the only course in the wake of the court’s decision was a new round of rule-making meetings, at the end of which the Obama administration issued a rule that was tougher on colleges, in part because it eliminated the repayment rate the court had struck down. The industry had shot itself in the foot.

Now with the industry having sued and gotten rid of the repayment rate, industry negotiators at the table started musing that penalties might be more fair if the rule included an alternative method of complying — say, a repayment rate. I believe the appropriate regulatory term for this development is: LOL.

Second, Martin’s announcement that any rule must penalize all programs — liberal arts and philosophy at Duke as well as diesel mechanic repair at Wyotech — that leave students with too much debt is like sending a bat signal to the numerous non-profit and public college lobbyists who stuff the office building at One Dupont Circle. If there’s any danger of their schools risking such penalties, they’ll swoop in to stop it. It won’t happen, and the whole rule will be blocked, one way or another. Which is what the for-profits want.

Thing is, there are good reasons the Obama gainful employment rule covered only career education and for-profit programs. First, the authority for the rule is a provision in the law that relates only to career and for-profit programs. Second, there was widespread evidence that for-profit programs are leaving students with overwhelming debt, essentially destroying their financial futures, and student complaints about those programs massively outnumber complaints from other sectors.

The facts about the industry are startling: More than half of the students enrolled in for-profit colleges drop out within about four months. Seventy-two percent of for-profit college programs studied by the Department of Education produced graduates who on average earn less than high school dropouts. For-profit college students — graduates and drop-outs alike — earn less after leaving school than before.

Deceptive and shoddy practices persist, despite the claims of some industry reps that all that’s left after the collapses of predatory Corinthian Colleges and ITT Tech are honest family-run businesses. Just this week, for-profit giant Career Education Corp. announced it’s paying at least $2.8 million to settle a class action lawsuit alleging that the company made misrepresentations to culinary school students regarding tuition, job placement, salaries, and other issues. Last week, the Justice Department announced that for-profit Florida Technical College will pay $600,000 to resolve claims that it obtained taxpayer money by falsely representing that some of its students had graduated from high school.

The gainful employment rule was working. Some schools dropped programs that were likely to fail. There is tremendous overlap betweeb programs that flunked the gainful employment test in January 2017, and schools that have been under law enforcement investigation for deceiving and abusing students. Better-intentioned schools that flunked the test could have worked to get themselves into compliance — by lowering prices, improving placement efforts, or screening out applicants unlikely to benefit from the schooling. Instead, they have joined their predatory competitors, and the DeVos Department, to kill the rule once and for all.

To Martin’s credit, he was honest. He laid bare the Department’s bottom line and attributed it, at least in part, to the views of the new administration. He could have shut his mouth, watched the student advocates argue their hearts out, and let the Department’s successive issuance of anti-student, anti-taxpayer draft rules speak for themselves.

Martin’s hard-line utterances, though, provoked a sharp response from the pro-student negotiators. Chris Madaio from the Maryland attorney general’s office called it “shocking” that the Department was refusing to even entertain certain ideas, to which Martin insisted, no, we’re not negotiating in bad faith. Cornell professor Jordan Matsudaira, who worked on the gainful employment rule while in the Obama White House, also expressed surprise at the Department’s flat refusal to consider sanctions against career programs only, given the reality of where the abuses are. He stressed that if the purpose of this rule remains to prevent students from borrowing more that they can repay, the evidence suggests that a rule that requires only disclosures would have little positive impact. Questioned earlier by consumer advocate Whitney Barkley, Martin insisted, without reference to any data, that the disclosure requirements have “had a profound effect on students.”

Laura Metune, Vice Chancellor of External Affairs at California Community Colleges, asked, given the enormous evidence of for-profit college abuses, exactly what does the Department think it’s doing now?

Marine Corps veteran Will Hubbard, who works at Student Veterans of America and is a negotiator at the parallel meetings to demolish the Obama borrower defense rule, stopped by the meeting Tuesday to offer his view on gainful employment: The Department is “dismantling legitimate protections” for students. Similarly, Daniel Elkins, representing veterans on the gainful employment panel, told the meeting that sanctions are needed because schools have been taking advantage of students.

The for-profit college representatives already have outdone themselves this week. Handed a proposal from the Department that did away with all penalties for burying students in debt, and required that all higher education programs, not just career education, make disclosures if they fall below newly-relaxed debt standards, the for-profit reps demanded even more. They objected to the Department using the term “low performing” to label programs that fell below that standard. They argued about when and how they would have to disclose.

Sandy Sarge, a lawyer chosen by the Department to represent college chief financial officers and business officers, worked, from 2007 to 2012 at Alta Colleges, which paid millions to settle federal and state charges of deceptive practices at its Westwood College. She spent time at the meeting talking about students who use federal aid to shop at Whole Foods. When the US Student Association’s Chris Gannon tried to respond, defending the integrity of students, the neutral moderator cut him off.

Negotiator Jennifer Blum of for-profit Laureate Education kept expressing concerns about gainful employment provisions as they related to graduate school programs. Numerous Laureate grad students are suing the company for alleged deceptions. (Recent research by both Brookings and the Center for American Progress found that African-American students are much more likely to attend for-profit graduate schools than are other groups.)

Meanwhile, Betsy DeVos is nowhere to be found at these meetings — not even a stop-by to thank the volunteer panelists for their hard work. Department staff here say she’s infrequently in the building, and reports indicate she still spends at lot of time at her grand homes in Michigan and Florida. I’m not sure anyone in the meetings has even referenced DeVos, not to mention Trump, even though both have invested money in for-profit education businesses, and their coming to power, aided by campaign contributions to the Republican Party from for-profit college executives, is the only reason for the Department’s abrupt policy reversal.


This afternoon the negotiators took the unusual and concerning step of tossing out the public and having a private meeting for several hours. Afterwards a mediator summarized a supposed agreement among negotiators on some principles: a repayment rate measure — the provision struck down by the for-profit college industry’s lawsuit — would be added back in as an alternative way for schools to avoid being in violation; there would be sanctions that apply to all college programs, except for graduate school programs (a troubling exclusion, in my view); and, when schools are found out of compliance, the Department would be required to take some kind of corrective action — program reviews, letters of credit, up to and including loss of federal student aid.

But the devil remained in the details of this dubious deal. One negotiator said she likely wouldn’t have supported excluding the public, had she been in the room at that moment, and furthermore that she didn’t agree that a consensus had been reached, only a “temperature check.” Another negotiator made comments indicating he didn’t fully understand the principles to which the group had supposedly agreed, and he raised concerns about various aspects. A third negotiator, the for-profits’ Blum, clarified there was no consensus on what specific debt-to-earnings and repayment rate measures would apply.

It appeared likely that, in the end, the Department will still be writing its own rule, and it seemed apparent from the Department staff’s representations that the rule would mean the abandonment of meaningful protections for students, as the for-profit college industry demands.