Faced With Proof Colleges Scammed Students, DeVos Insists Students Are the Con Artists
Trump education secretary Betsy DeVos is scheduled to testify tomorrow before a House Education and Labor Committee hearing on student debt issues. DeVos already has expressed this week her continuing concerns about an epidemic of fraud and abuse in the for-profit college sector. Unfortunately, DeVos seems to believe the con artists are not the for-profit college operators who have been caught, over and over, ripping off students and deceiving regulators, but rather the veterans, single mothers, immigrants, and other students who attend these schools.
DeVos signaled her contempt for these low-income and middle-class students early in her tenure, most notably when she told a conservative conference that under Obama administration regulations aimed at protecting students from predatory college abuses, “all one had to do was raise his or her hands to be entitled to so-called free money.”
DeVos was casting aspersions on the more than 200,000 former students who have applied to her Department for cancellation of their federal student loans under a provision of law called “borrower defense,” which allows such loan relief where schools have engaged in abusive practices.
In the face of widespread evidence of for-profit college abuses, the Obama administration in 2016 issued new borrower defense regulations strengthening rights for students to have their loans cancelled where there was evidence of school misconduct. The administration also was advancing plans to give broad relief to former students of Corinthian Colleges and ITT Tech, two collapsed for-profit college chains found by the Department of Education and law enforcement agencies to have engaged in egregious predatory practices.
NPR reports today, based on Department documents it recently obtained, that career Department officials recommended in January 2017 that the Department move ahead with full relief for former Corinthian and ITT students; they concluded that given those companies’ well-documented records of misconduct, “the value of an ITT education — like Corinthian — is likely either negligible or non-existent.”
But when DeVos became Secretary in early 2017, and was asked to formally sign off on loan discharges approved under Obama for some 16,000 former Corinthian students, she signed the form with a gratuitous dig, writing that she was doing so “with extreme displeasure.”
Then, DeVos ordered a do-over of the elaborate administrative process required to issue Department rules and, at the end, completely gutted the Obama borrower defense regulation, making it nearly impossible for cheated students to obtain loan relief in the future.
And yesterday, for the second time, DeVos unveiled a plan to deny full debt relief to even those students who were clearly wronged by their schools; instead most would get only partial reduction of their debt, maybe as little as a 25 percent reduction, based on a nonsensical formula her Department underlings manufactured, measuring the earnings of graduates of offending programs against those of graduates of comparable programs.
Senator Dick Durbin (D-IL) today called this new DeVos plan “an outrage.” Senator Patty Murray (D-WA) said DeVos new “‘methodology’ uses faulty math to justify denying borrowers the relief they are owed.” Rep. Bobby Scott (D-VA), who will chair tomorrow’s hearing, said the Department had “invent[ed] another scheme to provide students less relief than the law allows.”
In May 2018, faced with a lawsuit brought by students represented by the Harvard Project on Predatory Student Lending, U.S. District Judge Sallie Kim invalidated DeVos’s previous attempt to impose a partial debt relief scheme, on the ground that the Department made illegal use of individual income data from the Social Security Administration. Kim also ordered DeVos to halt debt collection from some Corinthian students. This year, presented with evidence that the Department’s contractors were still demanding loan payments from, and garnishing wages and tax refunds from, some 46,000 of those students, Judge Kim held DeVos in contempt and fined the Department $100,000.
The Department called its illegal loan collections a mistake by third parties, but yesterday’s announcement makes clear DeVos herself will spare no effort to deny broke students a measure of protection.
In a statement announcing the new plan, DeVos insisted, “We cannot tolerate fraud in higher education.” But — and to paraphrase Pee Wee Herman, every Trump administration policy has a big “but” — she added, “nor can we tolerate furiously giving away taxpayer money to those who have submitted a false claim or aren’t eligible for relief.”
DeVos’s claim that her unfair loan cancellation policy will protect taxpayers is false. As I have argued in regulatory meetings to both the Obama and the Trump administration, a strong borrower defense rule in the long run would save, not bleed, taxpayer dollars, because it would change incentives for the most powerful actor in the student loan equation: the Department of Education. If the Department were forced over and over to forgive federal loans because of abuses at a particular school, it would finally understand the costs of allowing that school to participate in the federal student aid program and, one hopes, would find a way to remove that school from eligibility. In turn, schools, faced with losing eligibility, would have greater incentives to offer quality programs at fair prices and to curb deceptive practices.
The only losers in such a winnowing process would be the worst for-profit college companies, the predators that deceive, overcharge, and under-educate students. Unfortunately those are some of the same companies where DeVos has invested some of her wealth, where DeVos top higher education aides previously worked, and whose lobbyists ply members of Congress with piles of campaign cash. (Presumably, DeVos’s boss, the con man who previously helmed fraudulent Trump University, also sympathizes with the predatory schools.)
Just as important, while an extensive investigation concluded in 2012 by the Senate HELP committee, and numerous other congressional, media, and law enforcement investigations, have produced voluminous evidence of fraud and deception by for-profit colleges, the DeVos Department has produced no evidence that students are engaged in schemes to systematically fleece taxpayers through borrower defense claims.
Consider what a student would have to go through to try to scam the Department with a bogus debt relief claim. The typical claimant would have to sign up for an expensive for-profit college with a record of deceptive practices and poor job placement, put in all the time and effort, incur out of pocket expenses, use up their Pell grants and other aid, and likely take out high-interest private loans as well as federal loans — all with the hope that the federal loans, and only the federal loans, would be cancelled by borrower defense. Does that sound like a scheme that would attract a lot of people? Would the student really come out on top?
In reality, people generally enroll in career education because they earnestly and urgently want to improve their futures, not because they want to scam the Department of Education. In reality, if their education really does get them on the path to a career, they won’t be spending time claiming they were defrauded. In reality, most of the borrower defense claims pending at the Department are clustered around big for-profit school chains, including Corinthian, ITT Tech, EDMC/Dream Center, University of Phoenix, Career Education Corp., and DeVry — companies that have been revealed through numerous law enforcement actions to have engaged in fraud and ripped off students and taxpayers.
We should be honoring, enabling, and protecting students who strive to pursue their dreams and to provide for their families — not branding them, without a shred of evidence, as ruthless scammers. Betsy DeVos should be ashamed.