DeVos Proposes to Curtail Debt Relief for Defrauded Students
S E E D E D C O N T E N T
Tom Brenner for The New York Times
Education Secretary Betsy DeVos proposed on Wednesday to curtail Obama administration loan forgiveness rules for students defrauded by for-profit colleges, requiring that student borrowers show they have fallen into hopeless financial straits or prove that their colleges knowingly deceived them.
The DeVos proposal, set to go in force a year from now, would replace Obama-era policies that sought to ease access to loan forgiveness for students who were left saddled with debt after two for-profit college chains, Corinthian Colleges and ITT Technical Institute, imploded in 2015 and 2016. The schools were found to have misled their students with false advertisements and misleading claims for years.
Afterward, the Obama administration forgave hundreds of millions of dollars in student loans and began rewriting regulations to crack down on predatory institutions and bolster borrowers’ ability to seek debt relief from the federal government. But higher education institutions, including historically black colleges and universities and for-profit educators, maintained the new rules were far too broad and subjected them to frivolous claims that carried significant financial risks.
In June 2017, just one month before the Obama rules were to take effect, Ms. DeVos announced that she would block and rewrite them.
Now the Trump administration is proposing new rules that would require borrowers to prove that they have fallen into deep financial distress to file a claim for debt relief, or to prove that the higher education institutions they attended had intentionally misled them. The department would also require that relief applicants divulge personal information that could have impacted their job prospects beyond their college experiences, including drug test results, health concerns and performance evaluations.
The proposal would establish a federal standard for what constitutes “misrepresentation” on the part of institutions, requiring that claims show “reckless disregard” through false or deceptive claims. It would also impose penalties on institutions that show signs of poor financial health, such as a high number of loan defaults or court judgments.
The new rules lay out “clear rules of the road for higher education institutions to follow” while “holding institutions, rather than hardworking taxpayers, accountable for making whole those students who were harmed by an institution’s practices,” Ms. DeVos said in a statement. “Our commitment and our focus has been and remains on protecting students from fraud.”
The new rules would save the government about $700 million a year, compared with those proposed by the Obama administration, a senior administration official said. The department will take public comment on the proposals for 30 days, and the rules are set to go into effect in July 2019.
Advocates for student borrowers said that savings was nothing to cheer. The new rules would establish insurmountable barriers to relief for many vulnerable students, and would eliminate accountability for institutions that employ predatory tactics in recruitment and advertising, they said.
“The Department of Education is turning a blind eye to widespread fraud and abuse at for-profit schools that left thousands of students in debt without a meaningful education,” said Suzanne Martindale, a senior attorney for Consumers Union. “Instead of helping defrauded students cancel their debts and move on with their lives, these proposed rules would shield poor-performing schools from being held accountable for their misconduct.”
Critics accused Ms. DeVos of stocking her department with former executives of for-profit colleges and universities to free the industry from oversight. DeVos advisers include her senior counselor, Robert S. Eitel, and Diane Auer Jones, a senior adviser on postsecondary education, both of whom worked for Career Education Corporation, a company that operates for-profit colleges, and reached a $10.25 million settlement with the New York attorney general over charges that it had inflated graduates’ job placement rates. The department’s general counsel, Carlos G. Muñiz, worked as a consultant for the company.
“With the stroke of a pen, Secretary DeVos and her team of former for-profit college executives have proposed giving fraudulent institutions de facto immunity while effectively stripping their victims of a realistic path to debt relief,” said Aaron Ament, the president of the National Student Legal Defense Network.
When Ms. DeVos halted the Obama-era rules, she declared: “Last year’s rule-making effort missed an opportunity to get it right. The result is a muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs.” She also criticized the Obama rules as being too lenient.
In December, she reversed an Obama-era policy of granting full debt relief for students by instituting a tiered system that granted partial relief for federal loans based on whether students went on to be gainfully employed. The decision was made, in part, because the department’s inspector general found that the Obama administration lacked a sufficient infrastructure to process claims.
A California magistrate ruled last month that the program violated the federal Privacy Act because it improperly used earnings data from the Social Security Administration. In its court filings, the department said it has sought information on more than 61,000 students, and had granted 10,000 of them partial debt relief.
Last fall, Ms. DeVos began revising the Obama-era rules, convening a committee of department officials, higher education advocates and for-profit college leaders to hash out a new approach.
Senator Lamar Alexander, Republican of Tennessee and the chairman of the Senate Education Committee, indicated that he thought the new rules got the balance right. The Obama administration set “overly broad and vague standards and, as a result, put taxpayers on the hook for too many loans,” he said.
But Democrats say Ms. DeVos’s policies continue to favor industry leaders over vulnerable students.
“Under the leadership of Secretary DeVos, the Trump administration is sending an alarming message: Schools can cheat student borrowers and still reap the rewards of federal student aid,” said Representative Robert C. Scott of Virginia, the top Democrat on the House Education Committee.
The rules would grant stronger recourse for higher education institutions accused of fraud, including an opportunity to review claims and respond to the department with evidence in their defense.
“Carte blanche approval of batches of applications would only serve to cut off access and opportunity for future students,” said Steve Gunderson, the president of the trade group Career Education Colleges and Universities, which represents several for-profit and trade schools.
The proposal also restores “pre-dispute arbitration agreements,” which allow colleges to force students to sign waivers saying they will settle their disputes with institutions through arbitration. The Obama administration had removed those agreements from its rule because they essentially forced to students to sign away their rights to sue and file federal claims, and shielded student complaints from the public.
The department official said the agreements would allow students to settle their claims more quickly and potentially recoup more compensation beyond their loans. The department said that it would ensure that schools were transparent about students’ rights under the agreements, but that borrowers bore some responsibility.
“Postsecondary students are adults who can be reasonably expected to make informed decisions if they have access to relevant and reliable data about program outcomes,” officials wrote in their proposal.
The rules also tighten criteria for borrowers to seek debt relief if they enrolled in schools that later closed. Under the Obama rules, students would not have been eligible for loan forgiveness if they transferred their credits or completed a program at another school. The new rules would disqualify students from loan forgiveness if the closed institution simply offered an opportunity to finish their coursework elsewhere. The administration is also rescinding an Obama proposal that automatically forgave loans for students whose school had closed and who did not enroll in another one within three years. That process now requires an application.
The department is also considering whether to maintain a “preponderance of evidence” standard or a more stringent “clear and convincing evidence” standard for loan forgiveness. Officials said they wanted to make sure the standard ensures that claims are not lodged over unofficial or offhand comments. They suggested that if students can provide documentation of questionable advertisements, that could qualify as an institution “knowingly” providing misleading information.
But advocates for student borrowers contended that no amount of documentation might matter if relief applicants are required to prove not only the actions of their institutions but also their intent.
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This is great news for venerable educators like Trump University. /s.
Oh!
You wouldn't dare imply that that the Trump government might implement policies that favor Trump businesses???
Why... why... why... I'm shocked! Shocked I tell you!
Hey, Steevie!!
You're gonna have to explain the /s tag again...
But it was Steevie who used the /s tag that you didn't understand... so I thought it would be better for him to explain.
I'd be gald to explain, but you often misinterpret things I say. Usually, in fact. Almost always...
Sorry, but I'm not here to do your research.
deleted
What part of
are you... ummm... errr... uhhh... misinterpreting ... here...
... but your question is based on a previous misinterpretation, so...
Actually his post stated LIKE Trump U....he didnt say Trump U! But it's funny how you deflected the convo though. Any thoughts on how DeVos hired as the head of the fraud investigation department, the former head of Devry who was cited by the former administration as having defrauded over 100 mill!
The /s tag was for the venerable part.
Not surprising at all. Wonder what took her so long to do it.
Rome wasn’t built in a day. It’s going to take a little while to fix all these Obama era fubars. I was expecting good things from her and she’s living up to my expectations.
No one in the Trump cabinet will be around after 2020. His numbers are way down in the very states that got him elected, Wisconsin and Michigan. If the Democrats get the turnout in November Trump will be largely turned into a lame duck. Not to mention that he may be impeached early next year.
Perhaps it is that perspective that incites the dogmatists to destroy as much as they can as quickly as they can.
You forgot the sarcasm tag!
Why doesn't the government make the institutions pay back the money?
Ummmmm...............
I know she's stacked her department with for profit college executives. I'm thinking wishfully here
I'll gladly take a toke...
I'm wondering if she is distracted, I heard one of her ten Yachts was broken, her favorite one at that.
She could always borrow one of her brother's fleet of airplanes.
Isn't her brother Erik Prince?
But, it's just not the same, after all you can't sun yourself on the deck of an airplane.
Why yes, yes he is.
Full story.
Yes. So she may have to settle for a Black Helicopter...
Life's a bitch, isn't it?!
Yes, it is. I'd like to see her try to sun herself on the deck of a plane.
I know it was originally called Blackwater and then when the deeds of his mercenaries came out he renamed it Xe. Did he change it back to Blackwater?
Prince supposedly sold the company, although he may have sold it to a company owned by a company owned by a company owned by Erik Prince...
They're still killers.
I heard the yacht was mauled by a bear.
That was a kayak!....bear!!....bear!!!...bear!!!
Bcz DeVos froze all the investigations last year! She hired the former President of Devry University as head if the investigation department!
Even broke clocks are right twice per day which is usually twice as often the damn gop. So, kudos to DeVos having one good idea which doesn't change the fact DeVos is The World's Biggest Fan Of Worthless For-Profit Rip Off Private Diploma Mills. Free public education is the bedrock of a free society which is something DeVos is not only opposed to butt actively is trying to undermine. Don't let DeVos and Trump get away with it...
That's an excellent summary!
They're putting "In God We Trust" signs in Arkansas public schools. So I want all those non-bible belt living right wingers tell me that we don't have religion forced on us here in the South
I don't give a shit...it doesn't belong on a school house wall. Public schools are to remain as secular as we can make them. There are kids in public schools who don't believe in God, ya know
Oh...and note the year that that "motto" was adopted. It was during the same time that "under God" was added to the Pledge of Allegiance and "IN God we Trust" was added to our money. Why? Because it was the height of the Red Scare and HUAC. None of those things belong
Well, what do you think I'm trying to do? I'm voting Blue in November so I can hopefully count on some secular thinking people who will change that fucking law
Because...my senators and reps are all Christian fundies and love the idea of that dumb motto.
Do you get it now?
And what's wrong with voting for a liberal with secular views? Seems that's in MY best interests, don't you think?
That's your worries, not mine.
Call me a capitalistic anarchist but how are we supposed to pay for "free" college? We all know it's not free...the money has to come from somewhere
Lemme see.....
I'm constantly told that the top 1% pay the bulk of the taxes in this country so I'm not sure that taxing the 1% more is the answer.
No.
I know a couple of places the money could come from:
Military budget
Corporate welfare
Farm subsidies
Funding to Israel
There are two answers, here.
First, if you listen carefully (which is easy enough) and the 1%-shill tells the truth (which is not a given!) you will hear "the top 1% pay the bulk of income taxes". Today, most lower-income Americans pay primarily payroll taxes and sales taxes. There are lots of ways to mislead listeners about taxes. "Lower income people do not pay any capital gains taxes!" Ummm... because they don't own anything...
Second, and even more importantly... the 1% SHOULD pay a much higher tax rate than others because their revenue is MUCH higher.
I saw a study not long ago that calculated that the ideal top tax bracket should be about 65-70%, to maximize tax revenue while not overly affecting the taxpayers' lifestyle. The remaining 30-35% is a LOT of money. They would still be able to buy their yachts...
Oh, and of course... the very rich employ armies of lawyers to avoid paying anyway...
I note that your standard-bullet-point obfuscation does not actually contradict anything I said.
So why are corporations getting money from the government?
If most farms are agri-businesses they should know how to manage their business, right? Grow only what you can sell. Isn't that the basic business model?
Israel is a rich country and doesn't need our money
As far as the military budget....don't touch veteran care or benefits!!!!!!!!!!!!
... and apparently you don't understand the word "conflate", either...
I think Bob knows the difference between payroll and income taxes.
Now here's an idea. I understand that there's a cap on the amount of salary that's subject to FICA and Medicare taxes. I don't know what the exact number is...somewhere in the neighborhood of 150,000 or so. So why not tax salaries above that cap? If I'm making $250,000/year I should be taxed on 250,000 not 150,00 because I will be eligible for SS and Medicare myself when I retire.
FICA limit $128,000
I disagree with that. All income should be subject to FICA
This is typical, Giggles, of how a sentence that is "true" may be utterly misleading.
Sam Walton's six kids own more than 100 million other Americans. Obviously, they are not employees.
The very wealthy are not concerned with ordinary people's taxes.
yeah....if they can buy a 40 million dollar yacht do they even need SS and Medicare?
I did not say they are the same thing. I you read that in my post, you have a problem.
How many multi-billionaires pay the same taxes that Giggles pays?
No and they should not be forced to pay into it. It’s part of the reason I stopped taking a salary over twenty years ago and get my income from rent money on buildings held under an LLC so I could stop paying into SS. I don’t need it.
good for you
Should they be? I mean...we're just little pissants, right?
I often ask myself how the ultra-rich think about the rest of us. They gain and hold "their" wealth by capturing the added value created by others, by "the rest of us".
Is it possible to sustain the cognitive dissonance that is inevitable when living conditions are so radically unequal?
I suspect that the only way for them to manage is, as you say, to consider us as piss-ants.
And everybody here on NT are looked at by the uber rich the same way. All of us would have to use the servants' entrance or the back door. If some people here think that the uber rich respect them....they need a strong cup of coffee or a boot up the ass.
And these uber rich inherited their wealth like the Waltons. They didn't earn it. The orange baby-man certainly didn't earn his wealth
Ah! The psychological bases for poor people supporting people and policies that screw them in favor of the already-rich...
I've read tons about this, to conclude that there are a number of contributing factors reinforcing each other. Tribalism and racism are the keys.
And if some here think I'm making this up, let me tell them a story.
My father was delivering a carpet one day to a house in Philadephia....huge mansion. Could have been Mainline, don't know. Any way, Dad shows up with his friend and this carpet and they go to the front door, ring the bell and were told that "servants and help are to use the side entrance".
Look...it doesn't matter to me that you think it's one giant Ponzi scheme. The fact is that there are people who can certainly pay more into it. If they want to draw on it at age 65, they are entitled.
I know life is unfair but sometimes we have to do what we can to make life a little more fair.
I'm just saying...it's the way the uber rich look down on the working class man. You don't find that a bit offensive?
So it doesn't bother you when people talk down to you or treat you like shit?
stay out of my pockets... LOL
yes, I have disposable income... no, you can not have it.
pay for your own life.
on a side note: it should be criminal to put kids in debt for a worthless liberal arts degree... this is a scam.
cheers
Helping poor people get;
An education
Healthcare
Food
Shelter...etc...
"OMG !!!!!! THATS SOCIALISM, THATS HORRIBLE!!!!!!!"
Billion dollar bailouts for banks and soy bean farmers that are going under because trump is a fucking moron?
NOT socialism?
Sure, and the moon really is made of cheese. /s
Devos would have let the Trump University scam continue and she would let him get away with it. All these "colleges" and "universities" should have stricter rules about being set up in the first place.
Fake schools help add to the Devos fortune, as do several other scams they have going with private prisons and other similar scams.
Until the American people stand up against it and against her, these school scams will go on.
Personal accountability. One wonders where some think the end users responsibility in all of this is.
Realistically the only thing college really promises is a degree of choice if the prescribed coursework is successfully completed. If they somehow don't meet that obligation then there is fraud and they are liable Other than that, the user is on their own to make their own way after they complete their degree. As it should be.
If a user is a big enough rube to buy into a colleges BS dog and pony show then that is on the user. Not on taxpayers. The tax payers didn't make the mistake. The end user did.
Good on Devos. You go girl.