ON TAP Today from the American Prospect
October 25, 2019

Dayen on TAP

The Education Department’s Rip-Off Schemes Radicalize Its Own Staff

Billionaire daughter-in-law to the Amway fortune Betsy DeVos probably contracts with the U.S. Mint to exclusively reissue $100,000 bank notes so she can light them on fire to light candles in her office. But she’ll have exactly one less, after a federal judge in San Francisco fined her exactly that amount, because the Education Department continues to collect on fraudulent loans issued to students of shady for-profit college network Corinthian Colleges.


Around 16,000 students have been affected by DeVos collecting on illegal loans, so that’s $6.25 each. Nevertheless, seeing any personal liability at all for an Education Department that not only failed to stop Corinthian from lying to students and saddling them with debt for worthless diplomas, but then kept trying to squeeze those students for unlawful payments, must offer at least a little solace. The Education Department resisted compensating Corinthian students at all, until they went on a debt strike. Under Arne Duncan, students ripped off by for-profit colleges were allowed to assert “defense to repayment” to get the loans canceled.


That process moved at turtle-like speed, with only one-fifth of Corinthian students made whole by the time DeVos took over. She instituted hurdles to prevent loan forgiveness, which Judge Sallie Kim ruled unlawful. This ruling is stayed pending appeal, but DeVos’s department kept trying to collect loan payments anyway, despite the dispute. Three thousand borrowers made these payments. The Education Department even garnished wages on 1,800 students, which it had no right to acquire.


Essentially nobody abused by Corinthian has had loans canceled during DeVos’s tenure. However, she has created momentum for mass loan forgiveness—inside her own department. A. Wayne Johnson, whom DeVos appointed as chief operating officer for the Office of Federal Student Aid, resigned this week, calling the system “fundamentally broken.” He’s now running for Senate (as a Republican) in Georgia, endorsing the cancellation of $50,000 in student-loan debt for every borrower, while adding a $50,000 tax credit for everyone who had already repaid their loans. This is a more robust student debt cancellation proposal than Elizabeth Warren’s (because it includes no means testing), from a Republican DeVos appointee who’s actually seen the student debt crisis up close. That’s how radicalizing it is. The way we finance higher education cannot sustain itself, and everyone to the left of Betsy Hundred Thousand DeVos ought to demand a reset.