Archives for category: Student Financial Aid and Student Debt

Forbes’ education writer Wesley Whistle writes about the lawsuit filed by AFT against Betsy DeVos for her failure to protect the students who were defrauded by colleges and universities, mostly for-profit.

DeVos rolled back an Obama-era regulation intended to prevent colleges from loading students with high debts and worthless degrees.

Secretary of Education Betsy DeVos has one more lawsuit to deal with this week. Yesterday, one of the largest teachers unions in the country filed suit against DeVos and the Department of Education (Department). The American Federation of Teachers (AFT) is suing DeVos for repealing the “gainful employment” regulation that is meant to protect student borrowers from programs that load them up with debt that doesn’t yield a job with an income sufficient to repay their student loans.

The complaint from AFT—filed by the National Student Legal Defense Network (NSLDN)—says the repeal of the rule was illegal and didn’t provide the proper justification required in federal rulemaking. The lawsuit asks the court to reinstate the rule to protect students from low-quality degrees and unmanageable debt.

“With this lawsuit we are going to strike down DeVos’ illegal repeal of the gainful employment rule and protect students from schools that leave borrowers with worthless degrees and debt they can never repay,” said Aaron Ament, president of NSLDN, in a press release.

In her continued effort to repeal or rewrite higher education regulations, Secretary DeVos first delayed, then delayed some more, and finally repealed the 2014 gainful employment regulation in July 2019. The Secretary claimed the rule unfairly targeted for-profit colleges—an industry rife with predatory practices, fraud, and abysmal outcomes for students—even though it was not a regulation solely for for-profit schools.

Under the Higher Education Act, career-oriented programs (think welding or nursing) and all programs at for-profit colleges must show that they lead to “gainful employment” for their graduates. This provision has appeared in some form since the Higher Education Act was first passed in 1965. After years without specificity of what this actually meant, the Obama Administration issued a regulation to finally put some teeth on one of the few accountability tools in higher education.

The rule basically created a debt-to-income measurement so that if these programs left their graduates with sky-high debt and too little income to repay it they would lose access to federal student aid—grants and loans. Issuing this regulation was meant to protect students from programs that would saddle them with debt they’d either never repay or struggle to do so. And it would protect taxpayers from having to foot the bill for loans that won’t be repaid because low-quality programs didn’t get their graduates in jobs with salaries sufficient to repay their debt.

All kinds of programs failed the gainful employment rule. For example, a dental laboratory technology certificate program left graduates with median earnings under $7,000, well under the federal poverty level. And it impacted all degree levels and types of schools. A graduate certificate at Harvard even failed the test. It was far from perfect as it didn’t address the schools that failed to graduate their students but left them with debt they cannot afford, but it was a one of the few protections students had.

When DeVos repealed the regulation she said that transparency was enough and released new data on the College Scorecard that showed debt and earnings for each program. While that is a great step in the right direction, it is far from enough. Research has shown that transparency cannot replace accountability and isn’t sufficient to protect students and taxpayers. Reinstating this rule would go a long way to ensure students aren’t left with worthless degrees and unaffordable debt.

 

 

 

 

During the Obama administration, Congress passed legislation to protect students who had been defrauded by for-profit colleges. In most cases, the “colleges” made claims about their success in placing their graduates in jobs. As a result of these misleading claims, thousands of students paid for a worthless degree. The Education Department attempted to help them get restitution. The Education Department was on the side of the victims of predatory colleges.

But times change, and now Betsy DeVos is in charge. In the past, she has invested in for-profit colleges. She has no sympathy for students who were defrauded. She thinks they are trying to get free money, and she has dragged her heels. Clearly she sides with for-profit colleges, not students.

A lawsuit was brought against the Department of Education for sending debt collectors to hound students who had been defrauded. The judge in the case, Judge Sallie Kim, fined the U.S. Department of Education $100,000 after ED admitted that it attempted to collect on debts owed by 16,000 students. For some unknown reason, the $100,000 was supposed to help those students, but each one would receive just a few dollars, maybe enough for a cup of coffee.

After the fine was imposed and DeVos was held in contempt of court, the Department announced that it had sent debt collectors to yet another 29,000 students (well, now that $100,000 fine amounts to about $2 for each defrauded student).

Despite the fine and the court order, the Department admitted that it continued to pursue students at late as last month.

Now Judge Kim must decide how to deal with the contemptuous, possibly criminal activities of the Department of Education. 

A federal judge is weighing higher fines for the Education Department after the federal agency disclosed that it pursued scores of additional borrowers for debt collection — violating a court order.

Magistrate Judge Sallie Kim of the U.S. District Court in San Francisco agreed this week to consider a request by former Corinthian Colleges students to increase the $100,000 fine she levied against the department in October. The judge imposed those sanctions and held Education Secretary Betsy DeVos in contempt for pursuing loans owed by 16,000 students from the defunct for-profit chain despite a May 2018 order halting collections.

In December, the Education Department revealed in a court filing that it identified another 29,000 people who were pursued for loan payments. The agency also informed attorneys for the students that it never fully ceased collections and went after at least 21 people for payments as recently as last month…

Attorneys for the Corinthian students have argued that the department’s continued violation of the order warrants harsher penalties. Hundreds of people lost wages or tax refunds because of the collection practice, while thousands of others were hit with negative marks on their credit reports. Some people who lost wages told attorneys that their utilities were cut off or they faced eviction.

The Education Department has collected more than $20 million from Corinthian students represented in the class-action case. It has yet to refund all of the money.

Money from the $100,000 fine was meant to provide redress for 16,000 borrowers, but because 45,000 people were affected, attorneys say far more compensation is needed….

The ongoing dispute stems from a class-action lawsuit filed in 2018 by the Project on Predatory Student Lending at Harvard University and the Housing and Economic Rights Advocates on behalf of Corinthian students. The groups alleged DeVos had illegally limited loan forgiveness due to students under a statute known as borrower defense to repayment.

Kim agreed the Trump administration violated privacy laws by using Social Security Administration data to calculate loan forgiveness. She banned the Education Department from using the earnings data to grant partial student debt relief to Corinthian students and halted collection on their loans.

DeVos has cited the ruling as the reason the department sat on nearly 300,000 borrower defense claims for more than a year. The department began clearing the backlog in December after updating its methodology with a sliding scale based on a borrower’s wages to determine loan forgiveness.

In other words, DeVos took the position that if the student was defrauded but was earning money, the student could not recover the money spent on a worthless degree.

The judge has the power to increase the fine the Department must pay, which means that we the taxpayers have to pay for DeVos’ efforts to protect the predatory colleges and persecute the defrauded students.

Peter Greene wrote about this controversy here.

G.F. Brandenburg wrote about it here. 

Brandenburg says he hopes DeVos goes to jail.

Clearly the judge will not fine her personally.

The students should be paid back.

I agree with Brandenburg: DeVos should go to jail for her ruthless indifference to the plight of students who were defrauded and were supposed to be protected.

Last month, Betsy DeVos testified to Congress about her role in the student loan program. 

Her Department hounded students to pay back loans instead of canceling them because their for-profit college defrauded them. A federal judge ordered the Department to stop harassing the students, then fined the Department $100,000 for violating the court order.

Rep. Josh Harder of California grilled her for her failure to side with the students. He accused her of acting like a lobbyist for the for-profit colleges.

It’s a powerful segment. Worth watching to see her utter and callous indifference to the suffering of students who accumulated tens of thousands of dollars of debt for a worthless degree.

Rep. Harder said he understood why she didn’t care: a student’s debt of $40,000 represented a minuscule fraction of the cost of one of her 10 yachts.

 

Peter Greene writes here about Erica Green’s excellent coverage of Betsy DeVos’s testimony to Congress about student debt. 

He says you have to pay close attention to her words to understand that she is not greedy, she is not dumb;  she knows exactly what she is doing.

He writes:

“Here’s an absolutely DeVosian quote from the proceedings:

“I understand that some of you here just want to have blanket forgiveness for anyone who raises their hand and files a claim, but that simply is not right.

Ah yes– the smirk.

“This is DeVos– she knows what’s right, and she’s going to stand up for it. And’s what is right is that Those People shouldn’t be able to get away with not paying their debts. Those People should not be allowed to stiff their Betters. Because you know that Those People are probably lying about how badly they were hurt, anyway, because Those People are always trying to get things they don’t deserve. This “anyone who raises their hand and files a claim” characterization that DeVos has been using is such a flip way to dismiss the damage done by for-profit collges, an d here it matters what DeVos doesn’t say– she doesn’t say that there are people out there who played by the rules, tried to bootstrap themselves to a better life through education, and got fleeced, and we should provide those people some real relief. She has never seriously acknowledged that harm.

“But that takes us to the other DeVosian value that’s on display here.

“Ms. DeVos maintained that it was “probably the case” that Corinthian Colleges deceived students, but she also said she believed that the “prior administration basically forced schools like Corinthian out of business” with onerous financial restrictions. She rebuffed questions about an investigation by career staff, unveiled in January 2017 memos published by NPR on Wednesday, that concluded that Corinthian students deserved full loan forgiveness because they received no educational benefit.

“Businesses fleecing customers is not outrageous. What’s outrageous is government interfering with the operations and practices of businesses. There is an extra layer of irony here– the Obama administration actually was pretty damn slow to take any useful action against Corinthian, and even helped bail them out for a time, and any good Obama-bashing Trumpian might hammer that point home, but DeVos can’t see that because for her there is no greater sin than interfering with the operation of a business.

”She’s made variations of that point again and again, all the way back to the confirmation hearing when she couldn’t imagine any misbehavior that would prompt her, as a government official, to step in and say “Stop!” Businesses matter more than people.”

 

 

The media received early copies of Mayor Pete Buttigieg’s plan for K-12 education. Like Warren and Sanders, he proposes a large increase in funding for the neediest children and for early education. He wants to see a reduction in college tuition. He does not propose a wealth tax on the 1%. He is against for-profit charters but, unlike Warren and Sanders, would not eliminate or freeze the federal Charter Schools Program, which currently dispenses $440 million a year, mostly to big corporate chains like KIPP and IDEA.

Mayor Pete’s plan is a centrist program, which could have been drafted by the Center for American Progress, the think tank for the Obama administration.

Valerie Strauss describes the plan here.

She writes:

Democratic presidential candidate Pete Buttigieg is unveiling a broad new education plan on Saturday that pledges to spend $700 billion over a decade to create a high-quality child care and preschool system that he said would reach all children from birth to age 5 and create 1 million jobs.

The 37-year-old, openly gay mayor of South Bend, Ind., also promised to spend $425 billion to strengthen America’s K-12 public schools, targeting federal investments and policy to help historically marginalized students. He would boost funding for schools in high-poverty areas as well as for students with disabilities, and promote voluntary school integration. And he said he would ensure that all charter schools — which are publicly funded but privately operated — undergo the same accountability measures as schools in publicly funded districts…The more than $1 trillion in his plan would be spent over 10 years and would come from “greater tax enforcement” on the wealthy and corporations, according to a Buttigieg campaign spokesperson, who asked not to be identified. He would not impose a new tax on the super-rich, the spokesperson said, who did not detail how much money the mayor believes he can realize from uncollected taxes…

Buttigieg’s new education plan details a push to help communities integrate their schools racially and economically, which research shows is beneficial to black and white students. The mayor pledged to invest $500 million into communities that want to undertake integration efforts. And he said he would reinstate Obama era guidance on the voluntary use of race in state- and district-level strategies to achieve integration, removing current restrictions on the use of federal funds to pay for busing that would be part of integration efforts.

He also pledged triple funding for Title I — the largest federally funded educational program, intended to help schools with high concentrations of students who live in poverty. But that added funding would be targeted to states and districts that “implement equitable education funding formulas to provide more state and local resources to low-income schools….”

Both Sanders and Warren have called for free college tuition for all, while the mayor’s recently released higher education and workforce development plan calls for lowering college tuition and fees on a sliding scale, with free college for those students whose families early up to $100,000. Former vice president Joe Biden, who has topped the polls more consistently than any of the other candidates, has also taken education positions less expansive than Warren and Sanders.

Buttigieg’s big initiative in this plan is around early childhood, for which he has pledged to spend $700 million to create a new system to provide child care and prekindergarten to all children, which he said is more than 20 million, and that would create 1 million new jobs in that sector.

For additional insight on Mayor Pete’s plan, read Matt Barnum and Kalyn Belsha’s account here in Chalkbeat. 

Politico Morning Education reports that the U.S. Department of Education mistakenly collected debt from many thousands of students who had been defrauded by a failed online for-profit college and were previously unreported. The last time the Department acknowledged having hounded students in error, it was fined $100,000. Why not fine the Secretary and the officials in charge personally so that they get the message that it is wrong to pursue collections from students whose debt should have been forgiven? (Today’s Politico was underwritten by the Waltons.)

 

A COURT FILING THIS WEEK REVEALED TENS OF THOUSANDS OF ADDITIONAL CORINTHIAN COLLEGES STUDENT BORROWERS WERE TARGETED FOR COLLECTION BY THE EDUCATION DEPARTMENT. The new disclosures have infuriated plaintiffs of an ongoing lawsuit against the government.

In October, after the Trump administration initially said it erroneously collected on the loans of some 16,000 Corinthian borrowers, a federal judge held DeVos in contempt of court and imposed a $100,000 fine for violating an order to stop collecting on student loans from the defunct for-profit college.

Now, according to the department, that means a total of 45,801 borrowers “were erroneously taken out of forbearance or stopped collections status.” That includes the roughly 29,000 newly identified borrowers, plus the original 16,034 borrowers. “FSA has now placed all 45,801 borrowers in the correct status,” the government’s court filing said.

What’s to blame for the mixup? The department said an “isolated communication” between Federal Student Aid and its contractors, plus “other logistical issues” caused the undercount. The government said FSA “now believes that it has an accurate account of existing borrower defense applicants.”

“Students and taxpayers should be infuriated by the Department of Education’s complete disregard for student borrowers,” said Toby Merrill, director of the Project on Predatory Student Lending. “Secretary DeVos has already been found in contempt of court for her illegal collections on students. Now we find out the impact was far greater than previously reported, and she still hasn’t returned all the money owed to students. It is galling, it’s unlawful, and it can’t be tolerated.”

I am speechless. Wordless. How could anyone who cares about their reputation join the most shameless department in the most shameless administration in history? DeVos showed her colors when she harassed 16,000 students to pay debts for their time at the closed for-profit  Corinthian Colleges when the debts would have been cancelled. She has repeatedly shown her views: her contempt for public schools and for civil rights enforcement.

Reported by Politico Morning Edition:

 

CAP’S COLLEEN CAMPBELL TO JOIN EDUCATION DEPARTMENT: Campbell, the director of postsecondary education at the Center for American Progress, will join the department later this month to oversee strategic communications for the NextGen project.

— NextGen’s goal is to overhaul how the federal government collects student loans.It involves creating and running a new platform on which tens of millions of borrowers will manage their loans, as well as awarding contracts that are collectively worth billions of dollars to financial services companies.

— During her time at CAP, Campbell wroteextensively about the department’s student loan servicing proposals and has been widely quoted about the issue in the press.

— Campbell said she decided to take a role in “a government and an administration under someone who I don’t always agree with” because she believes the Office of Federal Student Aid has “a vision that’s borrower- and student-focused” when it comes to the NextGen plan.

— Campbell’s hiring brings new progressive credibility to a project that Education Secretary Betsy DeVos has described as one of the major ways she’s working to modernize and streamline how the department operates. Read more from Michael Stratford.

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.

 

A federal judge found Secretary of Education Betsy DeVos in contempt of court and fined her Department $100,000, which is less than a slap in the wrist. It won’t begin to cover the losses suffered by students who were hounded by the Department to repay fraudulent student loans for a fraudulent education at for-profit colleges. DeVos believes it is her duty to protect the fraudsters, not the students.

A federal judge on Thursday held Education Secretary Betsy DeVos in contempt for violating an order to stop collecting loan payments from former Corinthian Colleges students.

Magistrate Judge Sallie Kim of the U.S. District Court in San Francisco slapped the Education Department with a $100,000 fine for violating a preliminary injunction. Money from the fine will be used to compensate the 16,000 people harmed by the federal agency’s actions. Some former students of the defunct for-profit college had their paychecks garnished. Others had their tax refunds seized by the federal government.

“There is no question that the defendants violated the preliminary injunction. There is also no question that defendants’ violations harmed individual borrowers,” Kim wrote in her ruling Thursday. “Defendants have not provided evidence that they were unable to comply with the preliminary injunction, and the evidence shows only minimal efforts to comply.

Evidently every part of the Trump administration believes it is above the law. The Washington Post reported today that the Education Department spent millions for student aid at for-profit colleges that were ineligible to receive federal

funding.

A trove of documents released Tuesday by the House Education and Labor Committee shows the Education Department provided $10.7 million in federal loans and grants to students at the Illinois Institute of Art and the Art Institute of Colorado even though officials knew the for-profit colleges were not accredited and ineligible to receive such aid.

The documents build on prior reports from the committee describing efforts by Education Department officials to shield Dream Center Education Holdings, owner of the Art Institutes and Argosy University, from the consequences of lying to students about the accreditation of its since-closed schools. Now it appears the Education Department tried to shield itself from an ill-fated decision to allow millions of dollars to flow to those schools.

Rep. Robert C. “Bobby” Scott (D-Va.), chairman of the House Education Committee, is threatening to subpoena Education Secretary Betsy DeVos for more documents related to the department’s role in Dream Center’s actions. Scott says the agency has obstructed the committee’s investigation and refused to answer questions, as emails and letters paint a picture of a federal agency complicit in an effort to place profits before students.