Archives for category: Student Financial Aid and Student Debt

David R. Taylor is a veteran teacher and blogger. He asks the important question of what to expect the consequences to be for public education if Trump is re-elected.

Very likely, it means four more years of Betsy DeVos and her crusade to destroy public education and shower federal money on charter schools, private schools, and religious schools.

Taylor reviews some of her worst actions, such as favoring predatory lenders and favoring for-profit colleges that rip off students. Such as, abandoning the kids who need her most by downplaying civil rights complaints and stripping transgender students of any protections. Such as, trying to starve her own department of funding.

Between the return of DeVos and a voucher-loving majority on the Supreme Court, public schools are in for a rough ride. We can’t change the composition of the Supreme Court (unless there is a genuine effort to expand it and add balance), but we can vote to make sure Betsy goes back to Michigan and her ten yachts.

The California State Attorney General, Xavier Becerra and 48 other states and the Consumer Financial Bureau won a $330 million settlement on behalf of students from a now-defunct for-profit “college.”

California Attorney General Xavier Becerra, along with 48 states and the Consumer Financial Protection Bureau (CFPB) on Tuesday announced a $330 million settlement with ITT Technical Institute (ITT Tech), the now-defunct predatory for-profit college, and PEAKS, its holding company. The settlement, which in California is pending court approval, resolves allegations of an illegal private student loan scheme that harmed student borrowers by misdirecting them towards expensive student loans that they struggled to repay. The settlement will automatically discharge PEAKS’ entire student-loan portfolio with loan forgiveness for anyone with an outstanding PEAKS loan. This will provide relief for more than 43,000 borrowers nationwide, including 4,000 Californians. PEAKS will also be required to shut down after carrying out the settlement.

“As students strive for a college degree, their attention should be on their studies not on being cheated by unscrupulous lenders,” said Attorney General Becerra. “Using a private lending scheme, ITT Tech saddled students with massive debt, exorbitant interest rates, and a worthless diploma. Today’s settlement removes the financial handcuffs gripping thousands of California students defrauded by ITT Tech. These students and former students can now wake up from this borrower’s nightmare. At the California Department of Justice, we will continue to crackdown on predatory for-profit colleges that focus on dollars instead of diplomas.”

Peter Greene explains here how Trump came to Betsy DeVos’ rescue when Congress tried to stop her from punishing students who had been scammed by predatory colleges.

DeVos wanted to withdraw an Obama-era program that helped students who incurred debts to fraudulent colleges. A court intervened to stop her. DeVos considers the students buried by debt to be free-loaders. Congress rebuked DeVos in a rare bipartisan vote. Trump issued his very first veto, simultaneously supporting DeVos and rejecting the thousands of students who had been defrauded.

This is outrageous.

Back to court.

How cruel can Betsy DeVos and Steven Mnuchin be? As people of great wealth and privilege, they have not a thought for those who have been impoverished by the pandemic.

Both have been sued in a class-action lawsuit on behalf of student debtors whose tax refunds they sought to garnish.

Jessica Corbett writes in Common Dreams:

Treasury Secretary Steven Mnuchin, Education Secretary Betsy DeVos, and the federal departments they run were hit with a class-action lawsuit Friday for illegal seizures of thousands of student borrowers’ tax refunds during the coronavirus pandemic, which has left over 40 million Americans jobless and familes across the country struggling to stay in their homes and keep food on the table.

The suit (pdf)—filed by Student Defense and Democracy Forward in the U.S. District Court for D.C.—accuses the Education and Treasury departments of violating the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act from late March, which halted all involuntary collection of federal student loans, including tax refund offsets, until the end of September.

“Secretaries DeVos and Mnuchin have inflicted needless financial pain on student borrowers and their families by failing to stop the illegal seizures of their tax refunds,” Democracy Forward senior counsel Jeffrey Dubner said in a statement.

“The turmoil caused by the ongoing pandemic is no excuse for breaking the law,” Dubner added. “Our class-action suit seeks to hold the administration accountable so that student borrowers can stay on their feet during this crisis.”

Trump vetoed legislation that would have protected college students burdened by debt from predatory colleges. Many of the defrauded were veterans.

Trump’s support of predatory colleges should not be surprising, since Trump owned a predatory college “Trump University”), which was closed down by regulators and led to Trump being fined $25 million.

From the Washington Post:

President Trump on Friday vetoed a bipartisan resolution to overturn a policy that makes it tougher for students who say they were defrauded by colleges to have their federal education loans canceled.


In rejecting the measure Friday, Trump called it “a misguided resolution that would increase costs for American students and undermine their ability to make choices about their education in order to best meet their needs.”


Although the White House had long signaled the move, veterans groups that strongly oppose the regulation had implored Trump to stand with members of the military who they say are routinely preyed upon by unscrupulous schools for their lucrative GI Bill education benefits.


In the lead-up to Memorial Day, veterans groups ran advertisements on Fox News urging Trump to support the congressional resolution.

But siding with veterans would have forced Trump to abandon the longest-serving member of his Cabinet: Education Secretary Betsy DeVos.
“President Trump’s veto … was a victory for DeVos and the fraud merchants at the for-profit colleges. My question to the President: in four days did you forget those flag-waving Memorial Day speeches as you vetoed a bill the veterans were begging for?” said Sen. Richard J. Durbin (D-Ill.), who introduced the resolution in the Senate.


The veto arrives two months after Congress agreed to scrap DeVos’s overhaul of a 1995 law known as “borrower defense to repayment.” The law provides federal loan forgiveness to students whose colleges lied to get them to enroll.


An Obama-era update of the statute lowered hurdles for students and shifted more of the cost onto schools, but DeVos tried to scuttle the update and then rewrite the rule.

The Trump administration in September finalized its rewrite, which limits the time borrowers have to apply for relief and requires them to prove they were harmed financially by the deception. The rule is scheduled to take effect July 1.


To sideline the policy, Democrats used the Congressional Review Act, which lets lawmakers overturn recent regulatory actions of federal agencies with a simple majority vote in both chambers.
Durbin and Rep. Susie Lee (D-Nev.) introduced resolutions in their chambers days after the Trump administration finalized the rule. But as the campaign to overturn the Trump policy gained momentum, the White House threatened to veto the resolution.


In a policy statement issued in January, the White House Office of Management and Budget said overturning the rule “would restore the partisan regulatory regime of the previous administration, which sacrificed the interests of taxpayers, students and schools in pursuit of narrow, ideological objectives.”


Yet in March, Trump told Republican senators that he was “neutral” on the rule, giving veterans groups hope that the president, who has sought and enjoyed support from veterans, might sign the resolution.


Hours before Trump vetoed the resolution Friday, American Legion National Commander James Oxford issued a statement urging the president to “come to the aid of student veterans,” much like he did a year ago in granting automatic student loan forgiveness to permanently disabled veterans.


News of Trump’s decision left the American Legion, other veterans groups, consumer advocates and lawmakers disappointed.
Lee pledged to forge ahead with a campaign to override the veto in the House.
“The fight for our students and veterans is far from over,” she said Friday. “I’m urging all of my colleagues from both sides of the aisle to put students, veterans and taxpayers first, and vote to overturn the 2019 Borrower Defense rule.”


The Trump administration estimates its new rule will save the federal government $11 billion over 10 years — loan payments that would have gone uncollected under existing rules.
“

The Secretary is thankful to the president for his leadership on this issue,” Angela Morabito, a spokeswoman for the Education Department, said in a statement Friday. “This administration is committed to protecting all students from fraud and holding all schools accountable when they fail their students. This administration’s rule does just that, despite false claims from many corners.”


DeVos has defended her overhaul as a sensible and fair way to account for the needs of students, colleges and taxpayers. She has derided the Obama-era update as a giveaway for students and a veiled attempt to go after for-profit colleges.
“Whereas the last administration promoted a regulatory environment that produced precipitous school closures and stranded students, this new rule puts the needs of students first,” Trump said Friday.

The new rule “extends the window during which they can qualify for loan discharge, and encourages schools to provide students with opportunities to complete their educations.”
Trump said the resolution “would return the country to a regulatory regime in which the Federal Government and State attorneys general, rather than students, determine the kinds of education students need and which schools they should be allowed to attend.”

The $2 trillion appropriated by Congress as coronavirus relief funds will benefit for-profit colleges with poor records, according to Marketwatch. They are likely to collect $1 billion. DeVos has been an investor in for-profit colleges, so don’t expect her to care. Democratic Senators have complained to DeVos but got no response this far.,

Dozens of for-profit colleges that are among those most likely to benefit from stimulus funding face thousands of claims from students demanding their money back because they say they were defrauded, according to analysis prepared for MarketWatch.

Some of the schools eligible for bailout funds also face federal scrutiny for mismanaged funds, while others have been dubbed “failed” under a federal standard requiring them to provide an education adequate for repaying loans, the analysis shows. Some schools eligible for bailout funds have settled lawsuits with the U.S. Justice Department following allegations of fraud and misuse of federal student aid…

The analysis found that of the top estimated 100 for-profit schools eligible for coronavirus crisis subsidies, 79 had students who demanded their loans be forgiven under a federal program meant to provide relief to students who alleged they had been defrauded. From these top 100 for-profit schools, 12,000 students had filed federal complaints alleging they were victims of fraud. Twenty-three of the top 100 for-profit schools most likely to receive funding were previously characterized by federal regulators as “failed” under a requirement that students go on to find jobs good enough to repay loans. DeVos last year rescinded the requirement that schools meet this standard as a condition for benefiting from federal subsidies.

Twelve of the top 100 for-profit schools eligible for stimulus funds also faced some form of legal action as of 2017 for alleged fraud involving recruitment and misuse of federal student aid programs, according to the analysis. Thirteen, meanwhile, were under “heightened cash monitoring,” an extra level of scrutiny under U.S. Department of Education rules meant to serve as a caution to students that can indicate problems with finances or accreditation.

“Colleges like these with a predatory history and thousands of prior students who are still awaiting compensation for deceptive practices should not be getting a federal bailout,” said Bob Shireman, deputy undersecretary of education under President Obama who now oversees higher education programs at The Century Foundation, a liberal think tank.

As the rushed effort to dispense $2 trillion in stimulus funds unfolds, experts are questioning how the government more broadly will guard against fraud, waste and abuse, and whether the public can trust whether tax dollars will be used to achieve the program’s goals.

Expect waste, fraud, and abuse, and a big payday for some of the worst actors in higher education, as well as a payday for the charter industry, which lobbied to be included in the fund for struggling small businesses, although they have not lost a dime.

Politico Morning Education reported yesterday that the coronavirus legislation in Congress has been delayed because Republicans and Democrats disagree about including college student debt relief.

Of course, other issues between the parties have stymied an agreement, especially the $500 billion economic recovery fund that would be administered by Treasury Secretary Mnuchin. Republicans want him to have broad discretion over where the money goes; Democrats insist on oversight, to ensure that he is not favoring Republican donors and underwriting Trump family properties, like Mar-a-Lago and Trump hotels. The latest speculation in the media is that the parties may reach agreement later today. Keep your eye on the Mnuchin fund.

REPUBLICANS, DEMOCRATS SPAR OVER STUDENT DEBT RELIEF IN STIMULUS BILL: Republicans and Democrats are fighting over how to structure relief for the nation’s tens of millions of student loan borrowers as part of the massive stimulus plan to address the economic havoc caused by the coronavirus outbreak.

— At the core of the student debt dispute: Republicans have largely embraced the idea that borrowers should immediately be able to put their payments on hold without accruing interest; Democrats say that’s an insufficient half-measure and want to see some amount of debt cancellation.

— The latest Senate GOP stimulus bill circulated on Sunday would require the Education Department to suspend payments on federally held student loans for six months without interest accruing — a modest expansion from an earlier bill that called for a three-month mandatory suspension with an additional three-month pause at the discretion of the department.

— Majority Leader Mitch McConnell was unable to advance the bill through a procedural vote on Sunday evening as Democrats objected. Among the many “major problems” with the bill, according to a senior Democratic aide, was that it doesn’t “provide adequate relief for the 44 million federal student loan borrowers.”

— The GOP plan follows the Trump administration’s executive actions to halt interest on federally held student loans and give borrowers a new forbearance option to pause their payments for the next two months. (Sen. Mitt Romney on Friday also proposed a longer forbearance of up to three years for recent graduates entering the job market.)

— But Senate Democrats, led by Chuck Schumer, are pushing a counter proposal: They want to cancel the monthly payments owed during the national emergency and guarantee each borrower receive at least $10,000 in loan forgiveness. Sen. Elizabeth Warren, who campaigned on sweeping student debt cancellation, has pressed the issue with Schumer personally, including during phone calls last week, according to a Huffington Post report on Sunday.

— Biden, who has resisted calling for widespread student debt cancellation in his education plans, on Sunday backed the plan to forgive at least $10,000 in debt per borrower as part of the stimulus bill. “Young people and other student debt holders bore the brunt of the last crisis,” Biden tweeted. “It shouldn’t happen again.”

— In the House, where Speaker Nancy Pelosi has indicated she may start drafting her own stimulus bill, there’s growing pressure from progressives to include student loan forgiveness. A group of progressive lawmakers, led by Reps. Ayanna Pressley and Ilhan Omar, urged House leadership to include loan forgiveness in the bill. The letter was signed by Rep. Jim Clyburn, the No. 3 Democrat in the House, and Rep. Alexandria Ocasio-Cortez (D-N.Y.). Rep. Maxine Waters, the chair of the House Financial Services Committee, has also separately called for including $10,000 in student debt forgiveness in a coronavirus stimulus plan.

— Rep. Bobby Scott, the chair of the House education committee, hasn’t publicly backed any student loan forgiveness plan and it wasn’t included as part of his $3 billion coronavirus bill to address education rolled out last week. But a Democratic committee aide told POLITICO: “The Senate Democrats proposal is a step in the right direction.”

— Republicans, meanwhile, say Democrats are exploiting a crisis to enact their policy agenda. “Democrats are trying to reduce student loans by $10,000. What the hell has that got to do with the virus,” Sen. Lindsey Graham (R-S.C.) said on Fox News on Sunday. “I’m sure everybody could use more money, but I don’t want to give money to people who have a paycheck. I want to give money to people who have lost their jobs.”

In a surprising turn, a bipartisan majority of the Senate voted to overturn Betsy DeVos’s rule to restrict debt relief to students who were bilked by colleges that defrauded them. The House already rebuked DeVos and passed the legislation. The bill will go to Trump, who may veto it or sign it. Will he protect Betsy DeVos or the students who were cheated? The Republicans who voted with Democrats were moved by the plight of veterans who were bilked.

WASHINGTON — In a bipartisan rebuke, the Senate voted Wednesday to overturn a major Trump administration rule that would sharply limit debt relief for students misled by schools that lured them in with false claims about their graduates’ career and earning prospects.

In a 53-42 vote that included 10 Republicans, the Senate easily struck down a revised Education Department rule finalized in September by Education Secretary Betsy DeVos. The House passed a companion resolution in January. The legislation will now go to President Trump, who will decide whether to uphold the rule with a veto or side with Congress over his own education secretary.

He has told Senate Republicans he is “neutral” on repealing the rule, though he has yet to comment on his veto intentions.

Ms. DeVos’s rule was one of several efforts to rewrite Obama-era debt relief measures, which allow students who attended schools that committed serious fraud to request that their loan debts be forgiven. Ms. DeVos’s changes raised the bar for borrowers’ relief claims, requiring applicants to individually prove that a school knowingly misled them and that they were financially harmed by the deception. It also set a three-year deadline on claims….

Democrats emphasized the harm from the rule to veterans bilked out of G.I. Bill benefits, a critical move that brought on Republicans.

Ms. DeVos’s changes “made it extremely difficult for these students to get any relief,” Senator Richard J. Durbin, Democrat of Illinois and the minority whip, who led the effort in the Senate, said on Wednesday. “The students are up in arms over it, and I’m joining them.”

A policy statement issued by the Trump administration in February defended Ms. DeVos’s rule as a change that “restores due process, the rule of law, and student choice,” and said that the president’s advisers “would recommend that he veto” attempts to overturn it.

The Senate action poses a political quandary for Mr. Trump. He has pressed the Education Department for a proposal to match sweeping college debt plans proposed by Democratic presidential candidates. And veterans, who backed the Senate measure, have been key political supporters….

So far, the Education Department has approved 51,000 loan-relief applications — nearly all of them during the Obama administration — and eliminated some $535 million in debt. About 170,000 applications still await a decision.

Ms. DeVos had denounced the debt-relief system as a “free money” giveaway, and sought repeatedly to curtail it. Her first attempt was blocked in 2018, after a federal judge ruled that the Education Department broke privacy laws by illegally obtaining information from the Social Security Administration on individual borrowers’ earnings.

Ironic, isn’t it, that Secretary DeVos, a billionaire who has never known debt, has no sympathy whatever for veterans, war widows, poor people, or young people who were lured by fake universities to pursue worthless degrees. Compassion and empathy are not her strong points.

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.