Archives for category: Student Financial Aid and Student Debt

The Center for Responsible Lending issued this press release, of great importance at a time when the Federal Department of Education is withdrawing support for students who have been victims of fraud by predatory online and for-profit “colleges.” Secretary DeVos not only stopped defending students who were defrauded, but appointed the former Dean at DeVry University to monitor the program. DeVry is one of the for-profit universities accused of defrauding students. The Department of Education hires foxes to protect the henhouse. Governor Jay Inslee has stepped up to the challenge of protecting students who were gulled by hucksters.

 

For Immediate Release

March 16, 2018

 

 

Gov. Inslee Signs Measure To Protect Student Borrowers

 

OAKLAND, CALIF.  – Washington Governor Jay Inslee signed the Washington Student Education Loan Bill of Rights into law yesterday, which will provide strong protections for the more than 730,000 student loan borrowers in the state carrying $22.9 billion in student loan debt. The law will establish a Student Loan Advocate to review complaints, and will authorize the state to license student loan servicers so they can ensure compliance with state and federal requirements and prevent mistreatment such as misappropriating payments or making false reports to credit bureaus.

 

“We commend Governor Inslee and the Washington legislature for finding common ground to help students manage their student loan debt,”” said Ezekiel Gorrocino, Policy Associate with the Center for Responsible Lending (CRL). “These important safeguards are a step in the right direction if we want to ensure student borrowers are treated fairly as they work to pay off their college education.”

 

The Washington Student Education Loan Bill of Rights will help keep student loan servicers from making it harder for borrowers to manage the debt. The largest servicer in the nation, Navient, has been sued by the Consumer Financial Protection Bureau and three Attorneys General for mistreating borrowers, including putting them in forbearance when they qualified for income-based repayment plans that would have saved them a great deal in interest.

 

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For more information please contact Carol Hammerstein at carol.hammerstein@responsiblelending.org or 919-313-8502.

 

According to the Hill, Betsy DeVos will do a trial run of debit cards for higher education. 

This will enable the Department of Education to track where the money is going.

”The Education Department will be launching a pilot program to place financial aid dollars on debit cards — a move that would allow officials to track how that federal aid is being spent.

“The program, which was announced in a notice posted in the federal register this month and reported on by BuzzFeed News, would begin next month and include up to 100,000 students.

“Currently, institutions receive the federal dollars, applying them to students’ tuition bills and then provide students with the excess funds. Under the program, students would receive the funds on the debit cards.

“The draft proposal for the pilot program says it would “enable more informed customer decision-making that helps Customers understand the financial implications of their student loan debt” and provide students “real-time, continuous counseling” through a mobile app.”

Two things to note here:

1. Students are described as “customers.”

2. The debit card could be a trial run for K-12.

 

 

Sarah Pool took out a student loan six years ago when she was 25. She earned a master’s degree and was $60,000 in debt. She pays what she owes with regularity, but the debt is now $69,000. That is more than twice her annual salary as a children’s librarian.

https://www.washingtonpost.com/lifestyle/style/this-life-an-existence-she-loves-under-a-growing-cloud-of-student-debt/2018/01/08/3daac3ce-f32b-11e7-97bf-bba379b809ab_story.html

”The glimmer of hope Sarah clings to is her enrollment in a public service student loan forgiveness program that would clear her remaining debt if she puts in seven more years of work with the government and continues to make payments on time. But she’s heard horror stories of borrowers being disqualified from the program — which is available to people who work for the government or certain nonprofits after they have paid their loans on time for 10 years — because of a paperwork error. And she’s terrified the program will be quietly eliminated. (President Trump’s 2018 budget proposal did suggest cutting it for new borrowers but would still forgive debts of people currently enrolled.)
 Not having the program, she says, would “kind of end my life. I‘ll be paying student loans until I’m dead, basically. Which is really scary.”

There has been a huge push to raise the college completion rate. At the same time, people like Sarah are forced to live near the poverty line to pay off their debt. Logic suggests that we as a society really don’t want more people to go to college. States have reduced their support for higher education, shifting the costs to students. Countries that want more students to attend and complete college degrees reduce costs. We don’t.

 

Betsy DeVos just awarded lucrative contracts to only two companies to collect student debt. 

She used to be an investor in one of the two.

The contract is worth hundreds of millions of dollars.

In the past, the Department had as many as 17 contractors squeezing college students who owe money.

How about a Congressional investigation of this sweet deal that stinks?

oh, I forgot, the Republicans protect their own. They don’t care about possible conflicts of interest.

 

Investigative writer David Dayen, writing in “The New Republic” describes the variety of ways that Secretary of Education Betsy DeVos is protecting predatory for-profit “colleges” while allowing them to stiff the students they cheated.

“Imagine a car dealer sold you a lemon. You sue to get your money back. But the judge discovers that you managed to get yourself around most of the time, despite the bum vehicle. You only missed 10 percent of your appointments, so the judge orders that you are entitled to 10 percent of the price of the car.

“That’s essentially what Education Secretary Betsy DeVos announced last week for students defrauded by for-profit chain Corinthian Colleges. Victims of the corrupt diploma mill will not have their student loans discharged; instead, they will get a portion of relief based on their current income. The more professional ingenuity they showed despite being defrauded by Corinthian, the less money they will get in restitution.

“It’s yet another way in which DeVos has acted in favor of the for-profit college industry, which was left for dead after several major companies’ deceptive schemes finally caught up with them. Not only is DeVos shielding the industry from the consequences of those misdeeds, she’s rewriting the rules to legalize those practices.

“Corinthian targeted single mothers and returning veterans with high-pressure recruitment, lying about job placement statistics to make enrollment seem like a good bet. Once signed up, Corinthian would pile on tens of thousands of dollars of unanticipated debt and deliver a substandard educational experience. One student alleged that some final exams involved board games and that he got course credit from an “internship” working at a fast-food restaurant. In the end, the useless degrees did not help, and sometimes even hurt, graduates’ job prospects.

“Corinthian shut down in April 2015, after the Education Department fined it $30 million for misrepresenting job placement rates. State and federal regulators eventually won billions in fraud judgments against the bankrupt firm.

“A coalition of students refused to pay their debts to Corinthian, citing a clause in their loan contracts allowing “defense to repayment” if they were defrauded. Even under Obama, the Education Department made loan relief unnecessarily burdensome, forcing students to prove the fraud instead of instituting blanket relief. Thousands of cases were left to DeVos to adjudicate, delaying forgiveness of billions of dollars.

“And DeVos did almost nothing about them. In the final year of the Obama administration, 27,986 of 46,274 debt cancellation claims were dealt with; in the first several months under DeVos, only two claims were addressed—and both were denied. By early December, the backlog had grown to 95,000 unprocessed claims, mostly from Corinthian students. Interest accrued on the loans while students waited in limbo for a ruling. The Education Department even used debt collectors to garnish wages and seize tax refunds on some borrowers. Several state attorneys general sued the department to deal with the backlog.

“DeVos finally announced a resolution last week, approving 12,900 “defense to repayment” applications and denying 8,600 others. But the new relief plan was noteworthy. The Education Department will now compare the earnings of an applicant for debt relief to the average earnings of students who took similar vocational courses. So if you trained at Corinthian as a medical technician, the agency will look at your salary compared to other medical technicians, and deliver relief on a sliding scale. Students making 50 percent of the average rate of their program will get 50 percent of their debt cancelled; those making 60 percent will get 40 percent cancelled; and so on.”

In case you wonder which side DeVos is on, consider the fact that she hired a former dean from DeVry University to place fraud cases in higher education. He should know. DeVry was ordered to pay a $100 Million fine for misleading students. But that was before DeVos took charge.

This is not a minor problem. Nearly 5 Million students have been cheated by phony “colleges” and “universities,” whose degrees are worthless.

The Trump administration can’t be expected to make demands on this corrupt industry, since Trump himself operated one of them and was forced to repay $25 million to angry students.

All sorts of bad things are buried in the new tax law. Here’s one: a huge payday for the student loan industry, as described in an Alternet post by Mary Ann Schlegel Ruegger.

“The GOP tax bill’s inclusion of 529 plans for K-12 private tuition has been widely criticized as yet one more provision that aids the wealthy. That’s because only wealthy families have enough money on hand to sock away $10,000 a year toward each child’s K-12 private school tuition. There’s been little mention of what these plans could mean for middle and lower-income families. By discouraging them from using 529 accounts for long-term college savings, these families are being set up for a future of indebtedness.

“Here’s the problem. These savings accounts were meant to offer tax advantages to families in order to help them to put money away for college. Expanding the use of 529 accounts to cover K-12 expenses encourages families to spend money on private schools now. When it’s time for those families to pay for college, their 529s or other college savings will be less— or nonexistent. Worse, GOP policy makers are providing just the “nudge” to convince these families to enroll in or justify staying in private schools they really can’t afford (even with vouchers), and make up the gap with private loans. The 529 provision in the tax bill is more than anything else a boon to the growing K-12 private school loan industry.

“Unlike higher education, where a student borrower’s financial relationship with colleges and lenders is well defined by federal and state laws, K-12 private education is a largely unprotected landscape.

“Take Indiana, for instance, home of the largest private school voucher program in the nation. Despite paying out $146 million last year in publicly funded tuition vouchers for private schools, the Indiana Department of Education doesn’t even have the right to see the enrollment contracts or student handbooks that govern the payment policies on that money, let alone provide any consumer protections to students who attend those schools. Unlike colleges, private schools at the K-12 level are almost completely free to impose whatever enrollment and financial policies they please. Lenders for K-12 also face far fewer restrictions than lenders for higher education.”

Read on, there is more, and you will learn who benefits.

The Center for Responsible Lending issued this press release about the first stage in the reauthorization of the Higher Education Act. The House Education and the Workforce Committee is chaired by Rep. Virginia Foxx, a far-right extremist from North Carolina.


PROSPER Act Shortchanges Students, Undermines Higher Ed Safeguards

Bill to dismantle higher education opportunity passes committee after late night vote and without bipartisan support

WASHINGTON, D.C. – Today, shortly after midnight, the House Committee on Education and the Workforce passed the PROSPER Act, a bill to eliminate important programs and safeguards that make higher education accessible and affordable for low-income students. The bill was approved without bipartisan support after a daylong debate and markup procedure where Chairwoman Virginia Foxx (R-N.C.) and other sponsors of the legislation summarily denied nearly all 40 amendments submitted by her Democratic colleagues.

The Center for Responsible Lending (CRL) has called on members of the committee and Members of Congress to reject this bill which would: rollback borrower defense and gainful employment rules; eliminate state authority to regulate student loan servicers; use taxpayer dollars to prioritize for-profit colleges over public and non-profit colleges and universities; cut funding for minority-serving institutions, like historically black colleges and universities (HBCUs); and dismantle all student loan forgiveness programs.

CRL counsel Ashley Harrington released the following statement in response to last night’s vote:

“This bill does only one thing—it widens the wealth divide by ensuring that the gap between those who can afford to attend college and those who can’t becomes more difficult to bridge than ever. It increases the ability of predatory for-profit college institutions to access taxpayer dollars and dismisses the call of students who want assistance with the crushing burden of student loan debt.

“In 2008, we saw firsthand what happens when we support industry and businesses at the public’s expense. The student loan debt crisis is on track to decimate our economy and our communities in much the same way the mortgage crisis did. Should this bill become law as written, it will only accelerate that process.

“There are numerous ways to address higher education costs and access—we can create a system that’s more fair and equitable, including increasing our investment in college and career readiness, opening more pathways to loan forgiveness, and working to stem the exponentially rising cost of college. Unfortunately, this bill does nothing to address these concerns. Instead, the PROSPER Act is a war on students and pushes higher education further out of reach for many Americans than ever before.”

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For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact ricardo.quinto@responsiblelending.org.

I am delighted to share the good news that Sara Goldrick-Rab won the Grawemeyer Award for her outstanding book on the spiraling cost of college. The award is presented every year by the University of Louisville for exemplary achievements in five fields of endeavor.

Her book, Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream.”

Goldrick-Rab wrote that she is donating the entire $100,000 that goes with the award to a fund she created.

She writes:

“When I heard that I would receive this year’s Grawemeyer Award for Education, I was honored. When I learned the Award came with a $100,000 prize, I was energized. The big news: I will be matching all donations to the FAST Fund at a rate of three-to-one starting today and I will continue to match your donations until I have spent down the entire $100,000 prize that comes with the award.

“I started the FAST Fund in 2016 after publishing the book Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream. The book revealed for the first time the extent to which the college financial aid system does not help most students in need. Instead, young people are often forced to drop out of college before receiving a degree, saddling them with mountains of debt but nothing to show for it. And increasingly common challenges such as homelessness and hunger are never addressed through traditional financial aid routes.

“The Faculty And Students Together (FAST) Fund cuts out the bureaucracy and puts money in the hands of teachers around the country — the people on the front line of this fight — in order to get emergency dollars to students swiftly. My research team and I have studied emergency aid like this for years, and found that often it’s a smaller amount of money given at the right time that makes the difference between a student staying in college or dropping out. This money can help make students’ immediate survival possible, while we also work to create the systemic change to solve the root causes of this problem.”

With Congress set to impose deep cuts on financial aid, Goldrick-Rab’s book is very timely. We are both insisting that everyone should be college-ready, even as states and the federal government reduce student financial aid.

Thanks to Sara G-R for her generosity and her scholarship!

And thanks to the Grawemeyer selection committee for its wise choice.

Can anyone spell “conflict of interest”? Has anyone at the Department of Education ever heard the term?

Betsy Devos just selected the CEO of a corporation collecting student loans to police the collection of student loans.

The strange thing is that the Education Department forgot to mention this interesting fact when his appointment was announced, and it was removed from his resume.

Whose side will he be on–the industry or the students?

When the Trump administration announced its pick to run the $1.3 trillion federal student loan system on Tuesday, there was one notable thing about the candidate that wasn’t mentioned in the press release: he’s the CEO of a private student loan company.

The Education Department’s statement described A. Wayne Johnson as the “Founder, Chairman and former CEO” of a payments technology company called First Performance Corporation. It noted his Ph.D. in education leadership, and Education Secretary Betsy DeVos, citing his dissertation, said he “actually wrote the book on student loan debt.”

But what wasn’t noted was Johnson is currently the CEO of Reunion Student Loan Services, a detail confirmed by a company representative reached by phone on Tuesday afternoon. Reunion originates and services private student loans, and offers refinancing and consolidation for existing loans.

The Education Department did not immediately respond to a request for comment.

I suppose this is another rebuke to the writer of the strange article in the New York Times who claimed that DeVos was making “surprising” appointments of people who are not as far right as she is. One alleged surprise was that she chose a gay woman to lead the Office of Civil Rights, which isn’t so surprising when you realize, that Candace Jackson may be gay but she opposes affirmative action and feminism, like DeVos and is content to see OCR reduce its civil rights activism. The other “surprise” choice was Jason Botell, who ran a KIPP charter school and advised Trump on education during the campaign. Why is running a charter school somehow a surprising choice for a charter zealot like DeVos. Now she has chosen an industry insider to police the industry. Is that also a surprise to the New York Times?

Betsy DeVos plans to withdraw federal regulations adopted during the Obama administration to protect college students from predatory for-profit colleges.

“The Trump administration moved today to roll back two regulations designed to protect students against predatory for-profit colleges.

“In federal filings, the Education Department said it would renegotiate the federal “gainful employment” rule, which stops government money from flowing to for-profit colleges whose students take on too much debt, but earn little after they graduate. Years in the making — it went into effect in 2015 after surviving two lengthy court battles with the for-profit college industry — the regulation is arguably the most significant piece of President Obama’s higher education legacy.

“The department also said it would also delay the implementation of a second rule, widely known as “borrower defense to repayment,” which would allow students who said they had been defrauded by their schools to more easily have their federal loans forgiven. Those regulations — which were set to go into effect on July 1 — also included provisions to prevent colleges from forcing their students to sign away their right to sue.

“In a statement, Education Secretary Betsy DeVos called the borrower defense rules “a muddled process that’s unfair to students and schools.”

“It’s time for a regulatory reset. It is the Department’s aim, and this Administration’s commitment, to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow,” she said.

“The move was quickly decried by Democrats and student advocates who fought for the regulations’ passage — frequently sparring with the Obama administration over whether they went far enough in penalizing for-profits.

“Today, Secretary DeVos chose for-profit colleges over students and taxpayers,” Democratic Senator Dick Durbin of Illinois said in a statement. “Her actions to eliminate important protections in higher education will harm students and waste millions in taxpayer dollars.”

Is it time to restart Trump University?