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Senator Warren Launching Project to Hold DeVos Accountable for Policies on Student Debt

By dianeravitch
June 1, 2017 //
45

Senator Elizabeth Warrren has created an online program called “DeVos Watch” to hold Betsy DeVos accountable for her oversight of student debt. The online platform will be hosted on Senator Warren’s website.

She wrote this opinion article for CNN:

http://www.cnn.com/2017/05/31/opinions/devos-watch-opinion-warren

The Trump administration is pondering whether to turn over responsibility for student debt collection to the Treasury Department. This has been debated for years. During the Clinton administration, Secretary Richard Riley turned the idea down,saying that “the move would be prohibitively expensive and that “since most borrowers default on their student loans because they are unable to make the payments, the IRS would be no more able to collect these payments than the Department of Education.” Mr. Riley added that perhaps large employers could make wage-withholding arrangements to streamline the process.”

Chester Finn, however, saw a benefit to making the Treasury the collection agency. He said,

Chester Finn, an assistant secretary of education during the Reagan administration, told a congressional committee that was considering the proposal that allowing the IRS to collect loans might encourage borrowers to repay them. “Perhaps the prospect of a stay in Leavenworth would finally reduce the multibillion-dollar loan-default problem,” he said.”

http://www.chronicle.com/article/What-if-the-Treasury-Dept/240218

Warren’s decision to create “DeVos Watch” was applauded by Ashley Harrington of the Center for Responsible Lending (CRL). She said,

“We applaud Senator Warren’s leadership for holding Secretary DeVos and the Department of Education accountable to students and parents. This new resource will be valued not only by education leaders and advocates, but additionally by the 44 million student loan borrowers who collectively share $1.4 trillion in debt.

“It is a matter of public record that higher education accountability at the federal level has suffered a series of setbacks since Secretary DeVos was confirmed earlier this year.

“From her senior-level appointees with close ties to the for-profit college industry, to the departmental regulatory reversals that favor for-profit colleges and loan servicers to the detriment of student borrowers, a growing concern has developed among consumer and civil rights advocates. We continue to call into question the quality, accessibility, and affordability of for-profit college institutions.

“Further, according to the Congressional Budget Office, the recently-released 2018 White House budget proposal would result in $26.8 billion in cuts that students and families will have to pay for over the next decade. Additionally, nine programs now operating within the Department would be eliminated at a cost of nearly $5 billion to students.

“No elected or appointed official should ever depart from or diminish the primary role of government: service to the American people. Instead, Secretary DeVos’ actions create a pattern of preference to private interests. Shedding further light on these practices is essential to protecting students and taxpayers.”

Categories Accountability, Betsy DeVos, Higher Education, Student Financial Aid and Student Debt

Americans Pay $38 to Collect $1 of Student Debt

By dianeravitch
May 29, 2017 //
8

Bloomberg News reported the astronomical amount spent to collect student debt for higher education. This is nuts.

https://www.bloomberg.com/news/articles/2017-05-19/americans-are-paying-38-to-collect-1-of-student-debt

“The federal government has, in recent years, paid debt collectors close to $1 billion annually to help distressed borrowers climb out of default and scrounge up regular monthly payments. New government figures suggest much of that money may have been wasted.

“Nearly half of defaulted student-loan borrowers who worked with debt collectors to return to good standing on their loans defaulted again within three years, according to an analysis by the Consumer Financial Protection Bureau. For their work, debt collectors receive up to $1,710 in payment from the U.S. Department of Education each time a borrower makes good on soured debt through a process known as rehabilitation. They keep those funds even if borrowers subsequently default again, contracts show. The department has earmarked more than $4.2 billion for payments to its debt collectors since the start of the 2013 fiscal year, federal spending data show.

“The findings, gleaned from the bureau’s analysis of about 600,000 borrower accounts, come as the Trump administration weighs a shakeup of the government’s student loan program. For years, defaults have mounted despite the improving U.S. economy and the money invested in collecting education debt. Education Secretary Betsy DeVos pledged earlier this year to “do a better job” than the Obama administration at managing the department’s loan contractors. Last week, DeVos suggested that the feds should “start afresh….”

“Debt collectors aggressively angle for new business from the Education Department because the contracts are among the most lucrative in the industry. The government values the latest round at $2.8 billion.

“The government often pays debt collectors nearly 40 times what they bring in, federal records show. Take the government’s rehabilitation program, which targets people who have defaulted on their debt—meaning they missed nine months of payments. If a borrower subsequently makes nine on-time monthly payments of as little as $5 during a 10-month period, their loans are returned to good standing and the default is supposed to be wiped from their credit reports 1 . But the CFPB found that more than 40 percent of these borrowers defaulted again within three years.

“Even when borrowers don’t default, debt collection efforts often yield little. Close to 80 percent of borrowers who rehabilitate their debt make the minimum $5 monthly payment, according to a 2015 estimate by the National Council of Higher Education Resources, a lobbying group that represents student debt collectors and servicers. That means the Education Department is paying its debt collectors up to $1,710 per borrower to collect around $45, regardless of whether the borrower continues to make her payments.”

All those billions for debt collectors, but not enough to provide debt-free awards to needy students.

Categories Higher Education, Student Financial Aid and Student Debt

Official in Charge of Federal Student Loan Program Resigns, Unwilling to Defend DeVos’ Policies and Mismanagement

By dianeravitch
May 25, 2017 //
16

James Runcie, the head of the agency in charge of federal student loans at the U.S. Department of Education, resigned in protest when he was directed to testify in support of Betsy DeVos’ policies before Congress.

DeVos has been shifting the Department’s policies to favor debt collection agencies, not students.

Categories Higher Education, Student Financial Aid and Student Debt

Trump’s First Education Budget: Deep Cuts for Public Schools, Good News for Charters, School Choice

By dianeravitch
May 18, 2017 //
22

Trump unveiled his first education budget, and it contains many cuts to popular programs in public schools. But it has a bonanza for private alternatives to public schools.

The Washington Post obtained a draft copy of the new budget, which has not yet been submitted to Congress.

Funding for college work-study programs would be cut in half, public-service loan forgiveness would end and hundreds of millions of dollars that public schools could use for mental health, advanced coursework and other services would vanish under a Trump administration plan to cut $10.6 billion from federal education initiatives, according to budget documents obtained by The Washington Post.

The administration would channel part of the savings into its top priority: school choice. It seeks to spend about $400 million to expand charter schools and vouchers for private and religious schools, and another $1 billion to push public schools to adopt choice-friendly policies.

President Trump and Education Secretary Betsy DeVos have repeatedly said they want to shrink the federal role in education and give parents more opportunity to choose their children’s schools.

Trump and DeVos are following the Obama formula for Race to the Top: Offer financial incentives for states to adopt the policies that the federal government wants. If they want the money they must volunteer, and that allegedly proves that participation was “voluntary.”

The budget proposal calls for a net $9.2 billion cut to the department, or 13.6 percent of the spending level Congress approved last month. It is likely to meet resistance on Capitol Hill because of strong constituencies seeking to protect current funding, ideological opposition to vouchers and fierce criticism of DeVos, a longtime Republican donor who became a household name during a bruising Senate confirmation battle…

Under the administration’s budget, two of the department’s largest expenditures in K-12 education, special education and Title I funds to help poor children, would remain unchanged compared to federal funding levels in the first half of fiscal 2017. However, high-poverty schools are likely to receive fewer dollars than in the past because of a new law that allows states to use up to 7 percent of Title I money for school improvement before distributing it to districts.

The cuts would come from eliminating at least 22 programs, some of which Trump outlined in March. Gone, for example, would be $1.2 billion for after-school programs that serve 1.6 million children, most of whom are poor, and $2.1 billion for teacher training and class-size reduction.

[Trump budget casualty: After-school programs for 1.6 million kids. Most are poor.]

The documents obtained by The Post — dated May 23, the day the president’s budget is expected to be released — outline the rest of the cuts, including a $15 million program that provides child care for low-income parents in college; a $27 million arts education program; two programs targeting Alaska Native and Native Hawaiian students, totaling $65 million; two international education and foreign language programs, $72 million; a $12 million program for gifted students; and $12 million for Special Olympics education programs.

Other programs would not be eliminated entirely, but would be cut significantly. Those include grants to states for career and technical education, which would lose $168 million, down 15 percent compared to current funding; adult basic literacy instruction, which would lose $96 million (down 16 percent); and Promise Neighborhoods, an Obama-era initiative meant to build networks of support for children in needy communities, which would lose $13 million (down 18 percent).

The Trump administration would dedicate no money to a fund for student support and academic enrichment that is meant to help schools pay for, among other things, mental-health services, anti-bullying initiatives, physical education, Advanced Placement courses and science and engineering instruction. Congress created the fund, which totals $400 million this fiscal year, by rolling together several smaller programs. Lawmakers authorized as much as $1.65 billion, but the administration’s budget for it in the next fiscal year is zero.

The cuts would make space for investments in choice, including $500 million for charter schools, up 50 percent over current funding. The administration also wants to spend $250 million on “Education Innovation and Research Grants,” which would pay for expanding and studying the impacts of vouchers for private and religious schools. It’s not clear how much would be spent on research versus on the vouchers themselves.

The new budget would also have a large impact of student aid programs for higher education.

It is clear that parents and educators must organize to fight for the funding of programs that benefit students in public schools.

Ninety percent of American children attend public schools, yet they are being neglected in the budgetary planning because Trump and DeVos favor charters, vouchers, and other kinds of school choice.

Don’t agonize. Organize.

Join the Network for Public Education. Be active in the fight against these cuts. Be active in the resistance to privatization and the Trump administration’s indifference/hostility to public schools.

Categories Betsy DeVos, Budget Cuts, Funding, Network for Public Education, School Choice, Student Financial Aid and Student Debt, Supporting public schools, Trump, U.S. Department of Education, Virtual Charter Schools, Vouchers

Nancy Bailey: Time for DeVos to Resign

By dianeravitch
May 15, 2017 //
39

Nancy E. Bailey writes here about Secretary Betsy DeVos’s unpleasant experience at Bethune-Cookman University, where she was booed by the graduates of the class of 2017.

She thinks it was a travesty that the students were not allowed any say in the choice of their commencement speaker. After all, the day is meant to honor them and their accomplishments.

Instead, they got a speaker who is in a job for which she has no qualifications, a woman who has acted to protect predatory lenders and debt collectors, a woman who has never shown any commitment to advancing civil rights.

The students know that public education is a basic democratic right, and they did not respect this representative of an administration pledged to privatization and stripping away their families’ health care.

Bailey writes:

On a day designated for students—a day to honor their achievements—they have to listen to a woman of privilege tell them how she understands their struggle. They cannot even end their college journey without hackneyed political browbeating.

Perhaps if DeVos had the right ideas about schooling, her appearances would be more palatable. Perhaps if she really wanted to help public schools work for all children, but that’s not what she is about.

Betsy DeVos is the topping on the cake after Duncan and Spellings. She is the final straw, meant to end public education altogether—to put in place a system that rings true to her religiosity—a separate system of the haves and have nots. She is welcoming back the time before Brown v. the Board of Education. But my guess is she saw herself as Joan of Arc on that stage Wednesday.

This is not about God or the students. Privatization has never been about the welfare of the student. And it is not about religion either, though they might make you think it is. It is about money and it is about race. School privatization has always been about that.

Betsy DeVos should resign. But she was placed in this position by one vote if we can believe that. The problem is many Republicans and Democrats sold out on public schools a long time ago. The Washington mindset really is Betsy DeVos. I know it and you know it.

So boo away students. Remember this day as you journey forth. Maybe you can make America really great again. The rest of us are betting on that.

Categories Betsy DeVos, Duncan, Arne, Higher Education, Student Financial Aid and Student Debt

A Trillion Dollars of Student Debt, and DeVos Wants to Protect Lenders, Not Students

By dianeravitch
May 8, 2017 //
11

Susan Dynarski of University of Michigan wrote an article in The New York Times about the trillion dollars of outstanding debt for college loans, and the Trump administration’s regulatory decisions that will help and protect the lending industry, not the students.

As the saying goes, elections have consequences. Hillary Clinton adopted Bernie Sanders’ pledge to make higher education free for students whose family income was less than $125,000. Trump offered nothing, and DeVos made clear in her confirmation hearings that she was not at all concerned about students who were burdened by crushing debt.

So the consequence of the 2016 elections is that Betsy DeVos is rolling back efforts by the Obama administration to regulate the businesses that make student loans and protect students from predatory practices. She is also making it harder for students to apply for student aid by removing access to an online program created for that purpose.

But that’s not all.

Access to income-based repayment programs is more important than ever because of a separate Trump administration rollback of protections for borrowers. Now, those who fall behind on their payments are subject to much larger penalties.

The Obama administration had limited the ability of loan companies to impose punitive fees on borrowers who were in default. Before the Obama rules went into effect, borrowers could be required to pay back as much as 16 percent of their loan balance before they were allowed to enroll in an income-based program. On March 16, Ms. DeVos issued a directive that allows loan companies to again charge these fees.

If the Education Department fails to protect and assist borrowers, where can they turn for help? During the Obama administration, other agencies stepped in to monitor the behavior of the loan servicers and banks. The Consumer Financial Protection Bureau, in particular, appointed a student loan “czar,” who has collected thousands of complaints from borrowers and has published an annual report on student loans.

In a recent letter, a group of academics urged that the consumer bureau go further by collecting loan-level data on repayment, delinquency and default just as it does in monitoring the mortgage industry. I have suggested the same, in a previous column.

The Trump administration and Republicans in Congress have made the consumer bureau a target. They aim to strip the agency of its oversight authority and independence. As it stands now, the Federal Reserve funds the consumer bureau, which buffers it from political pressure. If the bureau is hamstrung, borrowers will have lost a powerful watchdog.

It is puzzling that Ms. DeVos has consistently said that government should be held accountable for the quality of the services it delivers to students, yet the Education Department has in short order made loan companies less accountable to both the government and to borrowers.

This is unfortunate. Dismantling the regulation of loan companies isn’t likely to unleash an innovative, private market that will improve services for borrowers, who have been assigned to a loan company and can’t shift to a better one. There is therefore no market discipline that will drive the bad companies out of business.

Deregulation, in this case, simply leaves borrowers at the mercy of an unaccountable corporate bureaucracy.

That seems to be the goal of Trump and DeVos. They know exactly what they are doing. They are acting on behalf of the industry, not students.

Categories Accountability, Betsy DeVos, Higher Education, Student Financial Aid and Student Debt, Trump

Politico: U.S. Department of Education Slows Down College Student Debt Repayment

By dianeravitch
April 26, 2017 //
4

I suppose it was inevitable that Betsy DeVos’s ED Department would side with for-profit colleges that have defrauded students. After all, she invested in such colleges, and Trump notoriously opened Trump University, which was ordered to repay students $25 million for its fraudulent courses.

Politico reports:

DEBT FORGIVENESS SLOWDOWN: Student loan recipients defrauded by their for-profit colleges might have to wait longer to see that debt forgiven by the Education Department. Since President Donald Trump took office, the department appears to have drastically slowed the approval of debt relief to tens of thousands of student borrowers seeking to have their federal loans canceled on the grounds their colleges defrauded them. That’s according to several current and former government officials.

– A department spokesman said in an email to POLITICO that the department “has not stopped approving borrower defensed repayments,” but declined to say how many claims the department had approved since Jan. 20. The spokesman said that Education Department career staff members are leading “a full review of the Borrower Defense to Repayment program and that Education Secretary Betsy DeVos “is committed to protecting students who have been defrauded by schools.”

– Consumer advocates and some state attorneys general are raising alarm bells, however. “The Trump administration is turning its back on struggling borrowers,” said Massachusetts Attorney General Maura Healey, a Democrat who worked closely with the Obama administration on loan forgiveness for defrauded students.

Categories Accountability, Betsy DeVos, Student Financial Aid and Student Debt

More on DeVos’ Decision to Cancel Protections for Students Lenders

By dianeravitch
April 13, 2017 //
3

From Politico Education (yesterday):

CONSUMER AND LABOR GROUPS BLAST DEVOS’ DECISION TO SCRAP OBAMA-ERA OVERHAUL OF STUDENT LOAN SERVICING. On Tuesday, DeVos halted Obama-era plans to overhaul how millions of student borrowers pay back their federal loans including new consumer protections for borrowers and contract provisions aimed at boosting the quality of federal loan servicing. Sen. Elizabeth Warren (D-Mass.), called the change a “gut punch” to the nation’s student loan borrowers because the policies would have made it harder for companies to cheat borrowers. Persis Yu, director of National Consumer Law Center’s Student Loan Borrower Assistance Project, said DeVos is walking away from “common-sense protections.”

— Randi Weingarten, president of the American Federation of Teachers called the move “just another clear example of Betsy DeVos and the Trump administration putting the interests of predatory profiteers over the needs of the little guy — in this instance, the millions of people trying to go to college or acquire career skills without being crippled by debt.”

— In a memo, DeVos wrote that it was necessary to scrap the plans because of “a myriad of moving deadlines, changing requirements and a lack of consistent objectives” and a need to move forward “with precision, timeliness and transparency.” The Obama administration’s plan had called for a streamlined loan servicing platform in which borrowers make payments through a single web portal, rather than going through individual loan companies. The first phase of that project was initially slated to be finished by the end of 2016 but was delayed until this past February.

— “This increases the stakes for the CFPB to write clear rules to solve the problems in the loan servicing market,” said Rohit Chopra, the bureau’s former student loan ombudsman, who criticized the decision. “If the Education Department won’t use its buyer power to clean up bad practices, law enforcement has to step in.”

— The Education Department did not consult with the Consumer Financial Protection Bureau, which helped craft the policy guidance, before withdrawing it, according to a CFPB spokesman. “Borrowers deserve to be treated fairly and should be able to repay their debt without having to deal with illegal loan servicing practices,” the spokesman told Morning Education. “The CFPB will continue to find ways, working with all of our partners, to support and protect the 44 million Americans with student debt.”

Categories Betsy DeVos, Student Financial Aid and Student Debt

Betsy DeVos Withdraws Protections for Students from Predatory Loan Agencies

By dianeravitch
April 13, 2017 //
16

In an inexplicable move, Secretary of Education DeVos canceled rules–some of which date back to the first Bush administration–to set standards for student loan agencies.

This benefits the industry that fattens on student loans, but it will harm students.

The New York Times editorial board asks “Whose Side is Betsy DeVos on?” I think we know.

“Education Secretary Betsy DeVos is inexplicably backing away from rules that are meant to prevent federal student loan borrowers from being fleeced by companies the government pays to collect the loans and to guide people through the repayment process.

“On Tuesday, she withdrew a sound Obama administration policy that required the Education Department to take into account the past conduct of loan servicing companies before awarding them lucrative contracts — and to include consumer protections in those contracts as well.

“The department is doing the loan industry’s bidding at a time when student debt has crippled a generation financially and the country’s largest loan servicing company, Navient, is facing several lawsuits accusing it of putting its own interest before that of the borrowers it is supposed to help.

“A suit brought by the Consumer Financial Protection Bureau claims that Navient saved itself money by steering borrowers into costly repayment strategies that added billions in interest to their balances. But as Stacy Cowley and Jessica Silver-Greenberg reported in The Times on Monday, states’ lawsuits are especially damning with respect to Sallie Mae — the company that spun off Navient in 2014.

“The Illinois and Washington attorneys general argue that Sallie Mae engaged in predatory lending, saddling people with private subprime loans that the company knew in advance were likely to fail because borrowers would not be able to repay them. The two attorneys general — part of an investigative coalition of 29 states — argue that borrowers deserve to have these tainted private loans forgiven.

“The scenario outlined in the court documents bears a frightening resemblance to the subprime mortgage crisis of a decade ago — when mortgage companies caused millions of borrowers to lose their homes by steering them into risky, high-cost mortgages they could never hope to repay.

“The Illinois and Washington lawsuits argue that Sallie Mae used subprime private loans to build relationships with exploitative schools that then helped the company make more federal loans to their students. Those loans were the jackpot for the company, the lawsuit argues, because they were guaranteed by the government, which steps in to reimburse the lender when a borrower defaults.

“The defaulted private loans destroyed the financial lives of students. But they benefited the schools — which sometimes made deals with Sallie Mae to subsidize the losses — allowing them to comply with federal rules requiring that no more than 90 percent of a school’s revenue can come from federal financial aid. The case shows the dangers inherent in letting companies service federal and private loans simultaneously.”

Will it make America “great again” by impoverishing a generation of students?

I thought she was a Christian. What would Jesus do? Didn’t Jesus throw the money-lenders out of the Temple?

Categories Accountability, Betsy DeVos, Education Industry, For-Profit, Fraud, Higher Education, Student Financial Aid and Student Debt, Students

Betsy DeVos Raises Fees for Collectors of Student Debt, Including One of Her Former Advisors

By dianeravitch
March 23, 2017 //
12

Betsy DeVos just reversed an Obama administration rule that limited the fees that student debt collectors can charge, and one of the beneficiaries has a direct connection to her. As we are learning, making money is a sign of virtue in DeVos’s world, and the more money, the more virtue.

Americans who default on some of their federal student loans are likely to pay more after Education Secretary Betsy DeVos reversed an Obama administration directive limiting some fees. But it turns out the Trump administration decision has some beneficiaries—including the father of a key DeVos lieutenant who just quit.

DeVos’s decision, announced Thursday in a memorandum to the student loan industry, allows companies known as guaranty agencies to charge distressed student debtors fees equivalent to 16 percent of their total balance, even when borrowers agree within 60 days to make good on their bad debt.

The reversal is almost certain to hand United Student Aid Funds Inc., the nation’s largest guaranty agency, a victory in its two-year legal battle against her department. The fees could translate into an additional $15 million in annual revenue for the company, filings in a related lawsuit suggest. Until Jan. 1, United Student Aid Funds was led by Bill Hansen, who served as Deputy Secretary of Education under President George W. Bush. His son, Taylor Hansen, a former for-profit college lobbyist, was until three days ago one of the few DeVos advisers with professional experience in higher education.

The younger Hansen resigned from the Education Department on Friday, department spokesman Jim Bradshaw said in an e-mail. Hansen couldn’t be immediately reached for comment on his departure.

Categories Accountability, Betsy DeVos, For-Profit, Higher Education, Student Financial Aid and Student Debt
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