Democrats Say DeVos Failing to Protect Students From Predatory For-Profit Institutions

December 13, 2019 by Tom Ramstack
U.S. Secretary of Education Betsy Devos.

WASHINGTON — Democratic members of Congress accused U.S. Education Secretary Betsy DeVos on Thursday of neglecting her duty to protect students from for-profit colleges that defrauded them, promising degrees or job placements they were unable to deliver.

In response, the Obama administration’s Education Department instituted a federal student loan forgiveness program for borrowers who were misled by schools that violated truth-in-advertising laws. The loan forgiveness is called the “borrower defense to repayment” program, or “borrower defense.”

Some members of the House Education and Labor Committee said during a congressional hearing Thursday that DeVos was too protective of the schools, leaving tens of thousands of students with unfair debt.

“Under the present leadership, the [Education] Department refused to implement the borrower defense rule,” said Rep. Robert C. Scott, a Virginia Democrat who chairs the Education and Labor Committee. “Instead of providing defrauded borrowers full and timely relief – as the law allows – the Department halted processing of claims so it could invent a new formula that ensured most defrauded borrowers would get only a fraction of the relief they were eligible to receive.”

About 240,000 claims for student debt relief are pending before the Education Department, he said.

“The Department’s initial partial relief formula would have deprived 93 percent of defrauded students of full relief,” Scott said.

Last year, a federal court blocked a Trump administration revision of the debt relief program, saying it misused students’ personal data and could deprive them of the loan forgiveness it was designed to provide.

“In fact, in the 18 months between the court’s June 2018 ruling and Tuesday’s announcement of a new revised partial relief formula, the [Education] Department did not process a single borrower defense claim,” Scott said.

DeVos defended her handling of the program, saying, “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.”

She said her department’s modification of the borrower defense was a “course correction” after the Obama administration planned to give “blanket” student loan forgiveness, even when it was undeserved.

DeVos’ Education Department requires defrauded students to show they will suffer personal financial harm if their loans are not forgiven, regardless of whether their colleges are known to have misled them. Under the previous framework, students merely needed to demonstrate they were deceived.

The borrower defense grew from an obscure program to a hot topic within the Education Department after the recent collapse of two of the nation’s largest for-profit college chains, Corinthian Colleges and ITT Technical Institute. They failed under a flood of lawsuits and regulatory actions.

A third college chain, the University of Phoenix, continues to operate but is a frequent target of claims it misleads students about the career opportunities it can create for them.

An internal document reported this week by U.S. News & World Report says the Education Department soon will notify about 17,000 students claiming the borrower defense whether they are eligible for loan forgiveness. About 95 percent of the claims will be denied.

Other internal memos suggest DeVos ignored staff reports saying a larger number of students qualified for debt forgiveness.

Rep. Susan Davis, a California Democrat, asked, “Does a university not have a responsibility to provide what it claims it will? There is literally no other consumer protection that does not restore full repayment of a fraudulent product.”

DeVos said, “I think there are many students that received a valuable education, just like they do from many other institutions. The question is what students among them were financially harmed.” 

Some Republicans came to her defense, saying the Obama administration was too generous with the borrower defense.

Rep. Greg Murphy, a North Carolina Republican, said, “I do think the federal government has led to some of the problems we’re having in higher education right now because the money is so — free.”

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