Department of Education Eviscerates Student Protections, Protects Predatory For-Profit Colleges: What Our Partners and Allies Think

On July 25, 2018, the U.S. Department of Education and Education Secretary Betsy DeVos announced their proposal to curtail a loan forgiveness program meant to help students who were exploited by predatory for-profit colleges. The announced revisions make it easier for these bad schools to escape accountability when exploiting students and student loan borrowers.

Last year, the Department announced its plan to alter the 2016 Borrower Defense regulation—a rule designed under the Obama Administration to protect students exploited by their school, and give them a process to obtain relief from their student loans.

Student advocates argued strongly to protect the Borrower Defense rule, and make it stronger to protect more students from fraudulent practices by the for-profit industry. However, the Department’s new version of the rule would dramatically scale-back these protections, make it harder for victims of predatory schools to have their student loans forgiven, and make it more difficult to hold these schools accountable in court.

Many consumer and students’ rights advocates have reacted strongly to this move by the Department. Here is what we and our partners had to say:

Full statements accessible via hyperlinks, where available.

American Federation of Teachers President, Randi Weingarten 

“[Betsy DeVos’] rewrite makes it harder for defrauded students to get the relief they need and easier for predatory for-profits to get away with ripping off students. It presumes a student is guilty and the profit-driven institutions are innocent by raising the evidence standard for students. It could make borrowers wait until they default before they can apply to have their loan discharged. It makes it harder for students to get relief from closed schools or for groups of students to get relief…Predatory practices by certain so-called colleges across the country have financially gutted working people—many of them first-generation college students, veterans and people of color—while offering them the false hope of a good job and a fair wage…Once again, DeVos has abandoned her responsibility to students to prop up an industry littered with fraud and bad actors.”

Americans for Financial Reform Senior Policy Analyst, Alexis Goldstein 

“The proposed Borrower Defense rule sacrifices students’ rights in order to line the pockets of executives at for-profit colleges, an industry that has shown time and again that it will use taxpayer dollars to deceive and defraud its own students…With this rule and its extreme and absurd barriers to relief, Devos effectively tells students that if a school scams them, they’re on their own.”

Association of Young Americans

“On behalf of our 8,000 members across all 50 states, the Association of Young Americans (AYA) strongly opposes the draft “Borrower Defense Rule” the Department of Education issued today, which would make it more difficult for students to obtain financial relief after being defrauded by predatory for-profit colleges. The draft rule is a clear signal from the Department of Education that they are more interested in protecting for-profit institutions than alleviating the financial harm suffered by thousands of vulnerable students.”

Center for Responsible Lending Policy Counsel Ashley Harrington

“This proposed draft reads more like a roadmap for institutions seeking to abuse students and avoid accountability and transparency rather than a plan to protect students and taxpayers. It ignores the pleas of more than 100,000 students, consumers, and taxpayers, as well as 31 state attorneys general who directly urged Secretary DeVos to stop shielding institutions and private companies…Under this rule, the Department goes further than any proposal discussed at negotiated rulemaking, proposing that relief be limited to borrowers in default in addition to very limited access to relief. A better solution to this growing financial burden would be preventing as many defaults as possible and holding institutions to a higher standard. Millions of consumers and billions of taxpayer dollars are at stake.”

Consumer Action Director of National Priorities, Linda Sherry

“Once again, Secretary DeVos proves her allegiance is to the multi-billion-dollar for-profit college industry and not to the students she’s supposed to protect…Victims of for-profit school fraud come from some of our most vulnerable communities, including veterans, single parents, and those who are first in their families to attend college. That this Administration could so brazenly turn its back on these students when they have been victims of proven fraud is unconscionable.”

Consumers Union Senior Attorney, Suzanne Martindale

“The Department of Education is turning a blind eye to widespread fraud and abuse at for-profit schools that left thousands of students in debt without a meaningful education…Students and taxpayers should not have to bear the financial burden of subsidizing failing higher education programs. Instead of helping defrauded students cancel their debts and move on with their lives, these proposed rules would shield poor-performing schools from being held accountable for their misconduct.”

Generation Progress Executive Director, Maggie Thompson

“At a time when students are saddled with tens of thousands of dollars in loan debt, Betsy DeVos’ new directive will severely hurt the economic well-being of students cheated by predatory schools. It’s simple: If your school defrauds you, you deserve to have your loans cancelled, and the Department should make sure that the school—not taxpayers—pays for the fraud. DeVos has already denied justice to borrowers defrauded by Corinthian Colleges and ITT Tech, now she is attempting to strip all borrowers of protection, while safeguarding the profit margins of shady schools. This giveaway to a predatory industry is a part of the Trump administration’s culture of corruption.”

Hildreth Institute Managing Director, Bahar Akman Imboden, PhD.  

“The DeVos’ administration is actively choosing to turn a blind eye to these so-called higher education institutions which aggressively target low-income communities, communities of color, service members and veterans. At the Hildreth Institute, we believe that the student loan system has created perverse incentives enabling many actors operating in the higher education space to prey on students. Without the proper accreditation processes, accountability measures, and oversight, these predatory actors will continue to base their business models on the availability of these loans with little commitment to providing quality education. We must protect students’ interests at all costs. We have 30 days to raise our voices and show our discontent over the proposed rules, this is the time to be loud and show that WE the people matter more than the lobbyists.”

National Consumer Law Center Attorney, Abby Shafroth

“The federal student loan system is supposed to promote economic mobility and provide a ladder to a better future for low-income Americans…But for too many Americans it has done the opposite—putting targets on low-income, financial aid eligible students and veterans who are recruited by predatory institutions focused on growth and profit rather than on education and career training. It doesn’t have to be this way. The Department can and should apply rules that deter schools from lying to students to get them to enroll and that ensure students who were taken advantage of have real access to relief.”

National Student Legal Defense Network President, Aaron Ament

“Today’s proposal is a giveaway to predatory for-profit colleges and a stunning show of indifference toward students working to better their lives. Make no mistake, the proposal destroys the rights of student loan borrowers—especially low-income students and students of color. With the stroke of a pen, Secretary DeVos and her team of former for-profit college executives have proposed giving fraudulent institutions de facto immunity while effectively stripping their victims of a realistic path to debt relief. If any version of this proposed rule were to go into effect, predatory companies will make out like bandits. Meanwhile, students, taxpayers, and institutions that try to play by the rules will be left holding the bag.”

Public Citizen Attorney, Julie Murray

“The Trump administration’s proposed rule is callous to the thousands of students harmed by an industry concerned only with its bottom line. Students must be able to hold predatory schools accountable in court for fraud and misrepresentation. Instead, the proposed rule announced today would help predatory schools evade liability while cutting off federal loan relief to students who can ill afford it. Make no mistake about it: This proposed rule tells predatory schools that crime pays.”

The Century Foundation Senior Fellow, Jen Mishory

“In 2017, the Trump administration decided to ignore the months of public negotiations and public comment periods undertaken just a year earlier: they first delayed the Obama-era regulations (a legally questionable move), and then, after stocking the Department of full of former for-profit college executives, re-ran the regulation drafting process. Today’s rewritten rule is draconian: each proposed change from the 2016 rule can only be described as (a) making life easier for predatory schools who might otherwise be on the hook to pay these claims, and (b) making life harder for students trying to get relief after their schools lied to them.”

The Institute for College Access & Success President, James Kvaal

“The message to students behind today’s proposal to rewrite the 2016 borrower defense rule is loud
and clear: you’re on your own. It would deny nearly $13 billion in relief to students…If finalized, the Trump Administration’s proposal would erect substantial new barriers to relief for students defrauded or otherwise abused by their colleges. It fails to protect students against misconduct that is illegal under state law. It imposes new evidentiary burdens on harmed borrowers, so that very few will get the relief they are entitled to by law. Perversely, the Department’s primary proposal is to require desperate borrowers to intentionally default – with all its negative consequences – before even seeking relief, forcing them to gamble on an unsympathetic bureaucracy.”

The Project on Predatory Lending

“This proposed rule is a clear attempt to stop cheated students from asserting their legal rights. It encourages abusive and predatory institutions to continue to rip off students with impunity, while slamming the door on the debt relief that Congress has instructed the Department to provide to cheated students…The Department’s proposal reflects its unfounded belief that the interests of institutions, taxpayers, and borrowers are opposed to one another. In fact, when institutions are not trying to profit off of federal student aid, those groups have shared interests. Instead of punishing students for supposed failures of personal accountability, the Department ought to look in the mirror.”

Veterans Education Success Research Director, Walter Ochinko

“On issue after issue, the DeVos proposed rule takes the side of predatory schools, eviscerating the protections that the previous administration accorded to defrauded students. It would be unconscionable for the Department to incentivize default by limiting eligibility to file a claim to those students who have stopped paying off their federal student loans and are in collections. Moreover, consistent with its perspective on for-profit schools, the Department’s proposal rewrites the history of Corinthian—the large for-profit school that declared bankruptcy in 2015 when the Department imposed a $30 million fine for the school’s widespread misrepresentation of job placement rates. Corinthian was treated unfairly, the Department concludes. Such revisionism is astonishing given that Corinthian was the “poster child” for predatory schools. Do DeVos and her for-profit-industry staffers really believe that students would be better off if predatory schools like Corinthian were allowed to continue defrauding students? Unfortunately, it appears that the answer is yes.”

Young Invincibles Government Affairs Director, Reid Setzer

“Secretary DeVos and the Trump Department of Education have once again sided with bad-acting schools instead of students. This new proposed Borrower Defense Rule is a gut punch for hundreds of thousands of misled and defrauded borrowers. The rule discourages and prevents borrowers from seeking the relief they deserve by making the standards for relief unreasonably high, eliminates group discharge, and allows schools to use forced arbitration clauses in enrollment agreements that deny students their day in court. Alarmingly, relief could only be available to borrowers who have already defaulted, forcing thousands of misled students to accept the long term financial harm that comes with default before they can even begin the process of seeking relief.”

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