DeVos Education Department Blocks Borrower Defense: What Our Partners and Allies Think

Today, the U.S. Department of Education announced steps to change two important higher education regulations—a delay of borrower defense and a renegotiation of the gainful employment rule—and to conduct a new regulatory process to rewrite these rules.

Borrower defense was set to go into effect on July 1, which provides a path for defrauded students to have their loans discharged and get a fresh start, while making schools financially culpable for the costs of loan forgiveness. It also banned the use of mandatory arbitration in enrollment agreements, giving students their day in court. Gainful employment, meanwhile, went into effect in 2015. It cuts off federal financial aid for career training programs where the typical debt of graduates represents too high a share of income.

Full statements accessible via hyperlinks where available.

American Federation of Teachers President Randi Weingarten:

“The Trump administration’s actions today show that the White House stands with predatory for-profit schools, not the students they rip off. About the only thing worse than ripping off students with worthless degrees from for-profit colleges is denying them help to relieve their substantial debt, and allowing the schools to continue to prey on students. Given that for-profit colleges were big donors to Trump and other Republican candidates, one wonders whether this is simply a new pay-to-play scheme at the expense of our students, including our veterans, who are much helped by the rules Education Secretary Betsy DeVos wants to eliminate.

“The Obama-era ‘borrower defense’ rule, which the administration now wants to delay and rewrite, would have allowed eligible students to be relieved of their student loan debt from unscrupulous for-profit colleges, such as Corinthian Colleges and ITT Tech. Thank goodness, state attorneys general are standing up for students and seeking to block the delay. The ‘gainful employment’ rule would shut down schools that do not provide an education that could lead to gainful employment.

“Trump and DeVos are sanctioning predatory practices that have allowed rip-off artists to wreak havoc on tens of thousands of students who just wanted to get a decent education that would lead to a good job. President Trump had to shut down his own fake university and reimburse defrauded students; he should have learned his lesson.

“As the nation’s largest union of higher education workers, we will continue to advocate on behalf of students and ensure they have access to high-quality programs that prepare them for the jobs of today and tomorrow.”

Americans for Financial Reform (AFR) Senior Policy Analyst Alexis Goldstein: 

“This is a slap in the face to defrauded Americans, and a stunning admission by the Department of Education that they intend to place the interests of wealthy for-profit college executives ahead of students striving for a better life.”

Center for American Progress Senior Director for Postsecondary Education Ben Miller: 

Reopening the gainful employment rule will simply waste more taxpayer resources in an effort at a giveaway to poor-quality career training programs. This rule has been through two regulatory processes and multiple court cases. It’s shameful that the Trump administration wants to expend so much energy undoing this regulation rather than focusing on providing students with worthwhile educations.

Gainful employment is still a legal regulation on the books and we will be watching closely to ensure the administration follows the law.

Center for Responsible Lending (CRL) Policy Counsel Whitney Barkley-Denney:

“We are deeply disappointed in the Trump Administration’s continued effort to put corporate interests ahead of struggling students. Over the past few years, and after a rigorous review process, the Obama Administration proposed and finalized two rules to ensure that higher education programs, funded by federal student aid dollars, provide an adequate education that will enable borrowers to pay back their loans upon completion.

“The premises of the Gainful Employment Rule and the Borrower Defense to Repayment Rule are simple: 1) career training programs should provide sufficient education to enable graduates to obtain jobs and actually pay off their debt without a significant financial hardship and 2) students defrauded by their schools should be able to have their loans discharged.

“These rules were created to shield students and taxpayers from deceptive acts like that of ITT Tech and Corinthian Colleges–for-profit college systems that abruptly closed their doors after widespread abuses put them on the brink of bankruptcy and jeopardized the futures of thousands of students. Though these are simple, pragmatic rules that protect not just students but also safeguard the taxpayer investment, Secretary DeVos today showed her willingness to place the devastating costs of the actions of these predatory institutions squarely on the shoulders of students and working families.

“With student loan debt and defaults at an all-time high, it is extremely troubling that this Department, rather than increasing protections for students, has decided to delay and destroy these pivotal rulemakings. If the Department wants to take a more positive and impactful step, it should use these regulations as a starting point to further increase protections and create a higher education system that produces strong student results, not just debt and limited employment options.  Based on its recent track record and substantial connections with the for-profit college industry, we are doubtful that this Department, under Secretary DeVos’ leadership, will produce rules that defend students and taxpayers from these predatory institutions.

“In the face of this clear dereliction of duty, we commend the Attorneys General in several states who are taking steps to hold the Department of Education accountable to its current regulations and statements. As the federal government continues to prioritize private interests, state actors are and should continue to be an important line of defense for defrauded students. There are a number of ways to make our higher education system more fair and equitable, including increasing our investment in skill development and college and career readiness, creating more pathways to loan forgiveness, and working to stem the exponentially rising cost of college. Instead, the Trump administration is prioritizing wealthy executives and for-profit colleges over the needs of the next generation of leaders and innovators.”

The Education Trust President and CEO John B. King, Jr.: 

“The Department of Education’s decision to revise the gainful employment and borrower defense rules and delay the implementation of the existing borrower defense rule is deeply worrisome and wrong. These rules were put in place to protect taxpayers and students—particularly low-income students and students of color—who are most likely to be taken advantage of by unscrupulous institutions. This action indicates, yet again, that this department is abdicating its responsibility to students and taxpayers.”

Generation Progress (GP) Executive Director Maggie Thompson:  

“Blocking the Borrower Defense to Repayment (BD) rule imperils the economic wellbeing of thousands of defrauded students, and is a taxpayer-giveaway to the predatory for-profit college industry. It’s clear that Secretary DeVos and her Education Department favor the profiteers of the for-profit college industry over students, families, and taxpayers. DeVos’ Department hired an executive from the for-profit industry, Robert Eitel, and is now dismantling the very regulations his industry’s bad behavior predicated.

“The borrower defense rule is simple, and important. If a college or career program commits fraud, its students deserve a full discharge of their federal loans. Fraudulent schools, not taxpayers, should be liable to repay those debts. No student should ever be asked to sign away their legal rights to get into the classroom.

“As the collapse of Corinthian and ITT Tech showed us, indebted victims of predatory schools are still waiting for relief from DeVos, and are facing credit penalties, wage garnishment, and Social Security reductions, all to pay off debts to spurious schools.

“BD is especially important for students of for-profit colleges—many of whom come from low-income communities or communities of color—who were afforded a path to some debt relief with the original regulation. By blocking the implementation of BD and limiting oversight, DeVos is sending the message that predatory institutions can cheat student borrowers out of time and money and get away with it.”

National Consumer Law Center (NCLC)  Director of the National Consumer Law Center’s Student Loan Borrower Assistance Project Persis Yu: 

“These rules were created through robust negotiation processes. Starting over wastes taxpayer money and creates uncertainty for students who are wondering how to protect themselves from being ripped off by predatory schools. These rules prevent predatory schools from lining their pockets by funneling taxpayer dollars through defrauded students.”

National Consumer Law Center (NCLC) Attorney Joanna Darcus: 

“It is outrageous that the Secretary intends to block a rule that protects federal student loan borrowers, veterans, and taxpayers when schools like Corinthian Colleges or ITT Technical Institutes engage in fraud or abruptly close.

“Delaying the borrower defense rule would allow schools to continue to use forced arbitration rip-off clauses to avoid accountability for fraud, deny victims their day in court, and leave taxpayers on the hook.”

Project on Predatory Student Lending Toby Merrill:

“Today’s action by the Department of Education is unconscionable and illegal. The department has already permitted hundreds of thousands of defrauded student loan borrowers to suffer for years without the relief to which they are entitled. The only ones who benefit from this delay are the for-profit school lobbyists and others profiting from the industry’s harmful and unlawful use of federal taxpayers’ money. The department should no longer be allowed to further delay relief for students by putting off rules intended to make right a longstanding wrong and to protect taxpayers. We will use all legal means necessary to enforce the rights of student loan borrowers.”

Public Citizen Litigation Group Attorney Julie Murray:

“With today’s announcement, Secretary Betsy DeVos has put the profit margins of for-profit colleges ahead of the interests of students and their families. The department’s announcement of a delay to these long-anticipated student protections is a craven attempt to avoid the agency’s legal obligations to enforce them. The department’s reliance on ongoing litigation to justify this delay, which will apply to portions of the rule not even challenged in the litigation, is a smokescreen. We are prepared to take all legal action necessary to force the department to comply with its obligations to enforce this rule.”

The Institute of College Access and Success (TICAS) Executive Vice President Pauline Abernathy: 

“Today’s action by the Trump Administration will be cheered by for-profit colleges and Wall Street but is terrible news for students, taxpayers, and anyone concerned about rising student debt. This irresponsible action will rightly be challenged in court.

“Student, consumer, and veterans organizations, state attorneys general, and many others are on record opposing any delay or weakening of the borrower defense and gainful employment regulations because they protect both students and taxpayers from waste, fraud, and abuse. The Congressional Budget Office estimates that repealing the gainful employment regulation alone would cost taxpayers $1.3 billion over the next 10 years.

“Halting and dismantling these common-sensesafeguards will leave taxpayers holding the bag when schools commit fraud or close suddenly, make it easier for unscrupulous schools to defraud students and evade accountability, make it harder for defrauded students to get their loans discharged as provided under the law, and funnel taxpayer dollars to programs that consistently leave students buried in debt they cannot repay.

“During her confirmation process, Education Secretary Betsy DeVos said she believed students have a right to seek legal remedies in court when they think their college has defrauded them. Yet today’s proposed delay of the borrower defense regulation scheduled to go into effect on July 1 would deny students this very right. The delay would let colleges keep using mandatory arbitration agreements to evade accountability by blocking student access to the courts, as Corinthian Colleges and ITT Technical Institutes did and most large for-profit colleges continue to do.

“If the Administration were serious about helping harmed students and protecting students from predatory practices, it would be implementing the borrower defense and gainful employment regulations without delay and acting on the tens of thousands of pending loan discharge applications, not dismantling current protections and committing to follow through only on the 16,000 applications approved by the Obama Administration. Defrauded borrowers deserve relief, have a right to it, and the public overwhelmingly supports providing it.”

The Republic Report Attorney David Halperin:

It is now confirmed: Donald Trump and Betsy DeVos aretrashing the Obama rules created to protect students and taxpayers from scam for-profit colleges. The purpose of these rules is to determine which career training programs are actually helping students build careers, and channel taxpayer dollars to those schools, rather than to overpriced, low-quality schools that are systematically deceiving and ripping off students.

For-profit colleges have donated big money to the GOPTrump owned oneDeVos invested in them. An executive from predatory Bridgepoint Education, Robert Eitel, now works at the Department of Education.

The for-profit college industry has relentlessly opposed the Obama rules, spending millions of our tax dollars to hire lawyers and lobbyists to try to defeat them. Now they appear to have prevailed. This is blatant corruption of policy by a predatory industry, one that has faced numerous law enforcement investigations for fraud. This is the opposite of draining the swamp. Under Trump, the swamp runs everything.

The students — veterans, single parents, immigrants, and others — whose financial futures have been ruined by predatory for-profit colleges are increasingly standing up for themselves, and they have strong allies in Congress and among civil rights, consumer, veterans, labor, and student organizations.  If the Trump administration wants to stand with for-profit college barons who have enriched themselves with taxpayer dollars while misleading and abusing students, they will face a sustained public fight.  Americans desperately need stronger options to train for careers; that is what we should be investing in, rather than supporting blatant fraud operations run by scam artists working in strip malls and on Wall Street.

Veterans Education Success Policy Director Walter Ochinko:

It has been widely documented that servicemembers, veterans, and their dependents, families and survivors are targeted for fraud because of the 90/10 loophole. Predatory college recruiters not only use misleading advertising and recruiting to enroll veterans, but also sign them up for student loans, sometimes without the veterans’ knowledge.

Defrauded veterans not only deserve the loan forgiveness they are entitled to under Borrower Defense but also the protections provided by the Gainful Employment rule, which the Department also announced it planned to renegotiate. In February 2017, sixteen veterans and military service organizations wrote to Congress urging that the Gainful Employment rule but fully implemented as written.

While today’s announcement by the Education Department is good news for predatory colleges, it is terrible news for America’s servicemembers, veterans, and their families who honorably served the nation, and to the taxpayers who fund their GI Bill educational benefits.

Young Invincibles Executive Director Jen Mishory:

“By moving to roll back these protections for students, the Department of Education is sending a clear, alarming message – they will put the interests of the for-profit college industry over the interests of students and taxpayers. Eliminating these two regulations serves as a toxic combination, simultaneously stripping students of protections and allowing poorly performing, predatory schools to proliferate. By delaying implementation and seeking to roll back the Borrower Defense rule, countless students who have been defrauded by predatory schools will be left without meaningful options for relief. By rolling back the Gainful Employment protections, students seeking an education will face an environment where poor-quality predatory schools can take taxpayer dollars and put students into insurmountable debt without oversight. Both put too many students in harm’s way.”

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