DeVos’s Education Department: Trick Student Borrowers, Treat Servicer and For-Profit College Execs

Here Are the Top 5 Ways DeVos’ Inaction Encourages Her Spooky Industry Friends to Bury Borrowers in Debt

Elm St., Washington D.C. – Ever since Secretary Betsy DeVos’ private jet first touched down en route to the Education Department, it’s been a horror show for student borrowers. DeVos has taken an ax to borrower protections against scams and abuses, and conjured up a deregulatory environment where student loan servicing companies and for-profit colleges are free to turn students’ dreams of the future into a living nightmare of debt.

When struggling student borrowers come knocking for help securing a quality and affordable education, Betsy DeVos is like your snooty neighbor who turns out all the lights and hides in the basement on Halloween. But for servicers and for-profit colleges that seek profit by preying upon borrowers, DeVos and her band of former industry lobbyists running the Education Department have set aside all the full-sized candy bars they can handle in terms of devil-may-care enforcement and favorable rulemaking. What will DeVos dress up as this year for Halloween — someone actually committed to protecting student borrowers?

Top 5 Reasons Why The DeVos Agenda Is Scary For Borrowers: 

1) The DeVos Education Department (ED) Is Proposing to Weaken Accreditation Standards So Bad College Accreditors Can Still Authorize Schools To Receive Federal Aid, Even If The School Has Shown Significant Problems.

In 2018, DeVos Reportedly Disregarded Her Staff’s Recommendation When She Decided To Reinstate Controversial Accrediting Agency ACICS – Which Had Previously Been Derecognized Due To “Pervasive Compliance Problems.”

On June 11, 2018, It Was Reported That “DeVos Disregarded A Scathing Review By Her Own Staff This Spring When She Reinstated” ACICS, Which Had “Had Failed To Meet 57 Of 93 Federal Quality And Management Compliance Standards.” “Education Secretary Betsy DeVos disregarded a scathing review by her own staff this spring when she reinstated the watchdog body that had accredited two scandal-scarred for-profit universities whose bankruptcies left tens of thousands of students with worthless degrees and mountains of debt, a new report has revealed. A 244-page internal document, written by career staff and delivered to the secretary in early March but made public late Friday, found that the Accrediting Council for Independent Colleges and Schools, or Acics, had failed to meet 57 of 93 federal quality and management compliance standards as it vied to continue operating as a gatekeeper for billions in federal financial aid dollars.” [Erica L. Green, “Betsy DeVos Reinstated College Accreditor Over Staff Objections,” The New York Times, 06/11/18]

  • The Obama Administration Had Derecognized ACICS Previously Due To “‘Pervasive Compliance Problems’” And “Lax Oversight Of Several Failed And Deeply Flawed” For-Profit “U.S. Department of Education two years ago derecognized ACICS, a national accreditor which was the gatekeeper to $4.76 billion in 2015 federal aid payments to more than 245 career-oriented colleges, most of them for-profit institutions. In justifying the decision, the Obama administration pointed to ACICS’s ‘pervasive compliance problems,’ while advocates decried the agency’s lax oversight of several failed and deeply flawed for-profits, including Corinthian Colleges and FastTrain College. Ted Mitchell, then under secretary of education, cited ‘such wide and deep failure that they simply cannot be entrusted with making the determinations we, you and the public count on.’” [Paul Fain, “New Life for ACICS,” Inside Higher Ed, 10/01/18]

In January 2019, The Education Department Released A Proposal That Would Give Accrediting Agencies “‘More Leeway To Approve Programs That Don’t Fit Traditional Models.’”

On January 8, 2019, ED Issued Proposals That Would “Grant Accrediting Agencies More Leeway To Approve Programs That Don’t Fit Traditional Models.” “The U.S. Education Department issued proposals Monday that […] would grant accrediting agencies more leeway to approve programs that don’t fit traditional models and loosen standards on instruction and the interaction between students and faculty […] Under the proposals, the Education Department would give accreditors, and to a lesser extent colleges, more authority over how distance education, correspondence courses and credit hours are defined.” [Danielle Douglas-Gabriel, “DeVos moves to boost college online learning while reducing regulatory oversight,” The Washington Post, 01/07/19]

Later In 2019, DeVos’ Department Proposed A Rule Change To Allow Noncompliant Schools To “Be Out Of Compliance And Keep Their Accreditation For Up To Four Years” Before Action Must Be Taken.

In April 2019, The Department Of Education Proposed Rules That Would Allow Noncompliant Schools “Able To Be Out Of Compliance And Keep Their Accreditation For Up To Four Years” Before An Accreditor Must Take Action. “In a series of recently approved rule changes proposed by ED, bad schools will be able to continue to operate for years, even after an accrediting authority has flagged a school as non-compliant with rules or standards. Under the current rules, when a school was determined to be out of compliance with the rules or standards of its accrediting body it had a maximum of two years to come into compliance or lose accreditation. In other words, if there was a problem, it had to be addressed one way or another. But Trump’s ED now wants schools to able to be out of compliance and keep their accreditation for up to four years, before any accreditor has to take action.” [Derek Newton, “Trump To Non-Compliant Colleges: Party On,” Forbes, 04/10/19]

  • “To think of this another way, if Trump was proposing new football rules, this one would allow a referee to throw a penalty marker but give the offending team years to argue about it before any penalty was actually enforced.” [Derek Newton, “Trump To Non-Compliant Colleges: Party On,” Forbes, 04/10/19]

  2) DeVos Ended The Borrower Defense Rule—Which Provides Loan Forgiveness For Students Who Were Cheated By Their Schools— And Has Illegally Allowed The Backlog Of Claims To Swell To Over 200,000.

Since She Took Office, Betsy DeVos Has Been Trying To Overhaul The Borrower Defense Rule, An Obama-Era Policy That Provides Federal Loan Forgiveness For Students Who Were Cheated By Their Schools.

Betsy DeVos “Has Tried To Overhaul” The Borrower Defense Rule “Since Taking Office.” “Since taking office, Ms. DeVos has tried to overhaul the 2016 process started by the Obama administration that was supposed to pave an easier road for students to secure loan relief after their colleges are found to have misled them with inflated claims of false promises of jobs. The Obama administration approved nearly 30,000 such claims, estimated at $450 million, in its last year in office. The Education Department approved 16,155 from Jan. 1, 2017 to December 31, 2018.” [Erica L. Green, “Education Department Has Stalled on Debt Relief for Defrauded Students,” The Washington Post, 04/05/19]

The Borrower Defense Rule “Allows Forgiveness Of Federal Student Loans For Borrowers Who Were Cheated By Schools That Lied About Their Job Placement Rates Or Otherwise Broke State Consumer Protection Laws.” “A long-delayed federal rule intended to protect student loan borrowers who were defrauded by their schools went into effect on Tuesday, after a judge rejected an industry challenge and the Education Department ended efforts to stall it any longer. The new rule, finalized in the last few months of President Barack Obama’s administration, is intended to strengthen a system called borrower defense that allows forgiveness of federal student loans for borrowers who were cheated by schools that lied about their job placement rates or otherwise broke state consumer protection laws. The new rule could expedite the claims of more than 100,000 borrowers, many of whom attended for-profit schools, including ITT and Corinthian, that went out of business in recent years.” [Stacy Cowley, “Delayed Obama-Era Rule on Student Debt Relief Is to Take Effect,” The New York Times, 06/21/19]

Betsy DeVos Has Dismissed Borrower Defense As “‘Free Money.’”

Betsy DeVos Disparaged The Borrower Defense Rule As “‘Free Money’” And Tried To “Narrow Its Scope” And Put The Burden On Students To Prove They’ve Been Harmed. “But Ms. DeVos delayed issuing what she said amounted to ‘free money’ and has moved to narrow its scope to only forgive debts of students who, regardless of their schools’ actions, fail to secure gainful employment and can prove they were otherwise harmed.” [Erica L. Green, “Education Department Has Stalled on Debt Relief for Defrauded Students,” The Washington Post, 04/05/19]

For Over A Year, ED Has Been Illegally Ignoring A Backlog Of Over 200,000 Borrower Defense Claims.

ED Failed To Approve Or Deny “A Single Application For Federal Student Loan Relief” Under The Borrower Defense Rule Between “June To December 2018, Even After A Federal Judge Ruled That The Trump Administration’s Foot-Dragging Was Illegal.” “The Education Department failed to approve a single application for federal student loan relief in the second half of last year[2018], according to new department data that signals that students who claim they were cheated by their colleges cannot count on help from Washington anytime soon. The department neither approved nor denied any relief claims filed by students under the so-called borrower defense program from June to December 2018, even after a federal judge ruled that the Trump administration’s foot-dragging was illegal. In October, the judge ordered the Education Department to enforce a long-delayed Obama-era rule that expanded and expedited loan relief for defrauded students, many of whom attended for-profit colleges.” [Erica L. Green, “Education Department Has Stalled on Debt Relief for Defrauded Students,” The Washington Post, 04/05/19]

  • There Are Over “200,000 Borrowers” That “Are Waiting For The Education Department To Make A Decision On Their Application For Loan Forgiveness.” “The number of federal student loan borrowers who are waiting for the Education Department to make a decision on their application for loan forgiveness based on alleged fraud by their college now exceeds 200,000 borrowers, according to new federal data released today.” [Michael Stratford, “Backlog of student loan fraud claims tops 210K, with processing stalled,” Politico, 10/03/19]

Defrauded Students Are Now Suing Betsy DeVos And ED For Garnishing Their Wages To Collect On Student Debts They Argue Are Not Legally Owed. 

In June 2019, A Group Of Student Loan Borrowers Filed A Lawsuit Against Betsy DeVos And ED For Garnishing Their Wages For Debt They Argue “Isn’t Legally Enforceable” As ED Knew They “Were Defrauded By [Their] School When They Signed Up For The Program.” “For the past few years, the government has been taking pains to collect on Tamara Blanchette’s student loans — garnishing some of the money she receives through her tax refund. But it’s debt the government shouldn’t be collecting on in the first place, a new lawsuit alleges. The suit, filed on behalf of Blanchette and similarly situated borrowers, alleges that Betsy DeVos and the Department of Education are collecting on debt that isn’t legally enforceable. That’s because the Department knows that Blanchette and other students who enrolled in the criminal-justice program at the Minnesota School of Business, a now defunct for-profit college chain, were defrauded by the school when they signed up for the program, according to court documents.” [Jillian Berman, “Lawsuit alleges the government is illegally garnishing tax refunds of student-loan borrowers,” MarketWatch, 06/20/19]

3)   DeVos’ ED Has “Failed to Adequately Supervise” Student Loan Servicers, And “Rarely Penalizes” Those That Harm Student Borrowers, According To Own Inspector General 

In February 2019, The Education Department’s Inspector General Issued A “Critical” Report That Found FSA “Failed To Adequately Supervise” Servicers And “Rarely” Penalized Them.

The Education Department’s Inspector General Just Issued A “Critical New Report” On How The Office Of Federal Student Aid (FSA) “Failed To Adequately Supervise” Student Loan Servicers, “Rarely Penalizing Them” For Not Complying With Federal Requirements. “A critical new report from the U.S. Department of Education’s Office of Inspector General finds the department’s student loan unit failed to adequately supervise the companies it pays to manage the nation’s trillion-dollar portfolio of federal student loans. The report also rebukes the department’s office of Federal Student Aid for rarely penalizing companies that failed to follow the rules.” [Cory Turner, “Federal Watchdog Issues Scathing Report On Ed Department’s Handling Of Student Loans,” NPR, 02/14/19]

  • The Report Also Found That FSA Did Not Make Adequate Efforts To “Identify Broader Patterns Of Noncompliance That Could Have Hurt Many More Students” Than The Few Incidents The Office Chose To Document. “Among the inspector general’s findings: While FSA did document servicers’ many failures to follow the rules, it did not study these isolated failures to identify broader patterns of noncompliance that could have hurt many more students.” [Cory Turner, “Federal Watchdog Issues Scathing Report On Ed Department’s Handling Of Student Loans,” NPR, 02/14/19]

ED’s Inspector General Found That Federal Student Aid (FSA) Has “Rarely Held Servicers Accountable”

ED’s Inspector General Found That FSA Didn’t Adequately Track Servicers’ Noncompliance With Federal Requirements And “Rarely Held Servicers Accountable.” The Education Department’s Inspector General found in a February 12, 2019 report that, “FSA Did Not Track All Identified Instances of Noncompliance and Rarely Held Servicers Accountable for Noncompliance with Requirements.” [“Federal Student Aid: Additional Actions Needed to Mitigate the Risk of Servicer Noncompliance with Requirements for Servicing Federally Held Student Loans,” U.S. Department of Education, 02/12/19]

4) DeVos Repealed A Rule Designed To Stop Student Aid Money From Going To Colleges Whose Graduates Could Not Find Good-Paying Jobs, An Action Estimated To Cost The Federal Government $6.2 Billion Over Ten Years.

The Gainful Employment Rule Was Created By The Obama Administration To Make Sure Only Institutions With Graduates That Found “Gainful Employment” Would Be Eligible To Receive Federal Student Loan Money.

In 2014, The Obama Administration Instituted The “Gainful Employment” Rule Which Would Hold “Career Training Programs Accountable For Putting Their Students On The Path To Success.” “To protect students at career colleges from becoming burdened by student loan debt they cannot repay, today the U.S. Department of Education is announcing regulations to ensure that these institutions improve their outcomes for students—or risk losing access to federal student aid. These regulations will hold career training programs accountable for putting their students on the path to success, and they complement action across the Administration to protect consumers and prevent and investigate fraud, waste and abuse, particularly at for-profit colleges.” [Press Release, “Obama Administration Announces Final Rules to Protect Students from Poor-Performing Career College Programs,” US Department of Education, 10/30/14]

  • The Rule Said Schools That Forced A Typical Graduate Into An “Estimated Annual Loan Payment” That Exceeded “20 Percent Of His Or Her Discretionary Income Or 8 Percent Of His Or Her Total Earnings” Would Be At Risk Of Losing The Ability To Accept Federal Student Loan Dollars. “To qualify for federal student aid, the law requires that most for-profit programs and certificate programs at private non-profit and public institutions prepare students for “gainful employment in a recognized occupation.” Under the regulations finalized today, a program would be considered to lead to gainful employment if the estimated annual loan payment of a typical graduate does not exceed 20 percent of his or her discretionary income or 8 percent of his or her total earnings. Programs that exceed these levels would be at risk of losing their ability to participate in taxpayer-funded federal student aid programs.” [Press Release, “Obama Administration Announces Final Rules to Protect Students from Poor-Performing Career College Programs,” US Department of Education, 10/30/14]

Just Three Months Into Her Tenure, Betsy DeVos Announced A Delay Of The Gainful Employment Rule’s Compliance Date; The Following Year She Proposed Scrapping The Rule Entirely.

On March 7, 2017, The DeVos Education Department Announced It Was Allowing “Additional Time, Until July 1, 2017, For Institutions To Comply With” The Gainful Employment (GE) Regulations. “On January 6 and January 19, 2017, the Department announced dates by which institutions subject to the Department’s gainful employment (GE) regulations must comply with certain provisions of the GE regulations. This document announces that the Department allows additional time, until July 1, 2017, for institutions to submit an alternate earnings appeal and to comply with the disclosure requirements in the GE regulations. […] To permit the Department’s further review of the GE regulations and their implementation. […] Dated: March 7, 2017.” [“Program Integrity: Gainful Employment,” Federal Register, 03/10/17]

On October 17, 2017, “Democratic Attorneys General In 17 States And The District Of Columbia Filed Suit Tuesday Against The U.S. Department Of Education Over Its Decision To Block” The Gainful Employment Rule. “Democratic attorneys general in 17 states and the District of Columbia filed suit Tuesday against the U.S. Department of Education over its decision to block an Obama-era rule designed to protect students from being defrauded by for-profit colleges. The Gainful Employment rule was supposed to take effect this year, but Education Secretary Betsy DeVos froze it until a new rule could be crafted.” [Maria Danilova, “States sue DeVos to get for-profit college rule restored,” The Associated Press, 10/17/17]

Then, On July 27, 2018, It Was Reported That DeVos “Plans To Eliminate Regulations That Forced For-Profit Colleges To Prove That They Provide Gainful Employment To The Students They Enroll.” “DeVos plans to eliminate regulations that forced for-profit colleges to prove that they provide gainful employment to the students they enroll, in what would be the most drastic in a series of moves that she has made to free the for-profit sector from safeguards put in effect during the Obama era. […] a draft regulation, obtained by The New York Times, indicates that the Education Department plans to scuttle the regulations altogether, not simply modify them, as Ms. DeVos did Wednesday with new regulations that scaled back an Obama-era debt relief plan for student borrowers who felt duped by the unrealistic appeals of for-profit colleges.” [Erica L. Green, “DeVos to Eliminate Rules Aimed at Abuses by For-Profit Colleges,” The New York Times, 07/26/18]

In June 2019, The Gainful Employment Rule Was Officially Rescinded, Despite Estimates That Repeal Would Cost The Federal Government An Additional $6.2 Billion Over Ten Years.

On June 28, 2019, DeVos Announced “The 2014 Gainful Employment Rule Will Be Rescinded Effective July 1, 2020” And Said It “Unfairly Targeted For-Profit Colleges.” “The Trump administration on Friday revoked an Obama-era rule that aimed to terminate federal funding to for-profit college programs that consistently left graduates with high student debt.

Department officials announced that the 2014 gainful employment rule will be rescinded effective July 1, 2020. The agency’s announcement said the rule focused too narrowly on graduate earnings and unfairly targeted for-profit colleges.” [Collin Binkley, “DeVos revokes Obama-era rule policing for-profit colleges,” The Associated Press, 06/28/19]

  • The Education Department “Estimated That Repealing The Rule Would Cost $6.2 Billion Over 10 Years In Payments For Pell Grants And Student Loans For Programs That Otherwise Would Have Been Cut Off From Federal Aid.” “The rule, known as gainful employment, was heavily criticized by the for-profit college sector and Republicans in Congress. In the first gainful-employment ratings released in 2017, 98 percent of programs that failed the standards were operated by for-profit institutions. The Education Department estimated that repealing the rule would cost $6.2 billion over 10 years in payments for Pell Grants and student loans for programs that otherwise would have been cut off from federal aid.” [Andrew Krieghbaum, “DeVos Issues Final Repeal of Gainful Employment,” Inside Higher Ed, 07/02/19]

5)   DeVos’ ED Has Denied 99% Of Applicants To the Public Service Loan Forgiveness Program

As Of April 2019, The Department Of Education Had Denied Nearly 99% Of PSLF Applications.

As Of April 2019, “Nearly 99% Of Applications Submitted Under Public Service Loan Forgiveness Have Been Denied.” “Tens of thousands of public servants have applied to have their federal student loans forgiven through a temporary relief program run by the U.S. Education Department. Fewer than 300 have had success. […] Nearly 99% of applications submitted under Public Service Loan Forgiveness have been denied, for many of the same reasons the Education Department cited in rejecting requests under the temporary initiative.” [Danielle Douglas-Gabriel, “Education Dept. rejects vast majority of applicants for temporary student loan forgiveness program,” The Washington Post, 04/02/19]

In 2018, Congress Provided A Temporary Expansion Of PSLF That Gave Applicants Another Chance To Have Their Federal Student Loans Forgiven With “Simpler Requirements.”

In 2018, “Congress Stepped In And Ordered A Program Expansion” That Gave “Applicants Another Chance To Clear Their Federal Student Loans” With “Simpler Requirements.” “Congress stepped in and ordered a program expansion in 2018 to offer the applicants another chance to clear their federal student loans through a new program with simpler requirements.” [Alexa Díaz, “Federal student loan forgiveness program rejects almost everyone, again,” Los Angeles Times, 09/05/19]

In September 2019, The GAO Revealed That ED Rejected 99% Of Applicants To The Temporary Expansion Program With Only 661 Approved Of 54,000 Requests.

In September 2019, The GAO Revealed That The “Education Department Has Rejected 99%” Of Applicants To The Temporary Expansion Program With Only 661 Approved Of 54,000 Requests. “But a year later, a new watchdog report has found, the Education Department has rejected 99% of those applicants too. The Government Accountability Office report released Thursday found that of the more than 54,000 applications to the new program — named Temporary Expanded Public Service Loan Forgiveness — processed through May, only 661 were accepted.” [Alexa Díaz, “Federal student loan forgiveness program rejects almost everyone, again,” Los Angeles Times, 09/05/19]

The Reason Many Borrowers Were Rejected Was Based On A Stipulation Implemented By ED “That Congress Didn’t Order.”

The Primary “Reason Borrowers Were Rejected” Was Based On “A Requirement That Congress Didn’t Order And That Applicants Found Confusing.” “The biggest reason borrowers were rejected under the new program, the report found, was that they hadn’t separately applied to the original program — a requirement that Congress didn’t order and that applicants found confusing. There’s no formal appeals process, the report said, and key parts of the Education Department website lack information about the new program.” [Alexa Díaz, “Federal student loan forgiveness program rejects almost everyone, again,” Los Angeles Times, 09/05/19]

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