DeVos Blasted for Student Debt Relief Rule Change That Hurts Defrauded Borrowers

Jessica Corbett, 

Common Dreams

PUBLISHED

August 31, 2019

https://truthout.org/articles/devos-blasted-for-student-debt-relief-rule-change-that-hurts-defrauded-borrowers/

Critics condemned Trump Education Secretary Betsy DeVos Friday for replacing Obama-era federal loan forgiveness regulations for student borrowers who claim that they were defrauded by their schools with new policies that could make it more difficult to access relief.

“On the Friday of Labor Day weekend, Betsy DeVos is gleefully forcing hundreds of thousands of students defrauded by for-profit colleges to suffer yet another indignity,” Randi Weingarten, president of the American Federation of Teachers, said in a statement. “Shame on her.”

Outlining the policy changes, which the Department of Educationannounced late Friday, The New York Times reported:

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The new rules apply to federal student loans made from July 2020 onward. They will replace a set of policies, completed by the Obama administration in 2016, that Ms. DeVos had delayed carrying out until a court ordered her to do so last year.

Under the new rules, borrowers seeking loan forgiveness will have much higher hurdles to clear. They will need to prove that their college made a deceptive statement “with knowledge of its false, misleading, or deceptive nature or with reckless disregard for the truth,” and that they relied on the claim in deciding to enroll or stay at the school. They will also need to show that the deception harmed them financially.

There is currently no time limit on submitting claims, but Ms. DeVos set a three-year deadline from the date that students graduate or leave their school.

Since DeVos was narrowly confirmed by the Senate to lead the Education Department in early 2017, she has “refused to follow existing law and cancel the loans for these students, leaving them in debt they can’t get away from,” Eileen Connor, legal director of the Project on Predatory Student Lending, told the Times. “Now, she’s shredding a set of fair, common-sense rules that level the playing field between students and those who take advantage of them.”

“The rule takes a scythe to defrauded borrowers,” Weingarten said of DeVos’s policy. “For many affected students, disproportionately veterans, first-generation college-goers, and people of color, it’s a double whammy—not only are their finances and careers wrecked by worthless degrees, any chance at justice is then callously denied to them by the secretary.”

Weingarten charged that with these new regulations, “Betsy DeVos has again shown just how determined she is to hurt students while helping her friends who run failing for-profit colleges.”

In a statement to The Associated Press, Yan Cao—a fellow at The Century Fund, a progressive think tank—concurred.

“With this policy overhaul,” said Cao, “Secretary DeVos has cemented her legacy as best friend to predatory colleges and enemy to the students they rip off.”

James Kvaal, president of the non-profit Institute for College Access and Success, explained to the AP how DeVos’s policies will make it harder for students to get debt relief.

Students, he said, would be required “to submit evidence that students do not have and cannot get” and file their claims as individuals, rather than as part of a group that was defrauded.

There also would be a three-year limitation on filing a claim, either from the date of a student’s graduation or the school’s closure. “That will weed out about 30 percent of claims that would otherwise prevail,” Kvaal said, citing the department’s own estimates.

“By leaving students on the hook for colleges’ illegal actions, today’s rule sends a clear message that there will be little or no consequences for returning to the misrepresentations and deceptions that characterized the for-profit college boom,” he said.

While some advocates for students swiftly denounced DeVos for the overhaul, the Education Department’s announcement was welcomed by Career Education Colleges and Universities, which represents for-profit colleges. The group’s executive vice president, Michael Dakduk, told the AP that “we think it provides fairness and due process to all parties involved.”

However, its remains unclear if the changes will actually take effect. According to the Times, “Consumer advocates said they planned to challenge the new rules in court.”

Abby Shafroth, a lawyer with the National Consumer Law Center, warned the Times that the Trump administration’s rollback will “encourage schools to break the law, engage in risky practices that lead to abrupt closures, and harm students with impunity.”