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Under DeVos, Education Department continues to shut out disadvantaged college students

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Students who were defrauded by for-profit colleges are still waiting on the U.S. Department of Education to forgive their federal student loans — and Senate Democrats are pressuring Education Secretary Betsy DeVos to act.

Since the Trump administration came into office, no borrower defense claims have been approved. Sen. Elizabeth Warren (D-MA), who has also been critical of a slow-moving Obama-era education department, and Richard Durbin (D-IL) released a report Tuesday on the backlog of debt relief claims. The students affected, many of whom are low-income, have been the victims of schools misrepresenting job placement rates, predatory loans, and have been manipulated by sophisticated marketing machines.

The matter of forgiving student loans through borrower defense to repayment was first raised during the Obama administration. Borrower defense to repayment is a rule created in the 1990s which held that if a college or university engaged in behavior violating state law, borrowers could have federal student loans cancelled, be relieved of the obligation to repay all or part of the loan, or be reimbursed for the payment of the loan. But the rule hasn’t served students well until recently. That’s because students who say they were defrauded by certain for-profit colleges, including the Corinthian Colleges Inc. chain and ITT Technical Institutes, which are now defunct, discovered this rule when all other options had failed. Still, the department hadn’t developed a process for students to pursue the claim that they had been defrauded.

So, defrauded students pursued activism through channels like The Debt Collective, a non-profit that works to erase student debt through organization and advocacy, as well as cooperation with consumer advocates to get the Obama administration to develop a path for students to get relief. The process started in 2015, and in March 2016, the department announced that students who were defrauded at 91 Corinthian Colleges campuses would finally have a clear path to debt relief.

Under the Trump administration, however, the department hasn’t approved any new claims. The Washington Post reported that although 10,000 claims have been recommended for approval, department officials will not move forward with this recommendations as they consider partial relief for defrauded student borrowers. A department spokesperson, Liz Hill told Inside Higher Education that she could not say whether partial relief is being considered. Hill said, “We’re working on a process for adjudicating all pending claims. There’s still a lot of internal discussion going on about the best way forward.” As many as 16,000 claims were reportedly approved by the Obama administration recently, but were not yet discharged. The Trump administration is reviewing all claims, including those that were approved.

In October, the department delayed regulations that would simplify the claims process for borrower defense to repayment by inviting public comment on a plan that gives the department until the summer of 2019 to implement updates on the rule. But the department has been limiting access to negotiated rule making sessions on borrower defense claims. On Monday, the department stopped an advocate from Higher Ed, Not Debt, a coalition of students, consumer advocates, and veterans, from livestreaming the session. Department officials refused to begin the meeting until the livestreaming was shut down.

These actions are just the latest in a string of decisions by the department to reduce oversight of for-profit colleges and rescind protections for students and graduates who are dealing with burdensome student debt; poor communication, if not outright abuse, from student loan servicers; and the fallout of attending schools that did not properly train them for their intended careers. In April, DeVos reversed Obama administration guidance that held student loan servicers, companies that have contracts with the government to manage loan payments, accountable for improper or abusive customer service. Reports from the Government Accountability Office and the Consumer Financial Protection Bureau (CFPB) showed servicers often fail to look out for the best interests of borrowers. A 2015 CFPB report on borrowers’ experiences found that servicers were responsible for errors, including putting students in the wrong repayment plans.

Over the summer, DeVos announced a delay of key provisions of the Obama administration’s gainful employment rule, which was intended to protect students from being scammed into programs that would promise them a career, but ultimately leave them way outside their intended field. Eight hundred programs were failing the ratings under the rule in July, according to Inside Higher Ed. One example is a program for legal assistants and paralegals at Center College, where more than a quarter of a graduate’s typical annual salary of $10,617 is spent on student loan payments.

The people most affected by student loan debt and the fallout of attending a for-profit college are low-income people, people of color, and veterans. According to a 2014 report from the Center for Responsible Lending, 35 percent of Black students took out $8,900 or more in federal loans for for-profit colleges in the 2011–12 academic year, compared to 19 percent at public universities.

Veterans have also been targeted by for-profit colleges. For-profit colleges rely on federal student aid for revenue, but military education benefits do not fall under that category, leading to a problematic loophole that encourages for-profit colleges to target veterans. Many veterans have pushed for greater regulation of predatory for-profit colleges.

Tressie McMillan Cottom, author of Lower Ed, which focuses on how the for-profit college industry uses economic inequality to its advantage, told NPR this year that the reason so many victims of for-profits are low-income people is because these institutions want to recruit students who qualify for the maximum amount of student aid.

“That happens to be the poorest among us. And because of how our society is set up, the poorest among us tend to be women and people of color,” Cottom told Gross.


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