Democrats vote to overturn Betsy DeVos rules on student debt


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The House Labor and Education Committee voted on legislation Thursday that would overturn Education Secretary Betsy DeVos’ new policy on student debt discharge that goes into effect on July 1st, 2020.

The Democrats’ legislation would reinstate Obama-era rules, which provided relief for students who were defrauded by for-profit colleges and ended up bearing student loans to that school. Since assuming her position, Secretary DeVos has “openly refused to implement the Borrower Defense rule, which has left hundreds of thousands of defrauded borrowers waiting for relief,” the Democrats stated.

While it’s unlikely that Democrats’ legislation will become law — after it passes the House, it needs to pass the Senate and be signed into law by the President, which has already been dismissed by the White House — House Education and Labor Chairman Bobby Scott said it is ultimately a meaningful exercise: “It is a statement, and it gives opportunity to debate the regulation in a way that ... people don’t know about it.”

In an interview with Yahoo Finance, Scott added that “this new regulation on student loans … is so outrageous that I think it cannot go without comment,” and questioned ED’s unwillingness to act. “How long does it take to get this thing straight?” he asked. “We’ve applied as much pressure as we can — I mean, you’d think they’d function. … There’s no sense of urgency.”

‘Education is a national priority’
The Democrat-controlled committee has voted to reverse DeVos’ policy regarding the Obama-era Borrower Defense Rule, using the Congressional Review Act. Republicans, meanwhile, argued for the administration position.

“President Obama’s … flawed borrower defense regulations abandoned due process and limited student choice,” Rep. Virginia Foxx (R-NC) said on the House floor. “They want to actually harm the students they claim they want to help.”

Noting a major incident last year, when U.S. Magistrate Judge Sallie Kim in San Francisco held DeVos in contempt of court for violating an earlier order to stop collecting to stop collecting on loans from former students of a collapsed for-profit chain, Democrats stressed that DeVos “still refused to provide defrauded borrowers the relief they desperately need.”

Democrats added that instead, the department had come up with a new rule in August last year that was way more complicated and much more restrictive.

According to a report by the nonprofit Institute for College Access & Success, 53% of defrauded students’ debt were forgiven under Obama-era rules. That number fell to just 3% in DeVos’ term.

Congressional Review Act
Democrats are operating under the Congressional Review Act (CRA), which stems from a 1996 law that grants Congress extensive power to invalidate rules that federal agencies establish. If the effort is ultimately successful, it will also make it more difficult for future administrations to try the same policies again.

“The CRA is a rarely-used vehicle with its own set of rules,” Megan Coval, vice president of policy and federal relations at the National Association of Student Financial Aid Administrators (NASFAA), told Yahoo Finance. Coval added that the last time it was used was in 2017 “to prevent the implementation of the Obama-era Teacher Prep regulation.”

Getting Borrower Defense to the finish line during the middle of Trump’s term was going to be a little more challenging, Coval noted.

“Upon expected passage in the House, the resolution will head to the Senate, where it will only require a simple majority to pass,” Coval explained. “The chances of passage are less clear in the Senate, but President Trump has already indicated he would veto the resolution if it made it to his desk.”

DeVos accused of making life ‘intentionally difficult’ for defrauded students
According to the House, DeVos’ rule on Borrower Defense makes it “intentionally difficult” for defrauded students to get debt relief, and also allows schools to use mandatory arbitration agreements so that students can’t get “the relief they deserve.”

Additionally, they stated that DeVos had overturned an Obama-era rule that forced schools facing allegations of widespread fraud to intentionally set aside money, so that in case of a shutdown, they’d be able to cover the cost of debt relief.

But based on their analysis of ED’s data, the schools didn’t follow the rule, and hence the maximum burden for debt relief would fall on taxpayers.

In the meantime, borrowers like Chicago native Keishana Mahone are stuck with not just the bill, but also an incomplete degree.

Mahone, who is in her 40s, had attended the shuttered for-profit Illinois Institute of Art, hoping to study graphic design. A year in, she found out her school was closing. “When I first found out about it, I was devastated,” Mahone told Yahoo Finance in an interview. “There's really no other words to describe it … It blindsided me.”

Looking back at the day, “the devastation that I saw at the school when they announced the closing my friends, my classmates, were literally sitting on the floor crying,” described Mahone. “[We were] really just in a state of shock, not knowing what to do, running around like chickens with their heads cut off. That was the vision of that day.”

While she had a few thousand dollars in student debt, her bigger issue was that all the credits she had taken at the Art Institute weren’t of equal value at another college. The non-transferability was disappointing, she added.

Mahone, who is part of a lawsuit against the Education Department and Betsy DeVos filed with several others, said that at the end of the day it wasn’t about the money — it was about lost opportunities.

“This could not happen to anyone else… I'm so steadfast and trying to work against this and to fight against this is because my heart really goes out to people do this has happened to,” she said. People have “gotten completely discouraged with the the Department of Education and how things are handled. …

… People already don't trust college, they already don't trust the educational system. They think that it's a gimmick, and that it's a scam... and when things like this happen, it kinda proves them right.”


Staff member
Help me here. Why would it be the wrong thing to help students who were defrauded and are bearing student loan debt unjustly?


Well-Known Member
Help me here. Why would it be the wrong thing to help students who were defrauded and are bearing student loan debt unjustly?
I was thinking the same thing reading through the article. Some of those schools are unscrupulous ,especially if the students are not able to transfer credits earned to another program/college. Maybe looking into the persons running the defunct Illinois Institute of Art would be more appropriate. :confused


Well-Known Member
I'm not sure, myself. I just don't trust the left to actually "help" anyone. Most of the time I find them just giving handouts. One would have to look at the actual situation case by case to know for sure.


We trust you Jesus, you are the only King forever!
Maybe there is something written into the law that benefits entities other than students, just thinking out loud here.

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Through Faith in Jesus
What a tough situation for these kids. And, what unscrupulous schools and institutions! Of course they didn't follow rules about setting aside money in case they folded. They were already being unscrupulous. I wonder.....was there an accountability process set up to make sure setting aside money was actually happening? Obviously this didn't solve the problem.

It would be nice if these kids could be helped some how along with more accountability for "schools" to be on the up and up. I wonder if the kids could show their understanding of a subject to the satisfaction of a real college to somehow gain credit in exchange for commitment to entering a real college for education? A sort of grace card, or special grant put into place to allow kids to earn credit for the classes they thought they were getting credit for and then fold them into their programs?

I wonder if there's more information not shared in this article.

Well, I did find something of interest that might give perspective. It sounds like DeVos explored how to implement a process of providing debt relief and also who really needed it. If I'm reading this correctly, if it's discovered that the education received at these institutes has earned people money at level or higher as other comparable programs then it's not deemed that this person is suffering damage. However, if a person is earning lower wages than those from comparable programs then it is deemed that this person did suffer damage.

It seems that there has been need to filter out false claims and those who are ineligible for relief.

The Trump administration has announced a new plan for how it will process a backlog of more than 210,000 claims for student loan forgiveness from borrowers defrauded by for-profit colleges – a new strategy that includes a formula that will provide only partial relief to the majority of them.

"We cannot tolerate fraud in higher education, nor can we tolerate furiously giving away taxpayer money to those who have submitted a false claim or aren't eligible for relief," DeVos said in a statement issued Tuesday. "This new methodology treats students fairly and ensures that taxpayers who did not go to college or who faithfully paid off their student loans do not shoulder student loan costs for those who didn't suffer harm."

....The new methodology uses various publicly available earnings data to compare median earnings of graduates who have made borrower defense claims to the median earnings of graduates from comparable programs. If the median earnings from the school in question are lower than the median earnings for that program at all comparable schools, then the applicants will be determined to have suffered harm and will receive student loan relief – either in full or in part, depending on how much lower the median earnings are.
Notably, the department said it plans to award no less than 10% relief to all eligible borrower defense applicants who attended a program at the now-shuttered for-profit giant Corinthian Colleges, regardless of the median program earnings comparison.

Jones said that department officials rendered a large portion of the first batch of claims ineligible for relief for a number of reasons, including, among others, that the applicants did not have a federal loan related to the claim or that the applicants didn't make an allegation or provide sufficient evidence that the institution violated an applicable state law.
"The numbers are a little bit still flexing," she said. "The majority of them will be ineligible.".....
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