Betsy DeVos Really Really Really Really Really Hates Loan Forgiveness.
Peter GreeneSenior Contributor
I look at K-12 policies and practices from the classroom perspective.
WASHINGTON, DC - DECEMBER 12: U.S. Secretary of Education Betsy DeVos testifies during a hearing ... [+] before House Education and Labor Committee December 12, 2019 on Capitol Hill in Washington, DC. The committee held a hearing on "Examining the Education Department's Implementation of Borrower Defense." (Photo by Alex Wong/Getty Images)
This week there's a new chapter in the long saga of Betsy DeVos's fight against loan forgiveness for students bilked by fraudulent for-profit colleges. To get us up to date, let's take a quick look at the whole sad tale.
It actually begins during the Obama administration, when Corinthian College, a chain of for-profits found themselves in trouble. They were following the standard model of using students as conduits for delivering federal loans, emphasizing recruitment over actual education, and leaving students holding a big bag of debt. When the feds announced in 2014 that they were going to get tough with such operations, Corinthian rose to the top of the list, chased by many, many state att0rney generals. They were in financial trouble as well, unable to pay faculty (but somehow able to pay lobbyists). By 2015 they were done, but they left behind a group of students who declared they would not pay back loans they took as victims of fraud.
It was an ugly, tangled mess. One of the results was the issuing of new borrower defense on repayment rules, clarifying that students who had acquired debt via loans taken out to attend fraudulent colleges should have some measure of loan forgiveness.
Those rules were set to take effect on July 1, 2017. But by then, Betsy DeVos was secretary of education, and she hated them. She said they entitled anyone who complained to "free money." When she had to sign off on settlements approved by the previous administration, she added the words "with extreme displeasure" to her signature. She claimed that the previous administration had clearly intended to just hand out money without any due diligence, although internal memos later showed that the department had put considerable study into the cases.
Before they could kick in, DeVos announced that she would suspend the rules until she had the chance to rewrite them. Immediately, eighteen states and the District of Columbia sued the department to have the rules put to work.
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The Corinthian students sued the department for continuing to collect on their loans even though an injunction had directed her to stop. The department admitted that they had "accidentally" collected on 16,000 loans; the court slapped the department and DeVos with a contempt citation and $100,000 fine, and some pointed words from Judge Sallie Kim ("I'm not sending anyone to jail yet, but it's good to know that I have that ability.") That was in October; in December, the department admitted that they had violated the injunction not for 16,000 students, but for 45,000. Just a paperwork accident.
In 2018, a federal judge in DC ruled that the continued stalling was unlawful and directed DeVos to get rules in place and get the process rolling again.
When DeVos finally rolled out her new rules, she bragged that they would save the government $11 billion dollars. That was because so little forgiveness would be given. Critics such as Douglas Webber (Temple University Department of Economics) found the formula to be "nonsensical and harmful to students." It involved a formula used to determine if the student had suffered actual economic harm, and offered only partial forgiveness of loans. In hearings about the new rules, Rep. Lori Trahan demonstrated that it was mathematically impossible for many students to ever win forgiveness. The rules were so egregious that they actually sparked a bipartisan move in the Senate to overturn them.
DeVos has continued to battle against loan forgiveness for defrauded students. She has argued that forgiveness should only apply to those who have suffered real financial harm, as if the loss of time, effort, and good credit are immaterial if someone is still getting some sort of paycheck.
She proposed making that Federal Student Aid be separated from the education department; critics immediately suggested that this was simply a move to prevent a future President or secretary of education from forgiving the loans.
In 2019, over 160,000 borrowers sued the department for stonewalling their applications for forgiveness; at the time, no decision on any application had been issued in a year. In April of this year, a settlement was reached in which the department promised to start working on the applications. That should have been the end of it; instead, last week DeVos was lambasted by yet another federal judge (she has spent much of her tenure on the wrong side of federal judges). Judge William Alsup described the process as "disturbingly Kafkaesque," with 94% of applicants being rejected. The rejection letters are supposed to contain specific directions for appeal. Said Alsup, who has now voided the April agreement based on this new information, the department, after months of inaction, "charged out of the gate, issuing perfunctory denial notices utterly devoid of meaningful explanation at a blistering pace." One might conclude that DeVos, having read the Presidential election polls, has decided to shut out all these applicants for "free money" before a new administration can come in to take a more forgiving approach.
There was more news this week. In June of this year, a whistleblower came forward with the news that department leadership had scrapped the planned portion of the website for those seeking loan forgiveness— because it provided too much information and made forgiveness too easy to get. The complaint zeroed in on Diane Auer Jones, formerly an executive with another shady for-profit college chain. The department denied that they had done anything to slow down implementation of the website, but this week House Democrats released documents and e-mails showing that the department had in fact halted creation of the website.
The DeVosian distaste for loan forgiveness has not been limited to students defrauded by predatory colleges. In 2007, a loan forgiveness program was set up for those who chose to go into public service; under DeVos, 99% of those applications were denied. And in March of this year she was sued yet again, this time for continuing to garnish wages for student loans at least a full month after the CARES Act suspended any such activity.
Perhaps DeVos's hard line with debtors is, as some critics suggest, reflective of her ties to the student debt collection industry. But a long-time DeVos watcher might also conclude that is simply ideological. As she told the House Education Committee at a hearing late last year,
I understand that some of you here just want to have blanket forgiveness for anyone who raises their hand and files a claim, but that simply is not right.
The many defrauded debtors are not just people who lined up for free money. Predatory colleges prey on those who are struggling to make ends meet and looking for a path to a better, more secure life. Instead, they've ended up with no path to that better life, and now they're weighed down with debt as well. In too many cases they were lied to, fleeced by folks who were getting paid a commission for every student they could recruit with a backpack full of federal loan dollars.
For DeVos, these are people trying to cheat the system and skip out on their legitimate debt. Trust that if voters eject DeVos and her boss next week, she will still do her best to make sure that few of them get their hands on any of that "free money." And if she is somehow back in office, she will find a way to stall this process for four more years.
Peter Greene
I spent 39 years as a high school English teacher, looking at how hot new reform policies affect the classroom.