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Students Defrauded by For-Profit Colleges Get Help from Court Ruling!

Dear Commons Community,

A federal judge has ruled that Education Secretary Betsy DeVos’ move to ease protections for former students of for-profit colleges should be reversed, handing a victory to those who said they were defrauded by their schools.  But U.S. District Judge Randolph Moss put his ruling on hold for 30 days, giving the Education Department and others a chance to respond. 

Moss had ruled last week that DeVos’ decision to freeze Obama-era protections for defrauded students was illegal. But he went a step further and said the regulation needs to be voided.

The lawsuit was lodged by students defrauded by for-profit schools and Democratic attorneys general from 19 states and the District of Columbia.

Toby Merrill, director of the Project on Predatory Student Lending at Harvard University, which is representing the students, hailed the decision.

“Students are continuing to push back and win against the department’s unfair and corrupt policies,” Merrill said. “We are one step closer to these important provisions taking effect.”

A New York Times editorial this morning commented (see below) on the ruling and concluded:

“Ms. DeVos and her cronies in the for-profit industry seem to think that they can plow ahead with these and other damaging proposals regardless of opposition. But it will not take long before the wider public focuses on the fact that the Education Department is undermining higher education to line the pockets of an industry where schools can get up to 90 percent of their revenue from federal student aid. That position will be difficult to defend at election time.”

Tough words but deserved!

Tony

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Giving the College Profiteers a Free Hand

Students defrauded by for-profit schools can expect no help from Education Secretary Betsy DeVos. But a federal court ruling offers some hope.

By The Editorial Board

Sept. 24, 2018

A federal judge sent the right message last week when he blocked Education Secretary Betsy DeVos’s suspension of an Obama-era rule that allows students defrauded by for-profit colleges to have some or all of their federal student loans forgiven.

This was his second ruling in a suit filed by attorneys general from 19 states who argued that Ms. DeVos had broken the law by delaying the rule from taking effect, and they demanded that it be immediately reinstated. The judge, Randolph Moss of Federal District Court in Washington, had earlier found that Ms. Devos had broken the law, and last week he invalidated Ms. Devos’s attempt to dismantle the rule, but stayed his ruling for 30 days to give the Education Department time to respond. The next step should be to order the department to grant debt relief to the thousands of student borrowers who have applied and are clearly eligible under the original rule.

The rule, known as “borrowers defense,” is rooted in a provision of the Higher Education Act of 1965 intended to lift the debt burdens of students who were misled by their schools. The rule was designed to compel schools to offer a fair education and to refrain from predatory practices — like lying about career opportunities or steering students into ruinously priced loans — that have been well documented over the last decade.

Ms. DeVos has essentially made the Education Department a subsidiary of the for-profit college industry. Republicans in Congress who wish to hide from this issue are being peppered with complaints from constituents victimized by the for-profit schools — particularly veterans, who have been targeted by companies that covet their G.I. benefits.

Ms. DeVos has already proposed tightening loan forgiveness rules to make it virtually impossible for those defrauded by predatory schools to get relief. She has also proposed rescinding the “gainful employment” rule, which enforces a longstanding Higher Education Act requirement that career education programs “prepare students for gainful employment in a recognized occupation.”

The Education Department wants to replace this important rule with additional disclosure requirements — covering debt, expected earnings, completion rates and other measures — that would apply to all colleges. This disregards the breathtaking fraud that has been documented specifically at for-profits — and the fact that their students take on greater debt and are more likely to default on loans.

The department has defended the decision to jettison the employment rule by describing it as a burden to institutions of higher learning. But in a letter this month, the American Council on Education, which represents about 1,700 colleges, argued persuasively that rescinding the rule, instead of perhaps modifying it, would damage the interests of students, colleges and the public. Still others have portended another round of lawsuits by arguing that the decision to rescind is itself unlawful because the Education Department has not disclosed the factual basis of its decision.

Ms. DeVos and her cronies in the for-profit industry seem to think that they can plow ahead with these and other damaging proposals regardless of opposition. But it will not take long before the wider public focuses on the fact that the Education Department is undermining higher education to line the pockets of an industry where schools can get up to 90 percent of their revenue from federal student aid. That position will be difficult to defend at election time.

2 comments

  1. Perhaps more reason why my fantasy of a benevolent federal DOE that looks out for the needy is just that, a fantasy.

    I hope the ruling holds up. I doubt she has a skilled enough staff to offer a valid rebuttal in the next 30 days.