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U.S. Secretary of Education Backs For-Profit Schools Over Protecting Students Loan Debtors

By on July 11, 2017

There is a big difference between adjusting rules and regulations to help student loan debtors buried in federal government loans find any hope of a better future, and what is happening now at the Department of Education.

It certainly seems that at every turn and opportunity U.S. Secretary of Education Betsy DeVos is gutting and striping protections and using U.S. tax dollars to do it.

On July 1, 2017, after many years of work on a new rule, the Department of Education was scheduled to make effective these changes that would have protected students from more fraud and abuse by for-profit schools. This was part of the regulations that related to the Gainful Employment and arbitration elmination rules and the Borrower Defense to Repayment program, which is terrible mess.

On May 24, 2017 the California Association of Private Postsecondary Schools (CAPPS) sued the Department of Education over these new rules going into force. And instead of dealing with the suit the Department of Education used it as an excuse to roll back the implementation of these new student loan debtor protections and start over again.

Secretary DeVos said, “Since their creation under the previous administration, Gainful Employment regulations have been repeatedly challenged by educational institutions and overturned by the courts, underscoring the need for a regulatory reset,” said Secretary DeVos. “We need to get this right for our students, and we need to get this right for our institutions of higher education. Once fully implemented, the current rules would unfairly and arbitrarily limit students’ ability to pursue certain types of higher education and career training programs.”

The official announcement from the Department of Education completely disregarded the value and need for the student loan debtor protections that were to go into place. Industry over students it seems. The new Trump Department of Education labeled the student loan debtor protections as “overly burdensome.”

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On June 16, 2017 the Department of Education published a new rule “delaying the effective date for many of the Borrower Defense Regulations’ provisions “pending judicial review” in the litigation brought by CAPPS.”

A lawsuit filed by Julie A. Murray of the Public Citizen Litigation Group on behalf of students negatively impacted by this delay said the outright delay in the rules “swept more broadly than the focus of the CAPPS litigation, postponing the effective date of provisions that were not the subject of CAPPS’ specific challenges.” – Source

When a number of States wanted to intervene in the suit leveled by CAPPS, the Department of Education spent U.S. tax dollars to tell the States to go away rather than help in the action to try and reduce student loan debtor protections. The Acting Assistant Attorney General Chad Readler said in court documents he “respectfully request that the Court deny the motion to intervene.” – Source

Why wouldn’t the Department of Education accept the additional help to erode or delay student loan debtor protections? Post your opinion in the comments below.

The Chicago Sun Times editorial board picked up on these issues as well. The paper said, “Since moving into the job in February, DeVos has been busy siding with the for-profit career college industry and against students. It would be one thing to tweak the rules to make them fairer to both schools and students. But DeVos appears intent on returning to the days when too many students got an unwelcome introductory course in Fraud 101.”

The impact of the delay in these new rules seems like a colossal waste of government resources which were invested in years to craft the scheduled rules with over 10,000 public comments. It has all been tossed out the window.

The suit filed by Public Citizen against Betsy DeVos and the U.S. Department of Education demonstrates how students are harmed by the total delay of this rule. The key issue in this lawsuit is the delay in implementing the rule also leaves in place the binding of debtors to arbitration agreements in school contracts. The students named in the suit were expecting the long planned rules to go into force on July 1 so they could file their suit against New England Institute of Art and Education Management Corporation.

About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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