Big holdup for claims against for-profit schools

Trump re­view tak­ing months, put­ting ex-stu­dents at risk

Houston Chronicle - - NATION - By Maria Danilova

WASH­ING­TON — Tens of thou­sands of for­mer stu­dents who say they were swin­dled by for-profit col­leges are be­ing left in limbo as the Trump ad­min­is­tra­tion de­lays ac­tion on re­quests for loan for­give­ness, ac­cord­ing to court doc­u­ments ob­tained by the As­so­ci­ated Press.

The Ed­u­ca­tion Depart­ment is sit­ting on more than 65,000 un­ap­proved claims as it rewrites Obama-era rules that sought to bet­ter pro­tect stu­dents. The re­write had been sought by in­dus­try.

The for-profit col­lege in­dus­try has found an ally in Pres­i­dent Don­ald Trump, who ear­lier this year paid $25 mil­lion to set­tle charges his Trump Univer­sity mis­led cus­tomers. And it’s yet an­other ex­am­ple of the Trump ad­min­is­tra­tion hir­ing of­fi­cials to over­see the in­dus­tries where they had worked pre­vi­ously.

In Au­gust, Ed­u­ca­tion Sec­re­tary Betsy DeVos picked Ju­lian Schmoke, a for­mer as­so­ciate dean at DeVry Univer­sity, as head of the depart­ment’s en­force­ment unit. She also has tapped a top aide to Florida’s at­tor­ney gen­eral who was in­volved in the de­ci­sion not to pur­sue le­gal ac­tion against Trump Univer­sity to serve as the agency’s top lawyer. More than 2,000 re­quests for loan for­give­ness are pend­ing from DeVry stu­dents.

Six months to de­cide

The Obama rules would have for­bid­den schools from forc­ing stu­dents to sign agree­ments that waived their right to sue. De­frauded stu­dents would have faced a quicker path to get their loans erased, and schools, not tax­pay­ers, could have been held re­spon­si­ble for the costs.

Now, in a fil­ing in fed­eral court in Cal­i­for­nia, act­ing Un­der­sec­re­tary James Manning says the depart­ment will need up to six months to de­cide the case of a for­mer stu­dent at the now-de­funct Corinthian Col­leges and other cases like hers. Sarah Di­ef­fen­bacher, a sin­gle mother of four from Cal­i­for­nia had taken out $50,000 in stu­dent loans to study to be­come a para­le­gal, but then couldn’t find a job in the field, de­faulted on her debt and could face wage gar­nish­ment.

“ED will be able to is­sue a de­ci­sion with re­gards to Ms. Di­ef­fen­bacher’s Bor­rower De­fense claims within six months, as part of a larger group of Bor­rower De­fense de­ci­sions re­gard­ing sim­i­lar claims,” Manning wrote to the court on Aug. 28.

Depart­ment spokesman Liz Hill said the agency is work­ing to stream­line the process and re­solve the claims as quickly as pos­si­ble. “Un­for­tu­nately, the Obama ad­min­is­tra­tion left be­hind thou­sands of claims, and we will need to set up a fair and eq­ui­table sys­tem to work through them,” she said.

She said stu­dents with claims pend­ing are not re­quired to make pay­ments on their loans.

But Alec Har­ris, a lawyer with Le­gal Ser­vices Cen­ter of Har­vard Law School who is rep­re­sent­ing Di­ef­fen­bacher, said the de­lay could put his client and her chil­dren on the street.

“This is a Depart­ment of Ed­u­ca­tion that has seem­ingly sided with in­dus­try and stacked the deck against for­mer stu­dents of preda­tory for-profit schools ev­ery step of the way,” Har­ris said.

Reid Set­zer, govern­ment af­fairs di­rec­tor for Young In­vin­ci­bles, an ad­vo­cacy and re­search group, said the depart­ment’s de­lay is harm­ing thou­sands of stu­dents.

“It’s kind of ridicu­lous,” Set­zer said. “There have been mas­sive de­lays since the change of ad­min­is­tra­tion.”

Obama took tough stance

The Obama ad­min­is­tra­tion went hard af­ter for-profit col­leges that lured stu­dents into tak­ing big loans with false promises. Chains in­clud­ing Corinthian Col­leges and ITT Tech­ni­cal Institute were forced to close, and Obama’s Ed­u­ca­tion Depart­ment ap­proved about $655 mil­lion in loan can­cel­la­tions for their stu­dents.

Un­der DeVos, no claims have been ap­proved since she came to of­fice seven months ago, ac­cord­ing to Manning’s July re­sponse to ques­tions from Demo­cratic Sen. Dick Durbin of Illi­nois, who is part of a group of law­mak­ers pres­sur­ing her to ac­cel­er­ate the process. The depart­ment is in the process of dis­charg­ing loans for claims that had been ap­proved by the pre­vi­ous ad­min­is­tra­tion.

Among the claims still pend­ing are more than 45,000 filed by Corinthian stu­dents and over 7,000 by ITT stu­dents.

Manuel Balce Ceneta / As­so­ci­ated Press

Sarah Di­ef­fen­bacher is among stu­dents and ex-stu­dents who claim to have been de­frauded by for-profit col­leges and may have to wait up to six more months for claims to be re­solved.

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