Tens of thou­sands

DOE de­lays 65K loan for­give­ness bids, rewrites rules on for-profit col­leges

Orlando Sentinel - - FRONT PAGE - By Maria Danilova

of for­mer stu­dents who say they were swin­dled by for-profit col­leges are left in limbo as the Trump ad­min­is­tra­tion de­lays ac­tion on re­quests for loan for­give­ness, ac­cord­ing to doc­u­ments re­cently re­vealed.

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 the in­dus­try.

The for-profit col­leges have found al­lies in the new ad­min­is­tra­tion and Pres­i­dent Don­ald Trump, who ear­lier this year paid $25 mil­lion to set­tle charges his now-de­funct Trump Univer­sity mis­led cus­tomers.

In Au­gust, Ed­u­ca­tion Sec­re­tary Betsy DeVos picked Ju­lian Schmoke Jr., 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.

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.

But Di­ef­fen­bacher says the de­lay is cost­ing her fam­ily dearly.

“They should be pro­tect­ing the stu­dents, be­cause stu­dents were led to be­lieve they were pro­tected,” she said in an in­ter­view. “And they are not, they are pro­tect­ing Corinthian Col­leges and for-profit schools.”

Alec Harris, a lawyer with Le­gal Ser­vices Cen­ter of Har­vard Law School who is rep­re­sent­ing Di­ef­fen­bacher, said the in­ac­tion 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.

The Obama ad­min­is­tra­tion went 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.

DeVos is work­ing on rewrit­ing two Obama-era reg­u­la­tions that were meant to pre­vent col­leges from mis­rep­re­sent­ing their ser­vices to stu­dents and from fail­ing to pro­vide them with an ed­u­ca­tion that would en­able them to find jobs.

In an in­ter­view with the AP last month, DeVos said, “Let’s be clear, no stu­dent should be de­frauded, and in case of fraud there should be rem­edy. But we also know this ap­proach has been un­evenly ap­plied, and if there’s go­ing to be reg­u­la­tion around some in­sti­tu­tions we be­lieve it needs to be fairly ap­plied across the board.”

Demo­cratic at­tor­neys gen­eral from 18 states and the District of Columbia filed suit against DeVos in July over the rules, which were fi­nal­ized un­der Pres­i­dent Barack Obama and sched­uled to take ef­fect July 1.

“Since Day One of the Trump ad­min­is­tra­tion, Sec­re­tary of Ed­u­ca­tion Betsy DeVos and the ad­min­is­tra­tion have sided with for­profit schools over stu­dents,” Mas­sachusetts At­tor­ney Gen­eral Maura Healey told re­porters in July.

DeVos’ an­nounce­ment about the Schmoke hir­ing was met with crit­i­cism by Democrats. Sen. Chris Mur­phy of Con­necti­cut tweeted, “This is a joke, right?”

The department de­fended its de­ci­sion, say­ing Schmoke served only in an aca­demic ca­pac­ity at DeVry and was not in­volved in ad­mis­sions.

“They are pro­tect­ing Corinthian Col­leges and for-profit schools.” — Sarah Di­ef­fen­bacher, for­mer stu­dent await­ing loan for­give­ness


Ed­u­ca­tion Sec­re­tary Betsy DeVos said for­profit col­leges need to be treated fairly.

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