Student debt has Trump in new bind
Siding with DeVos on loan forgiveness could enrage vets
WASHINGTON — Amid mounting coronavirus deaths, a faltering economy and slipping poll numbers, President Donald Trump faces a fresh dilemma with possible consequences for his reelection: Should he stand by his education secretary’s efforts to roll back loan forgiveness for students bilked by their colleges?
On Tuesday, House Speaker Nancy Pelosi sent Trump Congress’ bipartisan resolution to overturn an Education Department rule that would make it considerably harder for students to have their federal loans forgiven, even if they could show they were victims of unscrupulous universities.
If the president signs it, he will hand Secretary Betsy DeVos a humiliating defeat, the first reversal of a major Trump administration regulation. If he vetoes it, he stands to enrage veterans groups that have come out against DeVos’ loan-forgiveness policy — and whose favor he has long courted.
“I’m truly proud to be a veteran today,” said Tasha Berkhalter of Lima, Ohio, a veteran whose degree from a for-profit college proved worthless after it went bankrupt. “I hope President Trump shows people that after service, we still matter.”
The rule, finalized by the Education Department in September, toughened standards established under the Obama administration for student borrowers to prove their colleges defrauded them and to have their federal loans erased.
The rule is scheduled to take effect July 1 — if Trump allows it.
The Senate gave final passage to the measure overturning the rule in March, though the pandemic delayed Pelosi from sending it to Trump.
In a tweet announcing that she had sent the resolution, Pelosi said it would “protect tens of thousands of defrauded students, many of whom are hurting now more than ever.”
Pelosi, D-Calif., urged the president to sign it “without delay.”
Trump has wavered. The White House’s statement of administration policy, issued in January before Congress voted to overturn it, said the regulation would restore “due process, the rule of law and student choice,” and that the president’s advisers had recommended a veto.
But Trump told Republican senators in March he was “neutral” on the rule.
The resolution hands Trump a dilemma.
He has highlighted his commitment to veterans and military service members, and last year announced that he would forgive loan debt for permanently disabled veterans.
But several veterans groups led the effort to persuade Republicans in the Senate to vote against one of the administration’s most significant policies for student borrowers. Ten Republicans joined Democrats to secure Senate passage, 53-42.
“With a bipartisan vote in both the Senate and the House of Representatives, it is clear the support of Congress for veterans, service members, and their families and survivors stands above partisan politics,” 34 groups wrote in a letter to Trump, including Veterans Education Success, Blue Star Families, and Iraq and Afghanistan Veterans of America.
The groups began running a television ad during Fox News shows this week, pleading with the president to sign the resolution.
The little-known loan forgiveness rule gained recognition when the Obama administration used it to extend debt relief to tens of thousands of students affected by the implosion of two large for-profit college chains, Corinthian Colleges and ITT Tech, in 2015 and 2016. The Education Department determined both chains had used deceptive recruiting tactics and that many of their former students should have their debts eliminated.
Veterans have long been considered among the groups most vulnerable to predatory recruitment tactics because of their lucrative G.I. Bill benefits. The benefits are particularly attractive to for-profit schools, because federal law requires those schools to obtain at least 10% of their revenue from sources other than Education Department-backed student loans. G.I. Bill benefits help schools meet that quota.
DeVos said that the Obama-era rules amounted to “free money,” and the previous administration lacked the infrastructure to process claims in a way that was fair to students, schools and taxpayers. Her changes raised the bar for borrower relief claims, requiring applicants to individually prove that a school knowingly misled them and — even if students were bilked — that they were financially harmed by the deception.
They also set a threeyear deadline on claims.
The effort to repeal the rule drew even nonpartisan groups like the American Legion, which represents 2 million members, into the fight.
In a letter, the legion’s national commander, James W. Oxford, said the rule was “fundamentally rigged against defrauded borrowers of student loans.” He said thousands of student veterans over the years had been “promised their credits would transfer when they wouldn’t, given false or misleading job placement rates in marketing, promised one educational experience when they were recruited, but given something completely different.”
“This type of deception against our veterans and service members has been a lucrative scam for unscrupulous actors,” he wrote.
In the minutes after the Senate took its vote, Berkhalter did what she has done often in the past decade when discussing her student loans: She wept.
Berkhalter served in the Army as a motor transportation specialist for five years before she was honorably discharged for medical reasons in 2005.
The same desire to “try to make things right, and put away the bad guys” that led her to the military also made her jump at the opportunity to attend ITT Technical Institute in 2006 to study criminal justice.
Well before she graduated in 2010, she had unanswered questions about ITT’s promised but nonexistent “high tech” equipment and outdated books. An admissions officer at another school warned that her credits would not transfer. ITT officials asked her to take out loans to front the cost of her tuition while they “waited” for her G.I. Bill check, then requested she take out more loans to cover inexplicably rising costs.
“They were very convincing. I was too trusting,” she said.
After graduation, she could see her dream job.
She was on a tour of a mental health treatment center for criminals where she was interviewing for a new job as a case manager, and her would-be bosses showed her a small corner office with a window that would be hers.
By the time she had gotten to her car, they called and offered her the job.
The next day, the offer was rescinded when the company said it could not honor a degree from ITT Technical Institute.
Berkhalter had completed four years of school, culminating in a 40-page thesis and a 25-minute presentation, and a certificate saying she had earned Bachelor of Science. Her $75,000 in G.I. Bill funds were gone.
“But it was all for a degree that no one takes seriously,” Berkhalter said. “Whenever I told employers where I attended, I was shown the door.”Today, Berkhalter owes nearly $100,000.
At times, she said, she has struggled to feed her children more than eggs and hot dogs. She stays home with her daughter, who was born with hip dysplasia, because she said she could not afford day care. Her husband’s salary barely covers the bills, and they rely on government assistance.
The family of six prays before they get into their 17-year-old vehicle, which seats four.
Berkhalter has a loan forgiveness application pending at the Education Department, which she said she hoped would give her another shot at a degree, and give her children a better life.
“It would be life-changing,” she said, “to have that cloud removed from over my head.”