Loan for­give­ness de­lays hurt­ing for­mer stu­dents

The Palm Beach Post - - HURRICANE IRMA - 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.

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 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 Jr., a for­mer as­so­ciate dean at DeVry Univer­sity, as head of the depart­ment’s en­force­ment unit. She also 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 get­ting 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.

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 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. “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.

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.”

The Obama ad­min­is­tra­tion went hard af­ter for­profit 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 more than 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. 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 for-profit schools over stu­dents,” Mas­sachusetts At­tor­ney Gen­eral Maura Healey told re­porters at the time.

“It seems more like they are try­ing to pro­tect the in­dus­try than try­ing to help bor­row­ers,” said Clare McCann, deputy di­rec­tor for fed­eral higher ed­u­ca­tion pol­icy with New Amer­ica, a Wash­ing­ton-based think tank.

Ed­u­ca­tion Sec­re­tary Betsy DeVos ac­cused of de­lays.

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