Today, Betsy DeVos and the U.S. Department of Education issued a new rule that will remove significant protections for students taken advantage of by predatory for-profit colleges. The proposed regulation rewrites a set of 2016 rules put in place by the Obama administration after the widespread closures of for-profit chains like Corinthian and ITT Tech. The Obama administration’s 2016 rules clarified how victims of illegal scams perpetrated by predatory colleges could follow a “borrower defense” Department of Education process to get their student debt discharged.
In 2017, the Trump administration decided to ignore the months of public negotiations and public comment periods undertaken just a year earlier: they first delayed the Obama-era regulations (a legally questionable move), and then, after stocking the Department of full of former for-profit college executives, re-ran the regulation drafting process. Today’s rewritten rule is draconian: each proposed change from the 2016 rule can only be described as (a) making life easier for predatory schools who might otherwise be on the hook to pay these claims, and (b) making life harder for students trying to get relief after their schools lied to them.
DeVos Policy #1: Make it harder for victims of scams to get into court.
The internal Department “borrower defense” process aside, the 2016 rule banned schools receiving Title IV dollars from forcing students to sign away their legal right to sue schools when signing college enrollment contracts, which for-profit colleges would do by including mandatory arbitration clauses and prohibitions on class action lawsuits. The new regulations reverse that ban, making it harder for students to exercise their legal rights and limiting litigation that might unearth evidence of the kind of misrepresentation described below.
DeVos Policy #2: Force students into default before they can apply for debt relief.
For students who already have debt, the Department would require that any individual who believes they were preyed upon by their school, misled or even defrauded, must have their loans in collection—where wages and Social Security may be garnished, credit can be ruined, and balances can explode with additional collection fee charges—in order to even apply for borrower defense. In other words, borrowers will have to follow a path toward financial ruin just to receive the forgiveness they are legally obligated to receive due to illegal, predatory behavior on the part of these schools. For students taking on loans going forward, the Department has proposed two alternative versions of the rule, one which would require default and one which would not.
DeVos Policy #3: Make it harder for students to show they should get relief (and, in doing so, let wrongdoers pocket more profits).
The proposed rule makes it much harder for someone in debt to show they should get relief: it removes a breach of contract, or the existence of a court judgement for breaking the law, as a way for a student to show they are entitled to relief. It also says that a student’s reasonable reliance on a substantial misrepresentation is not enough. Instead, a borrower would have to show that the school knew the information they provided to students was false or misleading, or that the school had reckless disregard for the truth. How would a student gather the facts to prove those things, unless they had the uncanny foresight that they would get scammed? It would be extremely difficult.
The DeVos Department is also considering upping the burden of proof to a “clear and convincing” evidence standard for students not in default—if they let non-defaulted borrowers apply for relief at all.
DeVos Policy #4: Add new process hurdles that will effectively place relief out of reach for thousands of students.
In the 2016 rule, if the Education Department had evidence that an entire group of borrowers were mistreated due to widespread, known misconduct at a school, they could use a group discharge process that would efficiently provide relief to members of that group. Instead, the Department is now requiring each former student to separately and individually show misrepresentation. The rule also ends the process for ensuring the Department automatically discharges loans when a school has closed and requires students to go through an individual process. Finally, after a borrower brings evidence in their individual case, the Department will share that evidence with the school and ask for response—but the student will not necessarily see the school’s response.
The new process and the heightened burden of proof combined require, at best, a skilled lawyer—a luxury that most people facing financial hardship cannot afford—and at worst, the uncanny foresight to know you were being scammed and then somehow gathered real-time proof to demonstrate the school’s intent.
DeVos Policy #5: Threaten students with retaliatory tactics like transcript withholding.
If any student is dogged enough to attempt all this—to prove things that are extremely difficult to prove—the new policy cruelly codifies the ability of schools to withhold or refuse to verify their transcripts.
It doesn’t get much more anti-student than that.