Showing posts with label Borrower Defense to Repayment. Show all posts
Showing posts with label Borrower Defense to Repayment. Show all posts

Wednesday, January 17, 2018

Dept of Ed Puts Fraud First Over Students and Common Sense. Essay by Steve Rhode

By SteveRhode, January 3, 2018

Secretary of Education Betsy DeVos seems to be waging a terrible war against student loan debtors who have been defrauded by their schools in order to extract federal student loan money. Since the Trump administration took over the Department of Education has not actually delivered relief to a single Borrower Defense to Repayment claim. Yet they brag as of December 20, 2017 they have just approved “12,900 pending claims submitted by former Corinthian Colleges, Inc. students, and 8,600 pending claims have been denied.”
Under that Department of Education program the student previously would be forgiven from the student loans obtained by deception and the government would claw back the money the school got.
Most of these claims have been submitted by students of for-profit schools who played fast and loose with their marketing.
But it seems the government is turning its back on students who have been misled by schools to get their student loan money. Not only is the Department of Education changing the rules but they are also proposing rules that students who land better jobs after graduation should not be forgiven from the loans they were defrauded by. Either you are or are not a victim of fraud but the proposed policy create a middle ground where victims get to be only partial victims.
Under the deadline of “Improved Borrower Defense Discharge Process Will Aid Defrauded Borrowers, Protect Taxpayers” the government proposes what they say is more fair. Department of Education Secretary DeVos says “No fraud is acceptable, and students deserve relief if the school they attended acted dishonestly.” But then goes on to say relief is conditional based on gainful employment. – Source

While the Department of Education brags about their recent wave of Corinthian College Borrower Defense to Repayment claims they also disclose “rather than taking an “all or nothing” approach to discharge, the improved process will provide tiers of relief to compensate former Corinthian students based on damages incurred.”

Relief from fraud will be dependent on the current earnings of the victims. Victims earning 70% and above of the income of their peers will only receive a 30 percent forgiveness of the fraudulent student loans. So to be clear, that income test is against the other students who were the victims of the same fraud and not the general population.
As a bonus the Department of Education gives fraud victims this carot “to mitigate the inconvenience for how long it has taken to adjudicate claims, the Department will apply a credit to interest that accrues on loans starting one year after the borrower defense application is filed.”
So the Department of Education will take forever to deal with the forgiveness application and then only tack on a year worth of interest while they drag their feet.
Now to add insult to injury the Department of Education is proposing making it much harder for students to prove they were subject to misrepresentation to induce enrollment in an effort to extract money from students loan debtors.
The proposed forgiveness plan is to eliminate any successful judgment against a school by an Attorney General as proof of deception. Instead the individual student would have to obtain an individual judgment against the school. This would require a legal action that nearly all students would never be able to afford to file. Additionally the defrauded student would have to show clear and convincing evidence they were intentionally misled and that misrepresentation let to monetary harm.
“They’ve made it almost impossible for borrowers to meet the misrepresentation standard by requiring them to demonstrate the intent of the school especially when students don’t have the power of discovery” to examine the inner workings of a school, said Clare McCann, deputy director of higher education policy at New America, who worked on the Obama-era policy. “They took every dial and dialed to the far extreme. It really tries to make [the regulation] as useless as possible.”
Pretty soon we are going to need a Department of Education Victim Helpline to assist people soon to be screwed over by a government department that clearly appears to be putting for-profit colleges first.


*****

Steve's essay was originally posted on The Get Out of Debt Guy web site.
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here. 



Thursday, October 26, 2017

Like a Galapagos tortoise, Education Department ponders debt relief for students victimized by the for-profit colleges

Corinthian Colleges filed for bankruptcy in 2015, and ITT Tech went bankrupt a year later. Together, the two for-profit college companies left more than half a million students and former students in the lurch. Thousands of these victims filed so-called borrower-defense claims with the Department of Education, asking DOE to forgive their student loans on the grounds that they were defrauded.

The Obama administration approved regulations for processing these claims, but Betsy DeVos put them on hold. She was concerned, she said, that the Obama rules might give undeserving students "free money."

Now DOE has approved a panel of 17 experts to overhaul the Obama regulations. According to a story in Inside Higher Ed, the DeVos Department anticipates the new rules won't go into effect until 2019. Under that timetable, defrauded borrowers won't even have an avenue of relief until four years after Corinthian filed for bankruptcy.

Meanwhile, hundreds of thousands of student borrowers who attended one of the Corinthian schools, ITT Tech, and dozens of other dodgy for-profit colleges will be making monthly loan payments for worthless education experiences. Hundreds of thousands of others will put their loans into deferment, which will relieve them from making loan payments but will cause their loan balances to go up due to accruing interest. And thousands more will simply default, which will allow the federal government's sleazy loan collectors to slap on penalties and fees to their loan balances.

But DeVos doesn't give a damn about the carnage wreaked by the corrupt for-profit college industry. In fact, she is doing everything she can to prop it up.

And so, Betsy DeVos, Amway heiress and for-profit co-conspirator, lumbers along like a Galapagos tortoise, oblivious to the misery experienced by millions of student debtors--who are now defaulting at the rate of 3,000 a day.

The DeVos Education Department ponders student-loan debt relief.
References

Danielle Douglas-Gabriel. Former ITT Tech students fight for some money in the company's bankruptcy case. Los Angeles Times, January 3, 2016.

Andrew Kreighbaum. Education Dept. Borrower-Defense Negotiators. Inside Higher Ed, October 26, 2017.

Shahien Nasiripour. Corinthian Colleges files for bankruptcy. Huffington Post, May 5, 2015.

The Wrong Move on Student LoansNew York Times, April 6, 2017.

Tuesday, September 12, 2017

Betsy Devos deserves a Congressional censure: It's nothing personal, Betsy; but you are a disaster

Betsy DeVos, President Trump's Secretary of Education, is a disaster. Month after month, she makes decisions to aid the for-profit college industry at the expense of students who have been swindled by the institutions they attended.

As David Halperin said in a recent essay, DeVos' embrace of predatory for-profit colleges is "breathtaking."  Halperin's indictment of DeVos' performance is comprehensive, and you should read it. Here are a few of the highlights of DeVos' reckless malfeasance:

She rolled back an Obama-era regulation that prohibits the for-profits from inserting mandatory arbitration clauses in their student enrollment agreements.  These clauses prevent defrauded students from suing the colleges that defrauded them and usually prohibit students from banding together to file class action lawsuits.

She set aside a procedure for processing so-called "borrower defense" claims, whereby students can get their student loans discharged on the grounds that they were defrauded by the college they attended.

Under her leadership, the Department has failed to failed (as of July 2017) to process even one of the 65,000 fraud claims that students have filed, including claims filed by students who attended Corinthian Colleges and ITT Tech--two for-profits that filed bankruptcy under a dense cloud of fraud allegations.

DeVos' Department of Education canceled an information-sharing agreement with the Consumer Financial Protection Bureau, an act so irrational that Steve Rhode was prompted to ask whether she was "nucking futs."

DeVos cannot be impeached, because the Constitution only allows impeachment of a cabinet official for "high crimes and misdemeanors;" and I don't think DeVos has done anything criminal. But she certainly deserves to be censured by Congress for conduct that is blatantly contrary to the public interest.

 Wouldn't it be grand if the U.S. Senate formally censured her in a bi-partisan expression of righteous indignation? In my mind's eye, I see Mitch McConnell, Senate Majority Leader, hand-delivering a formal Senate censure resolution.

Perhaps Mitch would borrow a line from The Godfather as he tenders DeVos a blistering condemnation of her public stewardship. "It's not personal, Betsy," McConnell would intone, 'but you're a disater."

It's not personal, Betsy.

References

Collin Binkley. Student-loan forgiveness has halted under Trump, records show. Chicago Tribune, July 27, 2017.

David Halperin. DeVos Embrace of Predatory For-Profit Colleges is Breathtaking. Huffington Post, September 10, 2017.

Andrew Kreighbaum. Few solutions for defrauded borrowers. Inside Higher Ed, June 26, 2017.

Steve Rhode. Is Betsy DeVos Nuckin Futs With Break From Student Loan Debtor Protections? The Debt Out of Debt Guy, September 



Monday, July 3, 2017

Department of Education Punts on Borrower Defense to Repayment Rules. Essay by Steve Rhode



I’m still waiting to be pleasantly surprised by the Trump Department of Education (ED) under Secretary DeVos. It has not happened yet.

From the recent actions to remove critical information from consumer notices to wanting to get a single loan servicer to handle all federal loans, the current incarnation of ED seems to be moving in a direction that provides less support and help for debtors.

On October 2016, the then ED announced new regulations to go into force on July 1, 2017. “The U.S. Department of Education today announced final regulations to protect student borrowers against misleading and predatory practices by postsecondary institutions and clarify a process for loan forgiveness in cases of institutional misconduct. These final regulations further cement the Obama Administration’s strong record and steadfast commitment to protecting student loan borrowers, deterring harmful practices by institutions, safeguarding taxpayer dollars and holding institutions accountable for their actions.” – Source

The Betsy DeVos ED is delaying the implementation of the Borrower Defense to Repayment rules. The ED announced today “Postsecondary institutions of all types have raised concerns about the BDR regulations since they were published on Nov. 1, 2016. Colleges and universities are especially concerned about the excessively broad definitions of substantial misrepresentation and breach of contract, the lack of meaningful due process protections for institutions and “financial triggers” under the new rules.” – Source

So the current ED is going to start over again and says, “The Department plans to publish its Notice of Intent to Conduct Negotiated Rulemaking on BDR and GE in the Federal Register on June 16, 2017. The Department will conduct public hearings on BDR and GE on July 10, 2017, in Washington, D.C. and July 12, 2017, in Dallas, Texas.” Goodness knows how long this new process if going to take and what opportunities student loan debtors will have to actually have their loans discharged due to misrepresentation by colleges and schools who received federal student loans.
For example, the ED previously said, “Many of these claims are from borrowers who attended programs that the Department found had been publicized with misleading job placement rates.” – Source

What do you think, should schools who misrepresented the success of their programs or actual employment rates to induce students to enroll, get a free pass and eliminated from the new rules? Let me know what you think by posting your comment below.
Even under the old administration the Borrower Defense to Repayment processing was less than optimal. There are students that have been waiting years for a conclusion to their claims and the next changes will only serve to slow down the entire process of assisting harmed student loan debtors.

As an example, ED previously said they had ” received a total of approximately 82,000 claims.” And while a previous report on the status of the program said 16,000 had been processed and approved, the current ED press release says, “Nearly 16,000 borrower defense claims are currently being processed by the Department, and, as I have said all along, promises made to students under the current rule will be promises kept,” said Secretary DeVos. So where are the rest of the claims?

Steve Rhode

Get Out of Debt Guy – TwitterG+Facebook
This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.