The New York Times lambasts Republicans and Betsy DeVos for catering to for-profit colleges: The Gray Lady overlooks culpable Democrats

In an editorial last month, The New York Times lambasted Secretary of Education Betsy DeVos, the Trump administration and congressional Republicans for protecting the greasy for-profit college industry. "Try as they might," the Times observed, "the Trump administration and Republicans in Congress cannot disguise that they continue to do the bidding of the for-profit industry, which has saddled working-class students--including veterans--with crushing debt while providing useless degrees, or no degrees at all."

Indeed, the Times grumbled, the Department of Education, under DeVos, "has undermined investigations of the [for-profit college] industry by marginalizing or reassigning lawyers and investigators . . ." Major investigations, the Times reported, have been abandoned, including investigations into the activities of DeVry Education Group, Bridgepoint Education and Career Education Corporation.

The Times is right of course. Betsy DeVos is the shameless lapdog of the for-profit college crowd, which continues to prey on unsophisticated Americans seeking to get a worthwhile education.  The Times predicts that DeVos' behavior may come back to bite the Republicans in the upcoming midterm elections, and perhaps there will be repercussions at the ballot box.

But to be fair, servile obsequiousness to the for-profit colleges is bipartisan. Both Democrats and Republicans have taken campaign contributions from these bandits and both parties have succumbed to the blandishments of the for-profit lobbyists.

In fact, The Nation reported nearly five years ago that two Democratic congressmen were leading an effort to protect for-profit colleges from meaningful regulation.  According to The Nation's reporter Lee Fang, Representative Rob Andrews from New Jersey and Florida congressman Alcee Hastings had taken thousands of dollars from for-profit college executives and for-profit backed political committees.

Andrews is no longer in Congress, but Alcee Hastings is still in office. This is the same Hastings, by the way, who, while sitting as a federal district judge, was charged with bribery, perjury and falsifying documents.  The U.S. Senate impeached him and removed him from his judicial post in 1989.

If the Democrats want to distinguish themselves from their Republican colleagues, they need to speak out forthrightly about the for-profit-college scandal. In my view, the for-profit racketeers cannot be tamed through tougher regulations. The only way to stop these predators from stalking unsuspecting and naive young Americans is to shut the industry down. But the Democrats don't have the courage to speak out against the for-profit mobsters. They seem to hope Americans will overlook their silence about the the for-profit college industry and pin all the blame on the Republicans.

Rep. Alcee Hastings (D-Florida): Friend of the for-profit college industry

References

Editorial. Predatory Colleges, Freed to Fleece Students. New York Times, May 22, 2018.

Lee Fang. Two House Democrats Lead Effort to Protect For-Profit Colleges, Betraying Students and Vets. The Nation, December 13, 2013.

United States Senate.  The Impeachment Trial of Alcee L. Hastings (1989) U.S. District Judge, Florida.

Trump administration cozies up to for-profit college industry: "I was wrong, I know, I know"

But I want you to know that I was wrong, I know, I know
I just wanna say that I was wrong, I know, I know
Well, I want you to know that I was wrong, I know, I know
And I just wanna say that I was wrong, I know, I know

I Was Wrong

  David Labuguen, Nathan Esquite, Zachary Hannah 

Patsy Cline gave one of the greatest lyrical apologies in music history when she sang, "I'm sorry, so sorry that I was such a fool." And of course about half of all country music songs are sung by some guy who says he's sorry for cheating on his girlfriend.

But for my money, the all- time best musical apology was sung by Arizona. So I want you to imagine me singing "I just want you to know that I was wrong, I know, I know."

I was willing to give Donald Trump and Betsy DeVos the benefit of the doubt regarding the student-loan crisis. I naively hoped Trump and DeVos would view this catastrophe with fresh eyes and take action to relieve massive suffering. 

But I was wrong.

Trump's Department of Education cozies up to for-profit college industry

Last week, Trump's Department of Education rolled back protections afforded to people who defaulted on their bank-based federal loans (the FFEL program). The Obama administration had instructed debt collectors not to assess penalties against FFEL defaulters if they entered a rehabilitation program within 60 days of default.

That relief is now off the table, and debt collectors are free to slap defaulters with a 16 percent penalty on the principal and accrued interest of defaulted bank-based loans.

And the New York Times reported that DeVos's Department of Education recently hired Robert Eitel to be a paid member of a "beachhead" team that advises DOE on regulatory matters. Mr. Eitel is taking an unpaid leave of absence from his job as vice president for regulatory legal services at Bridgepoint Education, Inc., a for-profit college company that operates Ashford University and the University of the Rockies.

As the Times reported, the Securities and Exchange Commission is currently investigating Bridgepoint to determine whether the company violated the 90 percent rule that requires for-profits not to receive more than 90 percent of their revenue from the federal student aid program. Attorneys generals in California and Massachusetts are also investigating Bridgepoint,

And there have been more allegations of wrongdoing against Mr. Eitel's employer. Last September, Bridgepoint reached  a $31.5 million settlement with the Consumer Financial Protection Bureau to resolve allegations that Bridgepoint deceived students into taking out private loans that were more expensive than advertised. And in 2014, Bridgepoint reached a $7.5 million settlement to resolve charges against it brought by the Iowa attorney general.

And now Bridgepoint's chief legal counsel is a paid consultant for DOE. And DeVos also hired Taylor Hansen, a former for-profit lobbyist, to join DOE's beachhead team. (According to Bloomberg News, Hansen resigned his DOE post last Friday.)

Is Betsy DeVos in the for-profit industry's pocket?

This stinks, and it is a strong sign that Betsy DeVos, Trump's new Secretary of Education, is in the for-profit college industry's pocket.

The for-profit industry is betting that Trump will reduce the regulatory pressure on it, and for-profit stocks have soared since Trump took office. Bridgepoint's stock is up 40 percent. DeVry Education Group's stock is also up 40 percent and Grand Canyon Education's stock rose by 28 percent.

I think we can conclude that the Obama administration's strict regulation of the for-profit industry has come to an end. And to be strictly accurate, Obama's DOE did not get serious about cracking down on the for-profits until the last two years Obama was in office.

Bottom line is this. The for-profit industry will continue to exploit unsophisticated Americans who are only trying to better themselves by investing in post-secondary education.  This sleazy industry's track record is terrible, and the 5-year default rate for people who borrowed to attend for-profit schools is almost 50 percent!

Bankruptcy may be the only option for overburdened student-loan debtors

Millions of student-loan borrowers are now drowning in debt, which includes the penalties and interest tacked on to the amounts they borrowed. Based on recent events, they can expect no relief from Betsy DeVos's Department of Education.

God help the people who took out student loans to enroll in worthless for-profit programs that did not lead to good jobs.  President Trump apparently has no sympathy for these people--even though he claims them as his core constituency.

College borrowers who have been driven into default on their student loans now have only one avenue for relief: the bankruptcy courts. As the bankruptcy courts become better educated about the student-loan crisis, I think we can expect more compassionate decisions by bankruptcy judges. So let us turn our eyes toward the bankruptcy courts because struggling student-loan debtor have no other place to turn.

Robert S. Eitel of Bridgepoint Education: On DOE's ""beachhead" team

References

Patricia Cohen. Betsy DeVos's Hiring of For-Profit College Official Raises Impartiality Issues, New York Time, March 17, 2017.

Patricia Cohen. For-Profit Schools, an Obama Target, See New Day Under Trump. New York Times, February 20, 2017.

Danielle Douglas-Gabriel. Trump administration rolls back protections in default on student loans. Washington Post, March 17, 2017.

 Shahien Nasiripour. , Betsy DeVos Hands Victory to Loan Firm Tied to Advisor Who Just Quit. Bloomberg News, March 20, 2017.