Showing posts with label David Halperin. Show all posts
Showing posts with label David Halperin. Show all posts

Friday, January 12, 2018

Betsy DeVos is trying to nullify a federal law intended to give defrauded students relief from student loans: Our government is shielding crooks

Betsy DeVos is in bed with the corrupt for-profit college industry. Her slavish pandering to the for-profit-college racketeers is truly shocking. Now she is trying to nullify a law that gives relief to students who were defrauded by for-profit colleges.

In 1994, Congress passed a law giving students an avenue for getting their student loans discharged if they were defrauded by the college they attended.  The law was not used much until Corinthian Colleges--a for-profit college group--collapsed and filed for bankruptcy. At the time of its demise, Corinthian had over 300,000 students or former students; and several thousand filed so-called borrower defense applications seeking to get their student loans discharged on the grounds they were defrauded by Corinthian.

The Obama administration adopted regulations for implementing the borrower-defense rule, which provided a regulatory avenue for reviewing fraud claims. But Betsy DeVos nullified those regulations. DeVos said the Obama regulations would allow students to wrongly obtain "free money" at the expense of for-profit colleges.

DeVos launched a new round of administrative review, and DOE said the new regulations would probably not be implemented until 2019. The DeVos DOE's new borrower-defense rules are very different from what the Obama administration had fashioned. In fact, the DeVos regulations, if implemented, will basically invalidate the federal borrower-defense statute altogether.

David Halperin, writing in Huffington Post, observed that "the DeVos-Trump draft borrower defense rules . . . essentially nullify the 1994 law that gives former students who are ripped off by their colleges . . . the right to seek cancellation of their student loans."

As Halperin explained, the DeVos rules erect "numerous and redundant barriers to students getting the benefit of that law." The DeVos draft rules are so draconian that a representative of the for-profit college industry admitted that the new rules "feels a little stacked against the student."

For example, under the rules DeVos proposes, students will have to prove their fraud claims by "clear and convincing evidence." This is a very high legal barrier, especially when you consider that the colleges--not the complaining students--have access to the evidence of fraud.

Of course, state attorneys general have been suing the for-profits for fraud.  Surely a former student could present a judgment for fraud against a for-profit college as evidence that the student herself is a fraud victim. No, DeVos' new regulations will not permit a fraud victim to present a judgment against a for-profit college as part of the student's own fraud claim. As Steve Rhode wrote recently:
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.
If the DeVos rules go into effect, fraud victims will rarely if ever obtain relief from their student loans. Abbey Shafroth, an attorney with the National Consumer Law Center, said this: "I really think [the DeVos rules] would effectively do away with borrowers' ability to get relief in almost all circumstances."

The DeVos Department of Education's proposed borrower-defense rules demonstrate that it has abandoned all pretense of fairness and decency toward student-loan debtors. DeVos herself is nothing more than obsequious book licker for the for-profit college industry, and Congress seems unable or unwilling to rein her in.

Last July, Eighteen Democratic state Attorneys General sued DeVos and the Department of Education, seeking to force the Department to implement the Obama-era borrower defense rules. I hope they are successful because what DeVos is essentially trying to do is eviscerate a 1994 statute passed by Congress for the express purpose of  providing student fraud victims with well deserved relief from their student loans.




References

David Halperin. Backing DeVos Repeal of Obama Rules, For-Profit Colleges Vilify Students. Huffington Post, January 9, 2018.

Andrew Kreighbaum. Few Details on Tougher Borrower-Relief Standards. Inside Higher Ed, January 9, 2018.

Andrew Kreighbaum. Devos: Borrower-Defense Rule Offered 'Free Money'Inside Higher Ed, September 26, 2017.

Steve Rhode. Dept of Ed Puts Fraud First Over Students and Common Sense. Getoutofdebtguy.org (blog), January 3, 2018.

Editorial: Scamming for-profit schools roar back under Betsy DeVos. Chicago Sun-Times, December 25, 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 



Thursday, March 23, 2017

Trump and DeVos give aid and comfort to For-Profit Colleges: The Democrats should hold hearings on this sleazy industry

As Senator Dick Durbin once observed, the for-profit colleges "own every lobbyist in town." And indeed they do. David Halperin, in a terrific article for The Nation, explained how the for-profit colleges have effectively used lobbyists and lawyers to fight off federal efforts to regulate their sleazy industry.

And now the for-profits don't even have to pay their lobbyists and attorneys. Secretary of Education Betsy DeVos pays them directly!

As the New York Times reported, DOE hired two for-profit insiders to help shape DOE's policy toward the for-profit industry. Robert Eitel is taking an unpaid leave of absence from his job as vice president for regulatory legal services at Bridgepoint Education, Inc.  to take a paid job on the Department's "beachhead team." Bridgepoint, a for-profit education provider, is currently being investigated by the Securities and Exchange Commission. Former Senator Tom Harkin, a longtime critic of the for-profit college industry, called Bridgepoint a "a scam, an absolute scam."

And DOE also hired Taylor Hansen, a former for-profit lobbyist, to be a consultant. At least Hansen had the decency to resign his DOE position after a public outcry was raised.

These hires, along with DOE's decision to delay compliance deadlines for for-profit colleges to meet DOE's "gainful employment" regulations, are a strong indication that the Trump administration will not vigorously regulate this bandit industry.

Senate Democrats could put enormous pressure on Trump and DeVos if they would hold hearings on the for-profit colleges. I would like to see Senators Elizabeth Warren and Bernie Sanders question some of the so-called educators who run these diploma mills.  Nearly half of the students who took out federal loans to attend for-profit colleges default on their loans within five years of beginning repayment.

And Senate Democrats also need to examine the student-loan debt collectors who slap huge fees on student-loan defaulters and engage in high-pressure collection tactics.  Educational Credit Management Corporation (ECMC), for example, was hit with punitive damages last year for repeatedly garnishing the wages of a bankrupt student-loan debtor in violation of the Bankruptcy Code's automatic stay provisions.

Senator Warren might ask Janice Hines, ECMC's CEO, to disclose her compensation package--surely well over $1 million a year. And Senator Sanders might ask Hines how ECMC amassed $1 billion in assets.

Great political theater! So why don't the Democrats get busy and schedule those hearings? I tell you why. Too many politicians--Republicans and Democrats alike--are in bed with the for-profit college industry.  Read David Halperin's article in The Nation for details.

Janice Hines: How much money do you make running ECMC?

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.

David Halperin. The Perfect Lobby: How One Industry Captured Washington, DC. The Nation, April 3, 2014.

 Shahien Nasiripour. , Betsy DeVos Hands Victory to Loan Firm Tied to Advisor Who Just Quit. Bloomberg News, March 20, 2017.
  
Predator Colleges May Thrive Again (editorial). New York Times, March 23, 2017, p. A 24.




Wednesday, November 25, 2015

What do Barack Obama, Marco Rubio, Mitt Romney and Debbie Wasserman Schultz have in common? They all received political contributions from Dade Medical College or affiliates. Dade's former CEO has been charged with making illegal campaign contributions

What do Barack Obama, Marco Rubio, Mitt Romney, and Debbie Wasserman Schultz have in common? All four received political contributions from Dade Medical College or someone affiliated with DMC.  Ernesto Perez, the college's former CEO, was recently charged with making illegal political contributions. Indeed, the Miami Herald ran a photo of Perez being handcuffed earlier this month.

Perez had a remarkable career in higher education. Although he is a high-school dropout and convicted criminal, that did not stop him from founding a medical college that trained nurses and had five campuses.

Dade Medical College or people affiliated with it made three quarters of a million dollars in political contributions over the years, and two Florida legislators were on its payroll. It is closed now, and its 2000 students have been left in the lurch. Most of them have student loans that still have to be paid back.

Americans should thank the writers of the Miami Herald and Michael Vasquez in particular for relentless and hard-hitting reporting about DMC and the for-profit college industry in Florida. As the Herald series of corruption in the Florida for-profit college industry revealed, a ton of Florida legislators received political contributions from the industry, helping it to flourish. In fact, 18 percent of all postsecondary students in Florida attend a for-profit, far higher than the national average--about 12 percent.

Another individual who has written great stuff on the for-profits is David Halperin, who has shown a spotlight on the way the for-profits have bought influence with legislators at both the state and national level.

If you want to understand how the for-profit college industry manages to prosper in spite of low graduation rates, high dropout rates, and high student-loan default rates, read Halperin's work in Huffington Post and the Miami Herald articles on corruption in the Florida for-profit industry. The for-profits have hired lobbyists and made strategic campaign contributions to nearly every legislator who has the power to help or hurt them. And millions of naive students have been injured by this pernicious industry.

Debbie Wasserman Schultz: A bleeding heart liberal
who takes political contributions from the for-profit college industry

References

Francisco Alvarado. Dade Medical College Has Powerful Friends but Struggling Students.  Broward/Palm Beach  New Times, August 29, 2013.  Accessible at: http://www.browardpalmbeach.com/2013-08-29/news/dade-medical-college-has-powerful-friends-but-struggling-students/

Patricia Born & Jay Weaver. Homestead mayor's ties to downtown redeveloper probed. Miami Herald, June 8, 2013. Accessible at: http://www.miamiherald.com/2013/06/08/v-fullstory/3441091/homestead-mayors-ties-to-downtown.html


Read more here: http://www.miamiherald.com/2013/06/08/v-fullstory/3441091/homestead-mayors-ties-to-downtown.html#storylink=cpy
Dade Medical College.  Ernesto Perez to be Honored at SFBJ CEO Awards. 2013. Accessible at: http://www.dademedical.edu/rightnow/ernestoperezbehonoredsfbjceoawards

Kelly Field, "U.S. Has Forgiven Loans of More Than 3,000 Ex-Corinthian Students, Chronicle of Higher Education, September 3, 2015. Accessible at: http://chronicle.com/article/US-Has-Forgiven-Loans-of/232855/?cid=pm&utm_source=pm&utm_medium=en

Fred Grimm. Before his fall, Ernesto Perez bought himself lots of friends. Miami  Herald, November 4, 2015. Accessible at: http://www.miamiherald.com/news/local/news-columns-blogs/fred-grimm/article42988848.html

David Halperin. Exposed: For-Profit Colleges' Blueprint for Blocking Obama Regulations. Huffington Post, May 5, 2014. Accessible at: http://www.huffingtonpost.com/davidhalperin/exposed-for-profit-colleg_b_5256688.html

David Halperin. For-Profit Colleges Spend Big on Lobbyists to Fight Obama Regulation. Huffington Post, April 28, 2015. Accessible at: http://www.huffingtonpost.com/davidhalperin/for-profit-colleges-spend_b_5221407.html

David Halperin. For-Profit College Lobbyist Explains Decades of Fraud as Humanitarian Mission. Huffington Post, September 23, 2015. Accessible at: http://www.huffingtonpost.com/davidhalperin/for-profit-college-lobbyi_b_8184952.html

David Halperin. The Perfect Lobby: How One Industry Captured Washington, DC. The Nation, April 3, 2014. Accessible at:  https://www.thenation.com/article/perfect-lobby-how-one-industry-captured-washington-dc/


Read more here: http://www.miamiherald.com/news/local/news-columns-blogs/fred-grimm/article42988848.html#storylink=David Halperin. $33 Million Per Year of Your Tax Money to For-Profit College Whose CEO Hid Criminal Record. Huffington Post, October 21, 2013. Accessible at: http://www.huffingtonpost.com/davidhalperin/33-million-per-year-of-yo_b_4136451.ht
David Halperin. Which For-Profit Lobbyist Are You? Huffington Post, March 28, 2014.  Accessible at: http://www.huffingtonpost.com/davidhalperin/which-for-profit-college_b_5040172.html

Michael Vasquez. Amid criminal charges, CEO of Dade Medical Ccollege Resigns. Miami Herald, October 23, 2013. Accessible at: http://www.miamiherald.com/2013/10/23/3706821/ernesto-perez-resigns-as-head.html

David Halperin. $33 Million Per Year of Your Tax Money to For-Profit College Whose CEO Hid Criminal Record. Huffington Post, October 21, 2013. Accessible at: http://www.huffingtonpost.com/davidhalperin/33-million-per-year-of-yo_b_4136451.html

Dade Medical College owner turns himself in. Miami Herald, November 3, 2015. Accessible at: http://www.miamiherald.com/news/local/education/article42643344.html

Michael Vasquez. Amid criminal charges, CEO of Dade Medical College Resigns. Miami Herald, October 23, 2013. Accessible at: http://www.miamiherald.com/2013/10/23/3706821/ernesto-perez-resigns-as-head.html

Michael Vasquez and Christina Veiga. A for-profit empire, Dade Medical College, tumbles down. Miami Herald, October 30, 2015. Accessible at: http://www.miamiherald.com/news/local/community/miami-dade/article41967387.html

Saturday, October 24, 2015

The Department of Defense Suspends University of Phoenix from Military Tuition Benefits Program: Senators John McCain, Jeff Flake and Lamar Alexander Ask DOD to Reconsider

The Department of Defense recently sanctioned the University of Phoenix by suspending it from participation in the U.S.  Military's tuition benefits program. Why? Allegedly, Phoenix sponsored improper recruiting events and inappropriately used the DOD's seal.

Senators John McCain, Jeff Flake and Lamar Alexander got involved in this matter on behalf of whom? Soldiers? No--they came to the aid of the University of Phoenix. The senators argued that the university had only committed "vague, technical violations" that UP had already fixed or promised to fix.

According to the senators, "The University of Phoenix has a long history of serving working adults and others for whom traditional university schooling is unavailable" and noted that the university had more than 200,000 students in 17 states. But the senators neglected to note that almost 1.2 million University of Phoenix students have accumulated $35 billion in student-loan debt and that UP's five-year default rate is 45 percent!

Why do you suppose these old croakers came to the aid of the University of Phoenix? It is headquartered in Arizona, which might explain Senators McCain and Flake's intervention. But even so, don't these guys have an obligation to protect the University of Phoenix's students--not the university itself? And doesn't the Department of Education deserve support when it tries to rein in abuses to the federal student aid program?

The reason the for-profit college industry is out of control is because this rapacious sector of higher education makes strategic campaign contributions and hires lobbyists to protect its interests in Washington. I couldn't find any evidence that the University of Phoenix has made campaign contributions to Senator John McCain, but I did find evidence that McCain's biggest contributors include Goldman Sachs, which owns a stake in a for-profit college, and Bank of America, one of the biggest players in the private student-loan market.

If you want to better understand how the for-profit colleges have ripped off American taxpayers, you should read David Halperin's article in The Nation.  "Many of America's for-profit colleges have proven themselves a bad deal for the students lured by their enticing promises--as well as for US taxpayers, who subsidize these institutions with tens of billions annually in federal student aid," Halperin wrote.

As Halperin explained, more than half of the students who enroll in for-profit colleges drop out within about four months.  Many of these colleges have been caught using deceptive advertising and misleading information about job placement rates.  And although the for-profits only enroll about 13 percent of postsecondary students, they account for nearly half of student-loan defaults.

How do they get away with this? By hiring lobbyists and making  campaign contributions to powerful federal legislators. According to Halperin, the industry's lobbyists include past Senate majority leader Trent Lott and Penny Lee, a former aid to Senate majority leader (now minority leader) Harry Reid.  In fact, as Senator Dick Durbin put it, the for-profits "own every lobbyist in town" (as quoted in Halperin's article).

And why, you might ask, haven't supposedly independent voices in the higher-education policy world spoken out more forthrightly about the abuses in the for-profit college industry? Why hasn't Chronicle of Higher Education taken a stand? Why hasn't the National Urban League been more aggressive in its policy recommendations for higher education? Perhaps it is because the for-profits advertise in the Chronicle and  Corinthian Colleges (now bankrupt) gave $1 million to the National Urban League.

As Halperin summarized at the end of his lengthy article, "There's a word for this state of affairs: corruption." And knowingly or unknowingly, Senators McCain, Flake and Alexander came to the aid of one of the for-profit industry's worst actors: University of Phoenix.  Senator McCain deserves this nation's respect for his heroism in the Vietnam War. How sad and how shameful to observe him in his dotage serving as a shill for the for-profit college industry.

References

Adam Looney & Constantine Yanellis.  A Crisis in student loans? Brookings Institution, September 10, 2015. Accessible at: http://www.brookings.edu/~/media/projects/bpea/fall-2015_embargoed/conferencedraft_looneyyannelis_studentloandefaults.pdf

David Halperin. The Perfect Lobby: How One Industry Captured Washington, DC. The Nation, April 3, 2014. Accessible at:  https://www.thenation.com/article/perfect-lobby-how-one-industry-captured-washington-dc/

Senator John McCain Press Release. Senators McCain, Flake & Alexander Question DOD's Probation Decision Regarding the University of Phoenix's Participation in the Military Tuition Assistance Program. October 22, 2015. Accessible at: http://www.mccain.senate.gov/public/index.cfm/press-releases?ID=d7d2b065-3df2-42ce-9763-82ed0310a6e6

Senator John McCain's Top Contributors. Center for Responsive Politics. Opensecrets.org. Acessible at: http://www.opensecrets.org/politicians/contrib.php?cycle=Career&cid=n00006424