Showing posts with label Department of Eduation. Show all posts
Showing posts with label Department of Eduation. 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.




Saturday, May 27, 2017

James Runcie, Chief Administrator of DOE's Federal Student Aid Program, resigns rather than testify before Congress. Will he take his bonuses with him?

James Runcie, Chief Operating Officer for the Department of Education's Student Aid Office, resigned a few days ago rather than testify before the House Oversight Committee. Good riddance!

Runcie, who has an MBA from Harvard, was appointed to the COO's position by the Obama administration in 2011. In December 2015, Secretary of Education Arne Duncan secretly reappointed Runcie to the position just before  Duncan stepped down as Education Secretary. In fact, Runcie's reappointment was one of Duncan's last official acts.

The Runcie-supervised student aid program has come under severe criticism over the last several years.   Recently, the press reported that the program misspent a total of $6 billion in federal money in the Pell Grant program and the Direct Student Loan program. A Huffington Post article, published about a year ago, noted that "government investigators from other agencies routinely slammed Runcie's division for failing to aid distressed borrowers and protect students, or they unearthed evidence of mistreatment that Runcie's deputies missed."

In fact, reports from multiple sources make clear that the Federal Student Aid office is a mess. The Government Accountability Office reported in December that DOE had underestimated the cost of its income-driven repayment programs. GAO concluded that the true cost was about double what DOE estimated.

And in Price v. U.S. Department of Education, decided recently by a Texas federal court, we got a glimpse of how poorly DOE responds to student complaints. Phyllis Price, filed an administrative complaint seeking to have her student loans discharged because the University of Phoenix, the school she attended, had falsely certified that she had a high school diploma.  DOE took six years to resolve Price's claim, and then it got it wrong. Price had to sue the Department to obtain the relief to which she was clearly entitled under federal law.

But sloppy administration did not prevent James Runcie and his close cronies from getting big salaries and handsome performance bonuses. As the Huffington Post reported, the typical Federal Student Aid employee makes more than $100,000, about a third more than typical federal employees are paid.

Runcie himself got a lot of bonus money. Just a few days ago, U.S. Congressman Jim Jordan (R-Ohio), accused Jordan of receiving $433,000 in performance bonuses while working for DOE!

Just think how big his bonuses would have been had he performed his job competently?

I hope the House Oversight Committee orders Runcie to appear under subpoena and explain what the hell he was doing while he was in charge of the Federal Student Aid program.

It is probably impossible to get Runcie's bonus money back, but surely Congress can stop the Department of Education's practice of giving cash bonuses to people overseeing the federal student loan program--a program that has brought so much misery to millions of Americans.

Will Mr. Runcie return his bonus money?

References

Sabrina Eaton. Rep. Jim Jordan blasts student loan official's $433,000 in bonuses despite failing grades. Cleveland.com, May 25, 2017.

Andrew Kreigbaum. GAO Report finds costs of loan programs outpace estimates and department methodology flawedInside Higher Ed, December 1, 2016.

Christopher Maynard. Education Department blasted over $6 billion in improper student aid payments. consumeraffairs.com, May 26, 2017.

Price v. U.S. Dep't of Education, 209 Fed. Supp. 3d 925 (S.D. Tex. 2016).

Shahien Nasiripour. Education Department Secretly Reappoints Top Official Accused of Harming Students. Huffington Post, May 7, 2016.

Top Federal Student-Aid Official Resigns Over Congressional Testimony. Chronicle of Higher Education, May 24, 2017.

US. Government Accounting Office. Federal Student Loans: Education Needs to Improve Its Income-Driven Repayment Plan Budget Estimates. Washington, DC: U.S. Government Accounting Office, November, 2016.






Tuesday, June 21, 2016

Federal student loans for Americans to study overseas: Is this a good use of taxpayer money?

If you've decided to get your degree from a school outside the U.S., congratulations. Now let us help you find out which international schools participate in the federal student aid programs and guide you through the process of getting federal aid to make a dent in that tuition bill.

Here's something I bet you didn't know. Not only can you take out federal loans to attend one of 5000 colleges and schools in the U.S., you can get a federal student loan to study abroad. In fact, the Department of Education lists more than 500 foreign schools that are eligible to receive federal student aid.

Would you like to study religion at the Nazarene Theological College in Manchester, England? Just take out a federal loan. Or perhaps you're interested in getting a psychology degree from the Salvation Army's Booth University College in Winnipeg, Canada. The federal government will loan you the money. Literally, you can use federal student loan money to attend college almost any place in the world: China, England, France, Israel, Australia, Hungary, Bulgaria--even Russia.

The Department of Education is particularly hospitable to foreign medical schools and maintains links on its web sites to 25 medical schools outside the U.S.  DOE reported that American students attending Medical University of Silesia in Katowice, Poland, borrowed an average of $80,000 in federal student loans to attend that medical school, plus private loans averaging $55,000.

Or perhaps you prefer to study medicine in a sunnier clime? You can take out federal loans to attend American University of the Caribbean School of Medicine in St. Maarten, but it's pricier than a Polish medical school.  American students borrowed an average of $315,674 to attend the medical school in St. Maarten, which is owned by DeVry Education Group, a publicly traded corporation on the New York Stock Exchange. 

But most Americans don't take out federal loans to obtain medical degrees overseas; most use student-loan money to study abroad for a semester or a year. Indeed, the growing popularity of Study Abroad programs is one reason an American college education costs so much more than it once did. Americans are taking out student loans to spend a few months in Paris, London, Barcelona, or dozens of other exotic cities.

American taxpayers are already subsidizing 5,000 U.S. colleges and schools that participate in the federal student aid program--institutions running the gamut from Harvard University to Toni & Guy Hairdressing Academy.  Do we really want to loan students money to attend schools overseas--especially at a time when so many colleges in the U.S. are on the verge of closing due to declining enrollment?

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