Showing posts with label Secretary of Education. Show all posts
Showing posts with label Secretary of Education. Show all posts

Saturday, June 3, 2017

Betsy DeVos should resign as Education Secretary and Trump should replace her with a junkyard dog

Betsy DeVos should resign as Secretary of Education in the Trump administration. I say this for two reasons:

First, Ms. DeVos is too nice a person to be President Trump's Secretary of Education.


No matter what you think of her politics or her education philosophy Betsy DeVos is not a toxic person. She did not deserve to be shut out of a public school, as District of Columbia protesters tried to do shortly after she took office.

And she did not deserve to have students boo her and turn their backs on her when she spoke at a college graduation exercise this spring. If I were her, I would tell the whole wide world to stick the Secretary of Education's position where the sun doesn't shine and go home to Michigan and spend time with my grandchildren.

Second. Betsy DeVos knows next to nothing about higher education policy.

The federal student loan program is in meltdown, destroying the lives of millions of people and undermining the integrity of higher education. Numerous small private liberal arts colleges are on the verge of closing; law schools are admitting students of a lower and lower quality, and huge swaths of the for-profit college industry are defrauding their students--or, at the very least, they are gouging their customers. The federal student loan program bears a big share of the blame for this dismal state of affairs.

Betsy DeVos knows next to nothing about the student loan crisis. She has shown no capacity to deal with this enormous problem, and she has already made a number of missteps. For example, she hired some empty suits from the for-profit sector to advise her--the wrong move, in my opinion.

Trump needs to hire a junkyard dog to run the Department of Education

President Trump needs to gracefully accept DeVos' resignation, praise her extravagantly in a tweet message, and then appoint a junkyard dog to replace her.

By junkyard dog, I don't mean a vicious person or an unethical person; I mean a tough person.  The next Education Secretary needs to be tough enough to confront the for-profit college industry, tough enough to handle higher education's legions of lobbyists, and tough enough to get rid of the student loan guaranty agencies that have amassed billions of dollars in cash hounding distressed student loan debtors.

The next Secretary of Education needs to be tough enough to tell the public the truth about the student loan crisis, which is this: Millions of people have taken out student loans they will never pay back.

What a junkyard dog do if  appointed Education Secretary?


  • First, the Consumer Financial Protection Bureau's 2013 report, A Closer Look at the Trillion, needs to be updated. How many people have defaulted on their loans, and how many are delinquent? How many are not making payments because their loans are in deferment or forbearance? How many are in income-driven repayment plans (IDRs) and making monthly payments so low that their payments don't cover accruing interest?
  • Second, the new Secretary should endorse the Democrats' bill to protect student loan defaulters from having their Social Security checks garnished.  This is a small matter in terms of the overall student loan crisis, but symbolically, such a move would signal that the Trump administration is not completely heartless.
  • Third, the Education Secretary should cancel the performance bonus program for DOE's student-loan bureaucrats. James Runcie, Chief Operating Officer for the student loan program, received $430,000 in bonuses--an outrage. The new Secretary of Education should fire everyone who got a performance bonus.
  • Fourth, the DOE Secretary needs to streamline the process whereby students who file administrative claims based on the closed-school rule or the so-called borrower defense can have their claims resolved quickly.
  • Fifth, DOE's junkyard dog should dismantle all the student loan guaranty agencies, starting with Educational Credit Management Corporation. While the termination process is taking place, DOE should stop paying the agencies' attorney fees to hound suffering student borrowers in the bankruptcy courts.
  • Sixth, the Secretary of Education, as junkyard dog, should revise Lynn Mahaffie's 2015 letter outlining when DOE will not oppose bankruptcy discharge of student loans to clarify to the federal courts that DOE supports a bankruptcy discharge of student loans under the same terms that apply to other unsecured consumer debt.
Obviously, any Secretary of Education who attempts to carry out the agenda I outlined will need to be tough as a junkyard dog. Betsy DeVos is not a junkyard dog, and I mean that as a compliment to her.


The next Secretary of Education should be a junkyard dog.
References

Lauren Camera. Protesters Disrupt DeVos School Visit. U.S. News & World Report, February 10, 2017.


Rohit Chopra. A closer look at the trillion. Consumer Financial Protection Bureau, August 5, 2013.

Erica L. Green. Bethune-Cookman Graduates Greet Betsy DeVos With Turned Backs. New York Times, May 10, 2017.




Tuesday, January 17, 2017

Inside Higher Ed asked Higher Education Insiders to Pose Questions to Betsy Devos: Madeleine Kunin and Wick Sloan Win Stupid Question Award

Betsy DeVos, Donald Trump's choice for Secretary of Education, faces questions from a Senate Committee this week. Inside Higher Ed contacted several higher education "experts" and asked them to pose their own questions to Ms. DeVos.

Most of the questions were what you would expect. Several people asked DeVos hypothetical questions designed to find out if the financial status quo for higher education for higher education will change under the Trump administration.

Some of the questions, however, were down right stupid. In fact, I give the Stupid Question Award jointly to Madeleine Kunin, former governor of Vermont and deputy secretary of education under President Clinton, and Wick Sloane, an instructor at Bunker Hill Community College.

Here is Ms. Kunin's question:
"Do you support public education and the mission of the department?"
Madeleine Kunin
 I assume Kunin wants a yes or no answer.  So what do think DeVos will say--No, I don't support public education?

Governor Kunin's question was inane, but Wick Sloane's question was just as wacky.  Here's Sloan's question.
"How quickly will you put in place a federal free and reduced-price lunch program for eligible low-income college students?"
Oh yes, and Sloane also suggested the federal government should provide free bus fare and subway passes to low-income college students. Of course that would be in addition to the $150 billion the federal government doles out every year in Pell Grants, student loans, and work-study money.

Interestingly, none of the insiders asked DeVos whether she supports reasonable access to bankruptcy for student borrowers who are overwhelmed by their college-loan debt.

None asked whether the government should stop offsetting Social Security checks to elderly student-loan defaulters.

None asked whether DOE should ban for-profit colleges from putting arbitration clauses in their enrollment documents--clauses that prevent defrauded students from filing lawsuits against the colleges that bilked them.

None asked whether DOE would streamline the loan forgiveness process for students who attended for-profit colleges found guilty of defrauding their students

No, the tone of most questions from higher education insiders across the spectrum of interests was simply this: "What's in it for us?"

References



Andrew Kleighbaum. Experts offer questions they hope to see asked of Trump's education secretary pickInside Higher Education, January 17, 2017.


Wednesday, November 30, 2016

Betsy DeVos, Trump's choice for Secretary of Education, has the power to ease the suffering of student-loan debtors

Betsy DeVos, Donald Trump's choice for Secretary of Education, has no experience in higher education, and that may be a good thing for student-loan debtors.

Most commentators on the student-loan crisis are insiders who want to maintain the status quo regarding the federal student loan program. The universities depend on regular infusions of student-loan money, which enables them to raise their tuition prices year after year at twice the rate of inflation.

But DeVos has no ties to higher education at all, and thus she has the capacity to look at the student-loan catastrophe from a fresh perspective. In fact, DeVos has the power to do one simple thing that could potentially bring relief to millions of distressed student-loan debtors.

Under current bankruptcy law, debtors cannot discharge their student loans in bankruptcy unless they can show that repaying the loans will cause them "undue hardship."  In nearly every case, the Department of Education and the student-loan guaranty companies argue that student-loan debtors should be denied bankruptcy relief under the undue hardship standard.

Instead, they routinely demand that distressed college borrowers enroll in long-term income-based repayment plans that can last for 20 or even 25 years.  And DOE and its debt collectors make this demand even when debtors' income is so low that they pay nothing or next to nothing under the terms of these plans.

Here are some examples:
  • In the Edwards case, decided last spring, Educational Credit Management (ECMC) argued that Rita Gail Edwards, a woman in her mid-50s, should pay $56 a month for 25 years to service a debt of almost a quarter of a million dollars! 
  • In the Roth case, ECMC opposed bankruptcy relief for Janet Roth, an elderly woman with chronic health problems who was living on Social Security income of less than $800 a month. Instead, ECMC wanted Roth to enter a long-term repayment plan even though ECMC conceded that Roth's income was so low that she would pay nothing under the plan. 
  • In the Abney case, DOE wanted Abney, a 40-year-old father of two, to enter a 25-year income-based repayment plan. Abney was living on $1200 a month and was so poor he couldn't afford a car and rode a bicycle to get to his job.
In essence, DOE and the debt collectors maintain that almost no one is entitled to discharge their student loans in bankruptcy and that everyone should be placed in long-term, income based repayment plans.

What if Secretary DeVos simply decreed that DOE and the loan guaranty agencies will stop pushing long-term repayment plans in the bankruptcy courts and would consent to bankruptcy discharges for people like Roth, Edwards, and Abney? (Incidentally, in all three cases, the bankruptcy courts rejected the creditors' arguments and discharged the student loans in their entirety.)

By consenting to bankruptcy discharges for people like Abney, Edwards and Roth, the Department of Education would signal to the bankruptcy courts that it supports a less harsh interpretation of the "undue hardship" standard. That would open the door for thousands of people of distressed debtors to file bankruptcy to discharge their student loans.

Some people might argue that my proposal would unleash a flood of bankruptcy filings that would undermine the financial integrity of the federal student loan program. But let's face facts. People like Roth, Edwards and Abney would never have paid back their student loans, and placing them in 25-year repayment plans that would have obligated them to make token payments that would have done nothing more than maintain the cynical fiction that their loans weren't in default.

Wouldn't it be better for DOE to be candid about the student-loan crisis and admit that millions of people will never pay back their loans? Wouldn't it be better public policy to allow honest but unfortunate debtors to get the fresh start that the bankruptcy courts are intended to provide?

Betsy DeVos is fresh on the scene of the student-loan catastrophe. Let's hope she brings some fresh thinking to the U.S. Department of Education.


Mark http://www.nytimes.com/2016/11/23/us/politics/donald-trump-president-elect.html?action=click&contentCollection=Opinion&module=RelatedCoverage&region=EndOfArticle&pgtype=article

Thursday, April 7, 2016

John L. King, Jr., Secretary of Education, spouts nonsense about financial literacy for student borrowers

John L.  King, Jr., the new Secretary of Education, knows the student-loan program is careening out of control and that millions of people owe billions of dollars they can't pay back.

So what's Secretary King's solution? Financial literacy. We can solve the student-loan crisis, Secretary King apparently believes, if college students are educated to make better financial decisions.

Thus as the nation enters "Financial Capability Month," Secretary King is touting a recent report prepared by the Financial Literacy and Education Commission that outlines how college students can develop better financial management skills.

Interestingly, the report emphasizes the role that colleges and universities can play in enhancing their students' ability to make good decisions about financing their college experiences. And the report highlights financial literacy programs that universities around the nation are offering.

For example, New Mexico State University "held a money management fair to promote games, websites, and outside financial education organizations to students." I'll bet that was fun.

And Louisiana State University, famous for its planned "Lazy River" water feature, created "financial education' handouts called "Financial Basics on the Geaux" and developed "CashCourse quizzes" to evaluate students' financial knowledge.

The Department of Education seems to think that colleges are great places for students to learn financial literacy, including the skills to manage their student loans. After all, as the Financial Literacy and Education Commission pointed out, colleges have an incentive to produce alumni who repay their student loans.

But of course this isn't really true. Colleges and universities have an incentive to maximize their revenues, which means luring tuition-paying students through the door. But higher education institutions have zero incentive to warn potential students that some of their degree programs are a bad financial investment.

And here's an example. Law students who graduated from Thomas Jefferson School of Law in San Diego in 2013 had an average student-debt load of $180,000 (among students who borrowed). That was the highest student-debt load of any law school in the United States that year.

Yet Thomas Jefferson's admission standards are quite low. According to a recent report by Law School Transparency, 75 percent of Thomas Jefferson's entering 2014 class had LSAT scores so low that they were at high risk of failing the bar. Twenty-five percent of it 2014 freshman class had LSAT scores so low that they were at extreme risk of failing the bar.

Not surprisingly, Thomas Jefferson's bar pass rates aren't high. Among first-time test takers who sat for the California bar in July 2014, less than half of TJSL graduates (44.7 percent) passed the bar exam.

As Paul Campos wrote in his 2012 book, "[I]t's likely that somewhere around four out of five current law students would be better off if they hadn't gone to law school" (emphasis supplied). And that percentage is surely even higher for people who graduate from TJSL.

Do you think Thomas Jefferson School of Law is telling its entering freshman students that they will probably face job prospects so poor that it makes no sense to borrow $180,000 to get a TJSL degree? Probably not. Thomas Jefferson needs to maximize its revenue by admitting as many law students as it can, even if  a majority of its entering students have LSAT scores so low that they run a high risk of failing the bar exam.

So what's my point? Simply this. The Department of Education is being naive or cruelly cynical to suggest that "financial literacy" can be usefully taught by colleges and universities that have every incentive to attract tuition-paying students and no incentive at all to warn potential students of the risks they run when they take out student loans to enroll in expensive programs that aren't likely to pay off financially.

In short, whether you are contemplating a bachelor's degree in religious studies from an expensive, elite university or a law degree from a mediocre law school, you can't count on the higher education institutions to give you good financial advice. When it comes to acquiring financial literacy, you are largely on your own.

References

Focusing on financial literacy for students. U.S. Department of Education blog site. http://blog.ed.gov/2016/04/ed-focuses-on-financial-literacy-for-students/

Jeff Schmitt, The Leaders in Student Debt. Tipping the Scales, March 31, 2014. Accessible at http://tippingthescales.com/2014/03/which-law-schools-lead-in-student-debt/

Paul Caron. July 2014 California Bar Exam Results. Taxprof blog, December 29, 2014. http://taxprof.typepad.com/taxprof_blog/2014/12/july-2014-california-bar-.html

Financial Literacy and Education Commission. Opportunities to Improve Financial Capability and Financial Well-Being of Postsecondary Students. Updated 2016. Accessible at https://www.treasury.gov/resource-center/financial-education/Documents/Opportunities%20to%20Improve%20the%20Financial%20Capability%20and%20Financial%20Wellbeing%20of%20Postsecondary%20Students.pdf

Law School Transparency. Reports on law school admission data accessible at http://lawschooltransparency.com/reform/projects/investigations/2015/key-findings/









Saturday, March 12, 2016

Predatory for-profit colleges and mandatory arbitration clauses in student contracts: Secretary of Education John B. King Jr. wants to stop for-profits from trying to escape accountability for abuse

In a March 11 press release, the Department of Education announced it is taking steps to protect students from predatory colleges. It's about time. The Obama administration has had seven years to clean up the for-profit college industry, and it has accomplished virtually nothing.

According to the press release, Acting Secretary of Education John B. King Jr. wants to stop colleges from forcing students to sign arbitration agreements that effectively insulate the colleges from liability for their wrongdoing. As DOE explained:
Forced arbitration provisions used by many schools in their enrollment agreements – often buried in the fine print – effectively prevent students from seeking redress for harm caused by their school and hide wrongdoing from the Department and the public. Such agreements often bar students from bringing their legal claims in a group, making it financially impossible for individual students to challenge schools. Some agreements require disputes to be filed in secret tribunals where little or no records are kept; some prohibit students from speaking about the claims they file. The Department will discuss with negotiators how to end such outrageous practices.
 DOE also wants to "incorporate crucial elements of state consumer protection laws" in new regulations. This too is a good thing. But why did DOE wait so long?

And why is DOE seeking to enact reforms through a "negotiated rulemaking process"? These reforms should be nonnegotiable.  All for-profit colleges should be subject to state consumer-protection laws, and all for-profits should be barred from forcing students to sign arbitration clauses that protect the colleges from liability for fraud and wrongdoing.

The next presidential election is eight months away. I predict nothing will get done regarding predatory for-profit colleges before Barack Obama leaves office. And we haven't hear a a peep out of Hillary about cracking down on this sleazy industry. No wonder young voters have rejected her.

References

U.S. Department of Education. U.S. Department of Education Takes Further Steps to Protect Students from Predatory Higher Education Institutions. March 11, 2016. Accessible at http://www.ed.gov/news/press-releases/us-department-education-takes-further-steps-protect-students-predatory-higher-education-institutions?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=