In the summer of 2018, Education Secretary Betsy DeVos proposed a revision in an Obama-era rule designed to protect student borrowers when their for-profit colleges shut down or when they believed they had been defrauded by a college’s predatory false advertising. DeVos’s proposed changes in the rule, called “borrowers defense to repayment,” would, she said, save the federal government $700 million annually. DeVos’s new rule had been scheduled to take effect on July 1, 2020.
Last Wednesday, however, the U.S. Senate voted to reverse DeVos’s proposed revisions to the rule. The House had approved the measure to overturn DeVos’s rule in mid-January. Politico‘s Michael Stratford reports that if President Trump signs the bill which has now passed both Congressional chambers, “the DeVos rule would be nullified, leaving in place the Obama-era standards. The Education Department would be prohibited from writing any new rule that is ‘substantially the same’ unless Congress acts.” In both the House and Senate, Republicans joined Democrats in voting to overturn Secretary DeVos’s new rule.
Stratford explains the implications of recent Congressional action to reverse DeVos’s rule: “The Senate on Wednesday issued a strong bipartisan rebuff to Education Secretary Betsy DeVos, passing legislation to block her policy that makes it tougher for defrauded student loan borrowers to have their debts forgiven. Ten Republican senators broke with the Trump administration and joined with Democrats on a 53-42 vote to overturn DeVos’s rewrite of the Obama-era “borrower defense” rule, which governs debt relief for students whose colleges engaged in misconduct. The measure, which cleared the House last month, now heads to President Donald Trump’s desk. The White House has threatened a veto of the legislation which did not garner a veto-proof majority in either chamber. But Trump told Republican senators during a closed-door meeting on Tuesday that he was ‘neutral’ on the resolution… Democrats argue that the Trump administration’s overhaul of the standards makes it too burdensome for legitimately defrauded borrowers to obtain loan forgiveness and protects for-profit colleges at the expense of students.”
The NY Times‘ Erica Green and Stacy Cowley report that DeVos had called the Obama-era “borrowers defense to repayment” rule, “a ‘free money’ giveaway, and sought repeatedly to curtail it. Her first attempt was blocked in 2018, after a federal judge ruled that the Education Department broke privacy laws by illegally obtaining information from the Social Security Administration on individual borrowers’ earnings.” The Trump administration had attempted to use a formula based on a borrowers’ wages and supposed ability to pay. “In December, Ms. DeVos’s department added further restrictions, adopting a complicated formula for calculating relief that limits nearly all applicants to only partial relief and requires the majority to repay most of their loans.” Green and Cowley add that, “So far, the Education Department has approved 51,000 loan-relief applications—nearly all of them during the Obama administration—and eliminated some $535 million in debt. About 170,000 applications still await a decision.” “Critics said the DeVos regulations would effectively kill the department’s loan forgiveness program by imposing requirements that almost no borrowers would be able to meet.”
The Washington Post‘s Danielle Douglas-Gabriel reminds readers why so many student borrowers have been seeking debt relief: “The closure of Corinthian Colleges and ITT Technical Institute, for-profit chains felled by charges of fraud and predatory lending, resulted in a deluge of claims at the Education Department. Claims continue to mount as other for-profit colleges, including Argosy University and the Art Institutes, have folded.” Douglas-Gabriel adds that DeVos has claimed that her new, more stringent, rule would “save the federal government $11 billion over 10 years.”
Green and Cowley report that support from veterans’ groups for Congressional action to overturn DeVos’s rule was key to building bipartisan support: “Veterans have long been considered among the most vulnerable groups for predatory recruitment tactics because of their lucrative G.I. Bill benefits. The benefits are particularly attractive to for-profit schools, because federal law requires those schools to obtain at least 10 percent of their revenue from sources other than Education Department-backed student loans. G.I. Bill benefits help schools meet that quota.” The American Legion and other veterans’ groups strongly support Congressional action to restore the the Obama-era rule.
Green and Cowley add that, “If Mr. Trump does not sign it, Democrats say they will press for a veto override. Senator Richard J. Durbin, Democrat of Illinois and the minority whip, successfully recruited Republicans for Wednesday’s vote after veterans groups—which he called a ‘critical ally’—backed the resolution.”
Stratford adds: “If Trump does not sign the measure, it would be only his seventh veto since taking office—and the first on a domestic policy issue.”