Education Secretary Miguel Cardona has begun repairing some of the injustice of Betsy DeVos’s policies in the federal college loan program administered by the U.S. Department of Education.
In an extremely significant first step, two weeks ago, Cardona replaced Mark A Brown, who had been appointed by Betsy DeVos in 2019 to oversee the Department’s enormous student loan program. Brown is known to have favored the interests of the for-profit colleges that depend for their existence on tuition derived from student loans. As Brown’s replacement, Cardona has appointed Richard Cordray, a dogged advocate for the students and military veterans who have been preyed upon by for-profit colleges.
The Washington Post‘s Danielle Douglas-Gabriel reports: “Education Secretary Miguel Carrdona… named Richard Cordray, the first director of the Consumer Financial Protection Bureau, to head the federal office that oversees the government’s $1.5 trillion student loan portfolio. Cordray led the bureau’s crackdown on consumer abuses in debt collection, student loan servicing, and for-profit colleges, garnering the respect of advocates and drawing the ire of those industries. His selection signals tougher oversight of the Education Department’s contractors and enforcement of the rules governing federal student aid… During his six-year tenure at the CFPB, which he joined in 2011, Cordray frequently clashed with the financial industry and conservatives over his aggressive regulation. His efforts to weed out poor servicing of student loans and predatory career training schools at times put him at odds with the Education Department… The CFPB under Cordray’s direction brought some of the most high-profile student lending cases in recent years. Among them: a lawsuit against the now-defunct for-profit giant Corinthian Colleges for steering students into private loans that had interest rates as high as 15 percent.”
In a piece for The American Prospect, Robert Kuttner summarizes some of the outrageous Trump-DeVos abuses Cordray will need to address in the Department’s college loan program: “For starters, there is the appalling story of management of cancellation of debt for people who do ten years of public service. This is authorized under the Public Service Loan Forgiveness program. But under Trump and his education secretary, Betsy DeVos, the Education Department did everything possible to deny this relief. To date, just 1.26 percent of applicants have received debt relief… More broadly, Cordray needs to reverse the Education Department’s Trump-era priority—from collecting as much money as possible to serving the needs of students and former students now in debt. One way to do that is to exercise much tougher oversight of the for-profit loan servicers on contract to the department, who often give bad advice to students in order to maximize their own profits.”
In March, Cardona granted debt relief to approximately 72,000 college students whose claims that their mostly for-profit colleges had defrauded them had already been adjudicated by Betsy DeVos’s staff. And at the end of March, Cardona also extended a freeze on loan payments and interest to borrowers who have defaulted during the pandemic and set the interest rate at zero. POLITICO’s Michael Stratford reported: “The Education Department said that it will immediately suspend the collection of 1.14 million federally backed student loans that are in default. The relief will apply retroactively… and the agency will refund the tax returns and wages that it seized from borrowers who have defaulted since March 13, 2020, when President Donald Trump declared a national emergency because of COVID-19.”
However, many defrauded borrowers agree with Kuttner that despite some progress in Biden’s first few months in office, there is an urgent need to speed up relief after years of delay under Betsy DeVos. On Friday, Danielle Douglas-Gabriel reported: “(W)hen it comes to cases involving federal student aid, consumer attorneys say the Biden administration is moving at a glacial pace. ‘I’m shocked that more than 100 days in we’re still in an active appeal on something that is so opposed to what the Biden administration claims it’s about.’ said Toby Merrill, director of the Project on Predatory Student Lending, a group representing borrowers in multiple Trump-Era cases…. Education Department spokeswoman Kelly Leon said the agency’s ‘new leadership is working actively to address concerns relating to the student financial aid policies of the prior administration.'”
Correcting DeVos era injustices for college students involves needed action in more than the loan program itself. Cardona has taken several steps to undo Trump-DeVos era policies that excluded vulnerable college students from pandemic relief assistance.
Politico’s Michael Stratford reports that beginning with the CARES Act in March 2020 and in all of the subsequent COVID-19 relief bills, “colleges must pass along roughly half of their COVID relief dollars directly to students in the form of emergency financial aid cash grants.” However, in the Trump-DeVos years undocumented students, including DREAMERS who have lived in the United States since they were young children, and international students were shut out of this assistance: “The Biden administration is reversing a Trump-era policy that barred undocumented college students and others from receiving federal relief grants meant to help pay for expenses like food, housing, and child care during the coronavirus pandemic. Education Secretary Cardona on Tuesday (May 11, 2021) finalized a new regulation that allows colleges to distribute tens of billions (of dollars) in federal pandemic relief grants to all students, regardless of their immigration status or whether they qualify for federal student aid.”
The Washington Post‘s Danielle Douglas-Gabriel further explains DeVos’s rationale for excluding undocumented and international students from relief all last year: “After confusing and conflicting guidance, DeVos issued a rule in June asserting that only those who can participate in federal student aid programs can receive (pandemic relief) money. It shut out undocumented and international students…. The Trump administration said a 1996 welfare reform law bars those groups from receiving public aid.” Now, under Cardona’s leadership, “The Education Department said the final rule better reflects the intent of Congress and makes clear that emergency aid can support all students who are or were enrolled in college during the pandemic.” The rule had been challenged by hundreds of colleges: “Many colleges and universities have been using their own institutional funds to lend a hand to undocumented and international students… Hundreds of schools urged the department to reverse course in public comments on the DeVos rule…. ‘Denying emergency grants to DACA and undocumented students wasn’t just legally questionable, it was a moral failing, and I’m relieved to see this finally corrected,’ said Justin Draeger, president of the National Association of Student Financial Aid Administrators.”
As we watch Secretary Cardona begin to address the injustices in education department programs intended to support vulnerable students secure a higher education, we more fully grasp the scope of the damage imposed under Betsy DeVos’s leadership.