Betsy DeVos Already Making It Harder for Students Defrauded by For-Profit Colleges to Have Loans Forgiven

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Secretary of Education Betsy DeVos has made it clear that she’s serious about protecting students from grizzly bears. But after putting two Obama-era regulations on the chopping block Wednesday, she sent a message that students seeking protection from a different threat—predatory for-profit colleges—are on their own.


According to new documents released by the Department of Education, DeVos is seeking to roll back two rules that President Barack Obama introduced last year addressing loan forgiveness for student victims of fraud.

The rules, which track graduate employment outcomes and the frequency of complaints made against individual institutions, were enacted in order to combat for-profit schools that make “widespread misrepresentations” about the success of their programs.

For years, schools like the now-closed ITT Technical Institute have lied about their graduation rates and job-placement figures, according to federal regulators. Other well-known for-profits, like DeVry University and the University of Phoenix, reached million-dollar settlements with the federal government after investigators accused both organizations of giving potential students misleading information about post-graduation salary prospects.

Meanwhile, the students at those schools were several times more likely to default on their loans, according to researchers at the Federal Reserve Bank of New York.

To help students who’d taken out massive loans to attend schools with track records of defrauding students, Obama established two regulations. As the Chronicle of Higher Education explains, one of the rules was meant to target ineffective career-preparation programs:

The gainful-employment regulation was meant to hold career-preparation programs accountable for the outcomes of their graduates. Specifically, if the estimated loan payments of a program’s graduates exceed a certain percentage of their income over a period of years, then the program would risk losing federal student aid.


The other rule made it easier for students with massive loans to file class-action lawsuits against schools with histories of fraudulent advertising practices. More importantly, the rule established that loan forgiveness could be granted “en masse” to students at disreputable institutions.

Previously, the government had examined those students’ relief petitions one by one, with no guarantee that each student would be granted the same relief, even though they had all gone through the same experiences.


“We won’t sit idly by while dodgy schools leave students with piles of debt and taxpayers holding the bag,” former Secretary of Education John King Jr. said when the regulations were announced last year.

But on Wednesday, DeVos said she believed both regulations should be scaled back and rewritten, describing them as “overly burdensome and confusing” to the colleges they are meant to regulate.


“It is the Department’s aim, and this Administration’s commitment, to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow,” she announced in a press release.

DeVos did not specify if there are any particular aspects of the Obama-era regulations that she intends to keep.


Steve Gunderson, president and CEO of the industry lobbying group Career Education Colleges and Universities, told The New York Times that he was thrilled about DeVos’ decision, which he said would protect schools “from ideological efforts to destroy postsecondary education.”

Others were less optimistic.

“Delaying the borrower-defense rule would be a monumental dereliction of the duty [Betsy DeVos has] to protect students and taxpayers,” four Senate Democrats wrote in a letter to the secretary. “Students should not be stuck with the bill when a predatory school commits fraud with federal student aid dollars.”


The regulations will go under examination by Department of Education committees over the course of the next several months.

Splinter Editorial Intern and Breakfast Cereal Enthusiast