Bit by bit, the U.S. Department of Education is sneaking Fraud 101 back into our nation’s for-profit college curriculum.
If the department’s secretary, Betsy DeVos, has her way, students who fall victim to tuition scams from bogus “colleges” and “universities” once again will find themselves at a heartbreaking dead end — without the skills to get a better job — and mired in hopeless debt.
In past years, the federal government had worked to weed out deceitful for-profit operations that persuade students to take out large federal loans only to abandon them, leaving them with no new job qualifications and a mountain of debt. In Illinois, 56 such campuses have been closed because they preyed on students.
But the administration of Donald Trump, who once ran a rip-off of his own called Trump University, is welcoming the scammers back.
Last week, the Education Department announced that many students who were defrauded by the for-profit Corinthian Colleges will still have to repay part of their loans. It’s as if somebody stole your smart phone, got caught and had to give back only the case.
DeVos also says she will eliminate two excellent rules that were designed to protect students against predatory for-profit colleges — while also protecting the higher quality colleges.
The first rule, called the gainful employment regulation, requires for-profit higher education institutions to meet minimum thresholds as to how much loan debt students can carry relative to how much money they reasonably can be expected to earn. Programs and schools that fail to meet this threshold can lose access to all federal financial aid for a period, which effectively can force them to close.
The second rule, called the “borrower defense of repayment,” provides that students can have their loans forgiven if there is sufficient proof they were defrauded or misled by their college.
Right about here we should mention that DeVos has stocked the Education Department with executives of the for-profit higher education industry.
Adding to her offenses, DeVos has cut ties with Consumer Financial Protection Bureau, which used Education Department data to track down the most shameful abuses by for-profit colleges. We see no reason DeVos would do that except to protect the shadiest operators.
Some members in Congress, joining DeVos’ campaign, are moving to roll back protections for students through legislation.
Many for-profit institutions do a fine job, providing a quality education, often in a trade, to underserved segments of the population. But the lure of federal loan money has created an avaricious industry of far less scrupulous operators, devoted to raking in money, who quick-talk students into signing up for loans they can’t afford.
The schools pocket the money up front, and the students have to repay the government for their federal loans, even if they never learn a thing. It’s easy to fall into this trap. For-profit schools blanket their targeted population with ads — over the internet, on TV, on phones, in mail boxes and elsewhere — and salespeople follow up on inquiries with relentless vigor, playing on potential students’ dreams of achieving success.
But, all too often, the students don’t graduate or their degrees are worthless. Only their loans are real. Declaring bankruptcy isn’t an option.
Attorneys general are fighting back. Most recently, Illinois Attorney General Lisa Madigan has joined her counterparts in 17 other states in a lawsuit that argues the rule-making process is carefully spelled out in the law and DeVos can’t capriciously rescind the rules. If the attorneys general prevail, future students will have stronger safeguards.
Far more effective than a lawsuit, however, would be a Congress, a secretary of education and a president who put students, not exploitative businesses, first.
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