Democrats lash out at DeVos over proposed changes to loan forgiveness plan

Education Secretary Betsy DeVos came under intense scrutiny from congressional Democrats on Thursday for refusing to fully forgive student loans for people who say they have been defrauded by for-profit colleges.

DeVos has instead proposed a loan forgiveness plan based on earnings data. 

“If claims are false, or students did not suffer financial harm, then hardworking taxpayers, including those who scraped and saved to pay their own student loans, should not have to pay somebody else’s student loans, too,” DeVos said at a hearing called by the House Education and Labor Committee.

“Simply discharging all of these loans, as some on this committee suggest be done, is not fair to taxpayers, nor to those who have paid or are paying their loans,” she added.

The department faces a backlog of more than 210,000 claims from students of for-profit schools who say they were lied to about job prospects and transferability of class credits.

The Obama administration approved debt relief for students of for-profit schools like Corinthian, which closed and filed for bankruptcy in 2015 amid several fraud investigations, leaving thousands of students in debt and without a degree.

DeVos has opposed the Obama administration’s move ever since she was confirmed in 2017, arguing relief should only be given to students who can prove they were financially harmed by for-profit educational institutions.

A rule issued by the department this week would only give full relief to students who earn much less than students in similar programs.

Under the new formula, the remaining students would have no more than 75 percent of their loans forgiven.

The rule enraged Democrats, who argue the department is falling far short of helping students who were defrauded by for-profit schools.

“Your refusal to process claims is inflicting serious harm on the students you have a duty to serve,” said Rep. Bobby Scott (D-Va.), chairman of the Education and Labor Committee.

“While the department has been searching for a legal method of shortchanging defrauded borrowers, those defrauded borrowers have been left with mountains of debt, worthless degrees, and none of the job opportunities they were promised,” he added.

A previous loan-forgiveness formula issued by DeVos in 2017 was blocked by a federal court last year. The new rule will likely be challenged in court as well.

DeVos defended some of the for-profit institutions on Thursday, arguing that onerous regulations by the previous administration forced them to shut down.

“I think there are many students who received valuable education from Corinthian, just like they do from many other institutions. The question is what students among them were financially harmed, and that’s part of the process,” she said.

Rep. Frederica Wilson (D-Fla.) lashed out at DeVos, saying her actions as Education secretary will prompt Americans to vote out the Trump administration next year.

“I’ve had some honest disagreements with my friends in the Republican Party on how to move education forward but I have never — not one time — believed they were out to destroy public education until I met you,” said Wilson said. “You are the most unpopular person in our government. Millions will register to vote in 2020 and many will vote to remove you more than to remove the president.”

Internal department memos obtained and published by NPR this week showed career staff supported full relief for defrauded students but were later overruled by DeVos.

“Corinthian Colleges, Inc. (‘Corinthian’) consistently represented that all graduates obtained jobs after graduation or, relatedly, that its students were guaranteed employment after graduation,” reads one memo from Jan. 9, 2017. “These representations were false and misleading. Accordingly, the Borrower Defense Unit recommends full relief for Corinthian borrower defense (BD) applicants.”