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How Betsy DeVos wants to defang rules for-profit colleges and reduce relief for borrowers

For years the for-profit college sector boomed, but consumer complaints about fraud led the Obama administration to crack down: Two major for-profit chains were closed, and new regulations provided more forgiveness for student debt. Recently, Secretary of Education Betsy DeVos has been taking a very different approach. Amna Nawaz talks with Anya Kamenetz of NPR about the changes.

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  • William Brangham:

    She doesn't necessarily attract as much national attention as other members of the president's Cabinet, but Education Secretary Betsy DeVos has been busy.

    Throughout the summer, her department has been taking a very different approach to for-profit colleges compared to its predecessor. That sector of higher education has been under especially harsh scrutiny in recent years.

    Those changes are the focus of our Making the Grade segment, with Amna Nawaz tonight, and part of our periodic look at the education secretary's agenda.

  • Amna Nawaz:

    For many years, the for-profit college sector boomed, eventually reaching enrollment of two million nationwide. But complaints mounted about some players in that industry, and the Obama administration cracks down on them, closing down two major for-profit chains.

    The administration also imposed new regulations, including some that provide more forgiveness for student debt.

    Education Secretary Betsy DeVos has announced some major rollbacks on that front.

    Anya Kamenetz covers higher education closely for NPR, and joins me now.

    Anya, welcome to the "NewsHour."

    I want to ask you about a couple specific changes that have been proposed by the education secretary. What about student debt forgiveness? Now, previously, under the Obama administration, if you attended a for-profit school, and that school was shut down or penalized for defrauding students, how easy was it to have your loans forgiven? And what's different now?

  • Anya Kamenetz:

    So the rule introduced under Obama was called borrower defense to repayment.

    And, basically, they were clarifying how a student who had gone to one of these colleges who had been defrauded could get their money back. They would have to — they wouldn't automatically get their loans forgiven, but they'd have to go through this process.

    And what's happened under DeVos is, there are still tens of thousands of claims pending from people who went to ITT Technical Institute and Corinthian Colleges, two colleges that were shut down, as well as others. And DeVos has said that she's going to grant only partial relief in many circumstances.

    And, in fact, there's a new report from the AP that has shown that, in the first few months of this program, under DeVos, they have only — forgiven fully only 1,000 people. And that's out of tens of thousands that have petitioned.

    So they are trying to match up your income with the amount of money that you're going to get back, which is a principle that seems to be not relevant to some student advocates. They say, look, if your college defrauded you, it doesn't really matter how you're doing financially now. The point is that you didn't get what you were promised.

  • Amna Nawaz:

    Previously, also, you were able to seek relief as part of a group. Is that right? Is that different now?

  • Anya Kamenetz:

    Right.

    So, borrower defense to repayment was originally meant to be something that students could achieve in batches. And the — the claims could be processed in batches by the Education Department. And DeVos has also instituted this idea of going case by case.

    Now, you have no right to representation as an individual student who's been defrauded. So you have people, many of whom are very poor, veterans, working parents, and they're trying to petition, and they have high burdens of proof to meet, as well as this personal information about their incomes.

  • Amna Nawaz:

    Now, OK, there was another rule about gainful employment. This goes back to regulations established in 2014. There was some accountability added to the system, right? They tracked and basically published then data that said, OK, if students — how many of your students are unable to pay back the loans that they took out to attend your school? And then people could publicly see those numbers. Schools with bad numbers are penalized.

    How would this administration change that rule?

  • Anya Kamenetz:

    Gainful employment is a rule that was specifically targeted at the for-profit college industry.

    And, as you mentioned, this rule wouldn't only publish schools that did a bad job kind of putting their students into gainful employment, but it would eventually penalize those colleges with losing access to federal student aid.

    What's happened under DeVos is, they are proposing now to take away the teeth out of that. So they're still going to publish the information, including performance by program of schools in federal — the federal College Scorecard, but what they're not going to do, they say, is have any consequences for colleges necessarily that are doing such a poor job of placing students in gainful employment after they leave.

  • Amna Nawaz:

    Anya, we're talking about changes proposed by the Department of Education.

    But I want to ask you about another federal agency, the Consumer Financial Protection Bureau. There was a man there who was basically the student loan watchdog, who resigned basically in protest a couple of weeks ago. Is that related to any of these changes at all?

  • Anya Kamenetz:

    It is, because the student loan industry is a major, major part of the overall consumer finance industry. And it is overseen in some sense by the Education Department. But, as we have seen, there have been many people from the student loan industry, as well as the for-profit college industry, that have been installed into the Education Department under Betsy DeVos.

    And even if that weren't true, the Education Department essentially collects revenue from the student loan business. And so the point made by Seth Frotman, and others who are consumer advocates is that there really needs to be another regulatory boss on the job, that the Consumer Financial Protection agency — the Consumer Financial Protection Bureau has fulfilled a very important role in overseeing a major amount of student loan debts, to $1.5 trillion.

    And without the true commitment to helping students and being — to having students' backs, this person, in resigning, really felt like they weren't really being able to do their job.

  • Amna Nawaz:

    Anya, very quickly, in a few seconds, what do you think is the overall impact on students as a result of these changes?

  • Anya Kamenetz:

    Well, it really is caveat emptor more than ever before for people that are thinking about signing up for college.

    And for-profit colleges, they are still losing enrollments, but it's really incumbent upon each individual to do their own research before signing up for any program.

  • Amna Nawaz:

    Anya Kamenetz of NPR, thank you very much.

  • Anya Kamenetz:

    Thank you.

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