Even in a government full of people with no integrity, will or courage to do the right thing, most agencies pull out, or at least pretend, when ordered by the courts. But not the Deputy Secretary of the Department of Education, Betsy DeVos, who seems to have been more encouraged by his losses in court for his efforts to deny debt cancellations owed to people who attended predatory for-profit universities, borrowers who are disproportionately women. and people of color, and often now work in front-line jobs.
First, DeVos tried to delay an Obama-era update of the borrower’s Defense rules for repayment, a 1990-era regulation that says, if a school violates state law, borrowers have the right to the cancellation of your federal student loans. The Obama administration update included new protections, such as banning schools from preventing students from suing in class action lawsuits. DeVos’s delay to this rule was deemed by a judge to be “illegal” and “arbitrary and capricious.”
Nor has it canceled the debts of tens of thousands of borrowers that the government already considered eligible for relief. Another lawsuit challenged this failure, and the court ordered DeVos to stop debt collection for any borrowers covered by the lawsuit; 16,000 students and parents were collected anyway. DeVos was then held for contempt of court and the department was fined $ 100,000.
In an impressive display of its current lawlessness, the department found 17,258 other borrowers it had illegally collected after the ruling.
DeVos’s legal troubles didn’t stop there. Massachusetts Attorney General Maura Healey had previously petitioned the department on behalf of 7,200 Corinthian Colleges alumni in the state, saying their debts were illegal and therefore bad. In 2018, a court found that DeVos had illegally seized the tax refund from two Massachusetts borrowers, given that they had open requests for debt cancellation. But DeVos continued to illegally seize tax refunds from other Massachusetts borrowers even after this ruling, leading to yet another lawsuit.
In June, the same judge who deemed DeVos’ actions in 2018 illegal ordered him to cancel the debts of the 7,200 former students of Corinthian Colleges in Massachusetts.
A series of legal defeats like this could pause the department head. Instead, it was at full speed for DeVos.
He rewrote the Borrower’s Defense regulations so dramatically that almost no borrower will ever qualify for debt cancellation; The department itself estimated that only about 3 cents of every dollar loaned will be forgiven under the DeVos rule. His rewriting was so drastic that 10 Republican senators joined Democrats in voting to override his rewriting in March, and Trump’s veto kept DeVos’s rewriting in place.
And now, the department is testing a particularly cruel and Orwellian handshake, denying debt cancellations without admitting that they are. They are writing to tens of thousands of scammed borrowers that their claims have been approved, but because there is no evidence that they suffered damage, the amount of debt relief is zero dollars.
But perhaps that is to be expected: DeVos, of course, had stacked his department with former for-profit university executives such as Robert Eitel and Diane Auer Jones, both formerly of the for-profit university chain Career Education Corp.
And, when she was once forced to process debt cancellations previously approved by the Obama administration, she took the time to write a comment at the bottom of the form, noting that she was approving the cancellations “with extreme disgust.”
The department’s refusal to comply with the rule of law has led the courts to larger, broader, and more punitive decisions than the courts typically file against federal agencies. Their stubbornness is wasting government resources in the service of denying the releases to black and Latino borrowers affected by the latest crisis, and now tougher by the pandemic.
As a result of the 2008 financial crisis and the Great Recession, black wealth was reduced by more than half, and Latinx’s wealth was reduced by 66 percent. Then these communities were targeted a second time, as for-profit universities rushed into this devastation, holding up false promises and falsifying job placement statistics to entice people in affected communities to enroll in their schools. Fraud was endemic in these institutions (as evidenced by the cascade of lawsuits and investigations they have faced), which is part of the reason why for-profit college graduates generally earn less after graduation than before. These are the same scammed students that DeVos has claimed were simply looking for “free money.”
But targeting had worked: Black women made up 26 percent of people enrolled in for-profit giant Corinthian before its bankruptcy collapse. In Massachusetts, at two Corinthian schools, 80 percent of the students were female and 75 percent were black or Latino.
Thus, during the Obama administration, thousands of alumni of for-profit colleges organized with a group called The Debt Collective and sought their right to debt cancellation under the decade’s borrower defense rules of the 1990s. Borrowers pointed to lawsuits and investigations, such as the Department of Education’s own enforcement actions against for-profit giant Corinthian, which collapsed in bankruptcy in 2015 following evidence of widespread wrongdoing, as evidence that, and in By virtue of that fact, the government had been defrauded.
The Obama administration, however, rejected requests from borrowers and advocates alike to pay off these bulk debts; one borrower, Pamela Hunt, even recorded a video message to President Barack Obama, asking him to pay off borrowers’ debts en masse before leaving office. But instead, they launched a process to decide, claim by claim, who would receive the debt cancellation. This left many borrowers with undecided claims especially vulnerable to a DeVos-run department that has been aggressively challenging both the borrower’s rights and the courts.
The consequence now is that many students who have been defrauded by for-profit schools that depend entirely on federal dollars still suffer from unfair and unmanageable debt, and they depend on a cabinet member who does not believe the law applies to them.
