Betsy DeVos Ignored Her Own Department's Recommendation to Forgive Defrauded Student Borrowers' Debt
Throughout her tenure as Donald Trump's Secretary of Education, billionaire auto parts and beauty products heiress Betsy DeVos has made it more difficult for victims of for-profit college scams to get debt relief. Under her leadership, the department scaled back Obama-era initiatives that would have forgiven the obligations of defrauded students—programs she criticized as creating an entitlement to "so-called 'free money.'" Earlier this year, while DeVos dragged her feet processing already-approved claims for debt relief, the department even collected loan payments from affected students, flouting a court order that barred it from doing so—an alleged mistake that nonetheless prompted an incensed federal judge to threaten putting people in jail.
Since for-profit colleges like the now-defunct Corinthian Colleges tended to target lower-income students with enrollment pitches, their victims are especially likely to suffer negative long-term consequences as a result of being saddled with debt they cannot repay. But since taking office, the thrust of DeVos's argument has been that providing universal debt relief to these students is overbroad, since not all attendees ended up destitute upon graduation. "While students should have protections from predatory practices, schools and taxpayers should also be treated fairly as well," she explained in 2017. This is like arguing that loansharks do, after all, loan money, and any consequences imposed as a result of their exploitative interest-charging and occasional leg-breaking practices must take this fact into account.
Yesterday, when the department announced its more-intensive, less-generous loan forgiveness proposal for former students of for-profit colleges, DeVos insinuated that the enhanced federal scrutiny is necessary to distinguish between honest victims and would-be opportunists. "We cannot tolerate fraud in higher education, nor can we tolerate furiously giving away taxpayer money to those who have submitted a false claim or aren’t eligible for relief," she said in a statement. And in a letter to lawmakers last month, NPR notes, DeVos criticized the administration of President Barack Obama for trying to "provide blanket relief" to students "without review of the facts and evidence"—or, put differently, for extending a payday to an unknown number of people she feels do not deserve it.
However, a trio of internal memos obtained by NPR shows that under President Obama, Department of Education personnel did conduct such a review—but they came to a different conclusion than DeVos. In an 18-page memo from October 2016, staffers from the Borrower Defense Unit, which evaluates fraud claims, reported that despite Everest College's claims that its credits would easily transfer elsewhere, students said their time at Everest "has been an impediment rather than an asset as they seek employment." The memo's authors specifically recommended providing "full" relief to eligible borrowers as a result.
The Department of Education's analyses of similarly unscrupulous for-profit institutions yielded similar conclusions. On January 9, 2017—just weeks before DeVos's confirmation to Donald Trump's Cabinet—the Borrower Defense Unit detailed Corinthian Colleges' "false and misleading" guarantees of post-graduate employment, and recommended forgiving eligible debt on that basis. Another memo dated that same month considered analogous guarantees made by ITT Technical Institute campuses in California, and endorsed the same solution.
Critically, all three memos considered the possibility that some students might have derived some benefit from their attendance, and that department should reduce the amount of their awards accordingly. Yet using near-identical language, all three memos rejected this approach. "Here, there is ample reason not to 'offset' the award of full relief to these borrowers in light of the lack of value attendant to their Corinthian education," the January 9 memo says, noting the astonishing lengths to which Corinthian Colleges went to deceive its victims. "Given this well-documented, pervasive, and highly publicized misconduct at Corinthian, the value of an Everest, Heald or WyoTech education has been severely limited."
In addition, the authors of the Corinthian and ITT Tech memos considered the merits of conducting an "case-by-case analysis" to determine whether affected individuals actually failed to land a job, the companies' guarantees notwithstanding. And again, the department explicitly elected not to do so, finding that the misrepresentations about a degree's value were "substantial regardless of a borrower's ultimately ability to secure employment." In other words, the lucky few who did manage to find work weren't any less swindled than their peers who didn't.
The department, the memos note, based its decisions on job-placement rate analyses and its review of borrower applications. It is not the case, as DeVos previously asserted, that the Department of Education under President Obama failed to consider "facts or evidence" when recommending full relief. Instead, it simply determined after reviewing the facts and evidence that under the circumstances, nothing less than full relief would be enough to do justice.
According to NPR's reporting, lawmakers have known about the existence of these documents for some time, and previously asked the Department of Education to disclose them. Given that the memos use clear and unambiguous language to torpedo her principal rationale for denying debt relief to vulnerable victims of systematic fraud, DeVos's reluctance to share them suddenly makes a lot more sense.
Two of the leading presidential candidates have an established history on civil rights matters.
Originally Appeared on GQ
