Education Secretary Betsy DeVos endured a withering barrage of questions on Thursday about her handling of a program meant to provide debt relief to federal student loan borrowers who say they were defrauded by for-profit colleges.
“Madame Secretary, your refusal to process claims is inflicting serious harm on students,” Rep. Bobby Scott, D-Va., said in his opening statement. “These defrauded borrowers have been left with piles of debt, worthless degrees and none of the jobs that were promised.”
DeVos testified before the House education committee one day after NPR published internal memos showing that the secretary overruled her own department’s findings that borrowers deserved full relief from their loans, because their college credits are essentially worthless. Hundreds of thousands of borrowers are in limbo, and several members referred to the memos in their questioning.
The questioning got heated and personal at times. Rep. Frederica Wilson, D-Fla., in her trademark cowboy hat adorned with purple glitter, stated that the secretary was “out to destroy public education.” Wilson told DeVos, “You are the most unpopular person in our government. … When many people vote in 2020, they will vote to remove you.”
Rep. Virginia Foxx, the committee’s ranking Republican, called those comments “over the line.”
In answering questions from the panel, DeVos acknowledged some of the problems. “Yes, there is a backlog of borrower defense claims at Federal Student Aid,” she said. “To say that I am frustrated by that is an understatement.”
While she stated her intention to enforce current regulations in “good faith,” DeVos also repeated her position that taxpayers’ interests need to be protected when deciding who should get their money back and how much.
“Students are my number one priority,” DeVos said in her opening statement. “They are why I come to work every day. So if students have been deceived by institutions and suffered financial harm as a result, they should be made whole.”
More than 300,000 borrowers have pending claims, DeVos said Thursday. Some have been waiting, in many cases for years, for the Education Department to decide their financial fate. Federal agencies found, starting in 2015, that some for-profit colleges, including the now-defunct Corinthian Colleges and ITT Technical Institute, lied to these students about their job prospects and the value of their credits.
In the waning days of the Obama administration, the Education Department decided to grant full loan relief to these defrauded borrowers under a previously little-used rule called “borrower defense.”
But when DeVos took over, she quickly made clear that the department would not be offering borrowers blanket relief. She came up with a new formula that would provide only partial relief to the vast majority of borrowers, based on their present-day income. That idea was stopped by the courts on the grounds that using Social Security earnings data to calculate relief violates borrowers’ privacy.
Questioning by Republicans on the committee, including Rep. Fred Keller of Pennsylvania, focused on the court case as the reason that borrower relief has been delayed.
This week, DeVos came back with a new plan for partial relief that would rely on publicly available income data. In the hearing on Thursday, DeVos defended the principle of providing “fair relief to all borrowers who actually have been harmed. … They would not be entitled to relief if they can’t demonstrate they’ve been financially harmed.”
But Rep. Suzanne Bonamici of Oregon was among many Democrats to argue that “just because someone is making money doesn’t mean they weren’t defrauded.”
The secretary was defiant on Thursday in her opposition to existing regulation and the findings of her own department.
After taking office, DeVos had to sign off on thousands of borrower defense claims that had already been approved by the previous administration. As pointed out by Wilson during the hearing, she added three words below her signature: “with extreme displeasure.”
On Thursday, DeVos said that the Obama administration had “weaponized borrower defense against schools that they didn’t like.” When asked directly, by Democrat Kim Schrier of Washington state and later by Democrat Andy Levin of Michigan, whether she believed Corinthian students had indeed been defrauded, the secretary did not answer.
“People just laugh in my face”
Scott in his opening statement referred directly to NPR’s reporting this week. “A media outlet published documents revealing that [the department’s] own staff conducted research … and found students deserved full debt relief.”
He demanded, “Are there other relevant documents the department is withholding?”
NPR on Wednesday published previously unreleased internal Education Department memos that show just how strongly career staff in the department’s Borrower Defense Unit had come down on the side of defrauded borrowers.
According to the memos, the unit reviewed thousands of borrower complaints against Corinthian and ITT Tech. Just weeks before DeVos was sworn in as secretary, the unit recommended to the department’s political leadership that these borrowers deserve no less than full relief from their student debts.
One memo, dated Jan. 9, 2017, begins: “Corinthian Colleges, Inc. (‘Corinthian’) consistently represented that all graduates obtained jobs after graduation or, relatedly, that its students were guaranteed employment after graduation. These representations were false and misleading. Accordingly, the Borrower Defense Unit recommends full relief for Corinthian borrower defense (BD) applicants.”
Another memo, dated the next day — Jan. 10, 2017 — arrived at the same conclusion for California-based students who allege they were lied to by ITT Technical Institute, and likewise recommended full relief.
The memos also include quotes from individual borrowers. In the Jan. 9, 2017, memo, a Corinthian graduate complains, “I was told I would find a job in my field. … I ‘graduated’ and still can’t find a job that will honor my degree.”
“Employers will not touch me,” says a borrower quoted in a memo dated Oct. 24, 2016. “After graduating I posted a resume online. I did not receive any responses until I removed [the school’s name] from my resume.”
Another borrower says, “People just laugh in my face.”
In an especially tense exchange, Rep. Jahana Hayes, a freshman Democrat from Connecticut, entered the memos published by NPR into the record and scolded DeVos for not reviewing them before her testimony.
“Can you explain why you ignored that memo? Did you not know you were coming here today?” Hayes asked. “In December 2019, when NPR ran a story, it didn’t cross your mind that I should read this document?”
In round after round of questioning, House Democrats shared stories of their constituents who have been personally affected by loans that have not been forgiven, employment dreams deferred and credit reports damaged as a result.
Rep. Susan Davis, D-Calif., pointed out in the hearing that even as a large number of borrowers continue to wait for their cases to be settled, a new set of borrower defense claims may be looming.
This week the University of Phoenix, once the largest for-profit college in the U.S., agreed to pay a record fine to the Federal Trade Commission over advertising claims about job placement. The settlement includes $141 million in forgiveness of debts owed directly to the university.