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Gouged by for-profit schools, students could soon be out of luck

Education Secretary DeVos criticized over lack of protections, loan forgiveness

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From the Editor's Desk

Betsy DeVos appears before the United States Senate Committee on Health, Education, Labor and Pensions for her a January confirmation hearing.

Betsy DeVos appears before the United States Senate Committee on Health, Education, Labor and Pensions for her a January confirmation hearing.

The “wait and see” attitude about President Trump’s Education Secretary Betsy DeVos is coming to an abrupt end, and it looks like students who had hoped to see their loans from defunct for-profit schools forgiven may be stuck.

DeVos’ recent actions are speaking a whole lot louder than the words skeptics sneered at last August, when DeVos made this pledge: “Protecting students has always been my top priority.”

Critics and higher education officials – along with Democrats like Senator Patty Murray – were already doubtful, but many are now openly complaining that the regulation-hating education secretary is doing the opposite, putting the interests of for-profits that operate over 3,000 schools clearly ahead of U.S. students.

Among the concerns: it looks like DeVos is considering only partially forgiving the loans of students who attended for-profit schools that have since shut down.

Not surprisingly, the threat alone is a big worry for tens of thousands of older and non-traditional students who were deceived by these now-defunct for-profit institutions, including schools that collapsed after being accused of widespread fraud. The Education Department hasn’t officially announced the new policy yet; details emerged in Associated Press reports over the weekend.

The Obama administration’s loan forgiveness policies – which DeVos has openly questioned and actively rolled back – helped countless students, cancelling some $550 million in student debt. Her actions quickly drew criticism that she’s siding with for-profit executives at the expense of students who are left flailing with huge debt and no degree.

She’s also hired a former executive of the for-profit DeVry University to head the Education Department’s Student-Aid Enforcement Unit; DeVry’s parent company paid more than $100 million to settle a federal lawsuit alleging false advertising.

John B. King Jr., who held the education secretary position under former President Barack Obama, initially hoped DeVos would prove critics wrong; at least that’s what he said before he became president of the nonprofit Education Trust.

Yet here was King at a New York University breakfast last week, ticking off concerns, including DeVos’ freezing of protections that would have prevented students from suing for-profit schools.

Former United States Deputy Secretary of Education John B. King Jr., speaks as President Barack Obama, right, looks on during an October 2015 event.

Former United States Deputy Secretary of Education John B. King Jr., speaks as President Barack Obama, right, looks on during an October 2015 event.

“They are giving oversight to the very for-profit executives who are taking advantage of students,” King said, adding that new policies “are exploiting the very students we tried to protect.”

Related: Debt without Degree: State cuts money to higher education while student costs skyrocket

In September, a group of attorneys general from 17 states and the District of Columbia sued DeVos over her plans to end rules protecting student borrowers. They have good reason to be concerned; some 28 percent of Americans with student debt haven’t completed the educational programs for which they took out loans, a 2016 National Financial Capability Study found.

Any further dismantling of regulations could harm thousands of poor and nonwhite students who’ve been taken advantage of by for-profit schools. These are students who saw a college degree as a life-changing opportunity, only to be left with debt, no degree and minimal job prospects.

For her part, DeVos has maintained she is making changes because the U.S. needs “to expand, not limit, paths to higher education for students, while also continuing to hold accountable those institutions that do not serve students well.”

Vulnerable students with big loans include veterans and adults looking for new career pathways, who instead found themselves at schools that used “manipulative sales tacticshired unqualified facultyenrolled unprepared students, and hid their misdeeds,” according to a Century Foundation report.

Related: Betsy Devos likens education technology to allowing a thousand flowers to bloom

Not surprisingly, Bob Shireman, a senior fellow at the Century Foundation who served as undersecretary of education in the Obama administration, is outraged by DeVos’s shift on loan forgiveness.

“Students can’t make just partial payments on their student loans,” Shireman told me. “By offering just partial relief to defrauded students, Secretary DeVos is falling short of her obligations to protect, defend and assist students who have been harmed by predatory colleges. When federal loans fuel a school’s fraud, the student should not be the one who pays the price.”

At last week’s packed breakfast sponsored by NYU’s Steinhardt School, panelists were asked why for-profit schools have managed to entice so many students in the first place. Madeline Pumariega, chancellor of the Florida College System, tried to explain.

“A for-profit school doesn’t have to ask for driver’s license, lease, or tax returns…they created a concierge service,” Pumariega said. “You went into a mall and came out with a student ID. They took our [traditional higher education’s] lack of customer service and brought in a business model.”

Older and non-traditional students will increasingly become a critical market for universities as the enrollment of traditional-aged students continues to dip, and I can’t help wondering how or why such students without means will take a chance on higher education, given the current atmosphere.

Some will be enticed by the many new certificate programs, and with more alternatives to high-tuition models becoming available, that question matters greatly.

Related: New questions question the value of certificates pushed by colleges, policy makers

I asked about Mission U, a new one-year college program where students will pay back a small percentage of their salaries once their careers are underway, in lieu of tuition or loans. There’s insufficient data and results, so it’s too soon to evaluate, but King sounded a cautionary note.

“Too often you get a promise: ‘It’s gonna turn out fantastic,’ ” King said. “There is a real risk of students being misled and we have to be vigilant on the accountability side.”

As new programs like Mission U emerge, the lessons of for-profit failures past – the ones DeVos wants to forgive – will matter to students more than ever. We’ll watch closely here at The Hechinger Report.

We believe higher education must be held accountable, even if DeVos isn’t willing to do the job.

This story was produced by The Hechinger Report, an independent news outlet focused on innovation and inequality.

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