[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                        EXAMINING THE EDUCATION
                      DEPARTMENT'S IMPLEMENTATION
                          OF BORROWER DEFENSE

=======================================================================

                                HEARING

                               BEFORE THE

                         COMMITTEE ON EDUCATION
                               AND LABOR
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

           HEARING HELD IN WASHINGTON, DC, DECEMBER 12, 2019

                               __________

                           Serial No. 116-48

                               __________

      Printed for the use of the Committee on Education and Labor
      
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                              __________

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                    COMMITTEE ON EDUCATION AND LABOR

             ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman

Susan A. Davis, California           Virginia Foxx, North Carolina,
Raul M. Grijalva, Arizona            Ranking Member
Joe Courtney, Connecticut            David P. Roe, Tennessee
Marcia L. Fudge, Ohio                Glenn Thompson, Pennsylvania
Gregorio Kilili Camacho Sablan,      Tim Walberg, Michigan
  Northern Mariana Islands           Brett Guthrie, Kentucky
Frederica S. Wilson, Florida         Bradley Byrne, Alabama
Suzanne Bonamici, Oregon             Glenn Grothman, Wisconsin
Mark Takano, California              Elise M. Stefanik, New York
Alma S. Adams, North Carolina        Rick W. Allen, Georgia
Mark DeSaulnier, California          Lloyd Smucker, Pennsylvania
Donald Norcross, New Jersey          Jim Banks, Indiana
Pramila Jayapal, Washington          Mark Walker, North Carolina
Joseph D. Morelle, New York          James Comer, Kentucky
Susan Wild, Pennsylvania             Ben Cline, Virginia
Josh Harder, California              Russ Fulcher, Idaho
Lucy McBath, Georgia                 Van Taylor, Texas
Kim Schrier, Washington              Steve Watkins, Kansas
Lauren Underwood, Illinois           Ron Wright, Texas
Jahana Hayes, Connecticut            Daniel Meuser, Pennsylvania
Donna E. Shalala, Florida            Dusty Johnson, South Dakota
Andy Levin, Michigan*                Fred Keller, Pennsylvania
Ilhan Omar, Minnesota                Gregory F. Murphy, North Carolina
David J. Trone, Maryland
Haley M. Stevens, Michigan
Susie Lee, Nevada
Lori Trahan, Massachusetts
Joaquin Castro, Texas
* Vice-Chair

                   Veronique Pluviose, Staff Director
                 Brandon Renz, Minority Staff Director
                                 ------ 
                                 
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on December 12, 2019................................     1

Statement of Members:
    Scott, Hon. Robert C. ``Bobby'', Chairman, Committee on 
      Education and Labor........................................     2
        Prepared statement of....................................     4
    Foxx, Hon. Virginia, Ranking Member, Committee on Education 
      and Labor..................................................     5
        Prepared statement of....................................     6

Statement of Witness:
    DeVos, Hon. Betsy, Secretary, U.S. Department of Education...     8
        Prepared statement of....................................    11

Additional Submissions:
    Courtney, Hon. Joe, a Representative in Congress from the 
      State of Connecticut:
        Memorandum dated December 14,2017 from the United States 
          Department of Education................................    92
    Davis, Hon. Susan A., a Representative in Congress from the 
      State of California:
        Prepared statement from United States of America Federal 
          Trade Commission.......................................   103
    Grijalva, Hon. Raul M., a Representative in Congress from the 
      State of Arizona:
        Letter dated August 30, 2018 from CLASP..................   109
    Hayes, Hon. Jahana, a Representative in Congress from the 
      State of Connecticut:
        Letter dated January 9, 2017 from the Borrower Defense 
          Unit...................................................   114
        Letter dated January 10, 2017 from the Borrower Defense 
          Unit...................................................   128
    Omar, Hon. Ilhan, a Representative in Congress from the State 
      of Minnesota:
        Class Action Complaint...................................   142
        Affadavit................................................   164
    Chairman Scott:
        Letter dated October 24, 2016 from the Borrowers Defense 
          Unit...................................................   167
        Department of Education and Attorney General Kamala 
          Harris Announce Findings From Investigation of Wyotech 
          and Everest Programs...................................   185
        Borrower Defense Partial Relief Methodology Corinthian 
          Colleges, Inc. (CCI) Programs December 2019............   197
        Borrower Defense Partial Relief Methodology Corinthian 
          Colleges, Inc. (CCI) Programs December 2019............   203
        Borrower Defense Partial Relief Methodology ITT 
          Educational Services, Inc. Programs December 2019......   209
        Borrower Defense Partial Relief Methodology ITT 
          Educational Services, Inc. Programs December 2019......   210
        Policy Statement dated December 10, 2019.................   211
        Federal Student Aid Enforcement Office Report on Borrower 
          Defense October 28, 2016...............................   224
        Prepared statement of Chairman Scott.....................   229
        Form 8-K Current Report..................................   232
        Letter dated August 25, 2016 from the Department of 
          Education..............................................   236
        Litigation Release: SEC Charges Former Executive Officers 
          for Their Role In Corinthian Colleges' Disclosure 
          Failures...............................................   243
        Letter dated December 10, 2019 from LSC..................   245
        United States Department of Education First Report of the 
          Special Master for Borrower to the Under Secretary 
          September 3, 2015......................................   247
        United States Department of Education Second Report of 
          the Special Master for Borrower to the Under Secretary 
          December 3, 2015.......................................   258
        United States Department of Education Third Report of the 
          Special Master for Borrower to the Under Secretary 
          March 25, 2016.........................................   265
        United States Department of Education Fourth Report of 
          the Special Master for Borrower to the Under Secretary 
          June 29, 2016..........................................   274
        U.S. Department of Education Accepts Operating Plan from 
          Corinthian Colleges Inc................................   282
    Takano, Hon. Mark, a Representative in Congress from the 
      State of California:
        Defendents' Brief In Response To October 8, 2019 Order...   285
    Thompson, Hon. Glenn, a Representative in Congress from the 
      State of Pennsylvania:
        Article: Bid To Buy For-Profit College By Former Obama 
          Insiders Raises Questions..............................   298
    Wild, Hon. Susan, a Representative in Congress from the State 
      of Pennsylvania:
        Article: Education Department Appoints Special Master To 
          Inform Debt Relief Process.............................   308

 
                        EXAMINING THE EDUCATION
                      DEPARTMENT'S IMPLEMENTATION
                          OF BORROWER DEFENSE

                              ----------                              


                      Thursday, December 12, 2019

                        House of Representatives

               Committee on Education and the Workforce,

                            Washington, D.C.

                              ----------                              

    The subcommittee met, pursuant to call, at 9:01, a.m., in 
Room 2175, Rayburn House Office Building. Hon. Robby C. 
``Bobby'' Scott (Chairman of the committee) presiding.
    Present: Representatives Scott, Davis, Grijalva, Courtney, 
Fudge, Sablan, Wilson, Bonamici, Takano, Adams, DeSaulnier, 
Norcross, Morelle, Wild, Harder, Schrier, Underwood, Hayes, 
Shalala, Levin, Omar, Trone, Stevens, Lee, Trahan, Castro, 
Foxx, Roe, Thompson, Walberg, Guthrie, Byrne, Grothman, 
Stefanik, Allen, Smucker, Banks, Walker, Comer, Taylor, 
Watkins, Wright, Meuser, Johnson, Keller, Murphy.
    Also Present: General Brown.
    Staff Present: Tylease Alli, Chief Clerk; Katie Berger, 
Professional Staff; Rachel Beers, GAO Detailee, Ilana Brunner, 
General Counsel - Health and Labor; Sharit Cardenas, Labor 
Policy Fellow; Emma Eatman, Press Assistant; Christian Haines, 
General Counsel - Education; Kia Hamadanchy, Oversight Counsel; 
Ariel Jona, Staff Assistant; Stephanie Lalle, Deputy 
Communications Director; Andre Lindsay, Staff Assistant; Jaria 
Martin, Clerk/Assistant to the Staff Director; Max Moore, Staff 
Assistant; Jacque Mosley, Director of Education Policy; 
Veronique Pluviose, Staff Director; Benjamin Sinoff, Director 
of Education Oversight; Banyon Vassar, Deputy Director of 
Information Technology; Claire Viall, Professional Staff; 
Joshua Weisz, Communications Director; Cyrus Artz, Minority 
Parliamentarian; Kelsey Avino, Minority Fellow; Courtney 
Butcher, Minority Director of Coalitions and Member Services; 
Dean Johnson, Minority Staff Assistant; Amy Raaf Jones, 
Minority Director of Education and Human Resources Policy; 
Hannah Matesic, Minority Director of Operations; Audra 
McGeorge, Minority Communications Director; Jake Middlebrooks, 
Minority Professional Staff Member; Carlton Norwood, Minority 
Press Secretary; Brandon Renz, Minority Staff Director; Alex 
Ricci, Minority Professional Staff Member; Chance Russell, 
Minority Legislative Assistant; and Mandy Schaumburg, Minority 
Chief Counsel and Deputy Director of Education Policy.
    Chairman Scott. The Committee on Education and Labor will 
come to order. We want to welcome everyone, and note that a 
quorum is present. The committee is meeting today in an 
oversight hearing to hear testimony from the Department of 
Education's implementation of the Borrower Defense Rule. 
Pursuant to Committee Rule 7(c), opening statements are limited 
to the Chair and Ranking Member. This allows us to hear from 
our witnesses sooner, and provides all members with adequate 
time to ask questions.
    I would like to thank Secretary DeVos for being with us 
today, and thank her for agreeing to hold enough time in her 
schedule to allow all of the members present to ask 5 minutes 
of questions pursuant to House rules. And I am especially 
thankful because as chair, I am exercising my prerogative to go 
last in the question order. And so, if she were to leave early, 
I would not get to ask questions. So, thank you for agreeing to 
stay with us for the full time.
    I recognize myself now for the purpose of making an opening 
statement.
    We are here to examine the Department of Education's 
implementation of the Borrower Defense Rule, and I want to 
thank--thank you, Madam Secretary, for appearing before the 
committee to discuss this important issue.
    The Borrower Defense Rule is grounded in basic fairness. 
Student borrowers, who are defrauded by their college, face 
severe financial and emotional consequences. And it is, 
therefore, cruel and counterproductive for the Federal 
Government to compound their misfortune by collecting on their 
student loans.
    Accordingly, the Higher Education Act requires the 
Secretary of Education to provide debt relief to defrauded 
borrowers. Until recently, that authority was rarely needed 
because institutional fraud was uncommon, but, in 2015, 
Corinthian Colleges, a large for-profit chain, abruptly closed 
its doors in the face of widespread allegations of fraud. Those 
allegations were later substantiated with countless reports of 
schools luring students with false promises of guaranteed jobs 
upon graduation and inaccurate information about the 
transferability of credits. A year later, another for-profit 
chain, ITT Tech, closed under similar circumstances.
    In response to a surge of claims, the Obama Administration 
issued a new Borrowers Defense Rule to streamline the process 
for providing relief to defrauded students. By the time the 
Trump Administration took office, 28,000 Corinthian students 
had already received relief, and the Department was on pace to 
process the remaining 54,000 pending claims by the spring of 
2017.
    However, under the present leadership, the Department has 
refused to implement the Borrower Defense Rule. Instead of 
providing defrauded borrowers with full and timely relief as 
the law allows, the Department halted processing claims, so 
that it could invent a new formula that ensured most defrauded 
borrowers would get only a fraction of relief that they were 
eligible to receive.
    The Department's initial partial relief formula would have 
deprived about 93 percent of defrauded students' full relief. 
In 2018, the Federal Court blocked the initial partial relief 
formula because it misused students' personal data. But even 
after the court's ruling, which specifically asserted the 
Department could provide timely and full relief to eligible 
borrowers under the Obama era framework, the Department refused 
to do so. In fact, in 18 months, between the court's June 18th 
ruling, June 2018 ruling, and today's announcement of a new 
revised partial relief formula, the Department did not 
present--process a single Borrower Defense claim.
    Meanwhile, the victims of predatory schools are being left 
in limbo. The number of borrowers awaiting relief has grown 
from 54,000 to roughly 240,000. So, Madam Secretary, your 
refusal to process claims is inflicting serious harm on 
students that you have the duty to serve.
    While the Department has been searching for a legal method 
to shortchange these defrauded borrowers, these defrauded 
borrowers have been left with mountains of debt, worthless 
degrees, and none of the job opportunities they were promised. 
In many cases, they were unable to go back to school, start a 
family, or move on with their lives. And not only has the 
Department refused to provide relief to defrauded students, it 
also illegally collected on 45,000 borrowers, who are awaiting 
you to take action on their claims. In some cases, these 
individuals had wage, wages and tax returns, garnished by the 
very government who was supposed to be providing them relief.
    The court found you in court--in contempt of court for 
collecting on roughly 16,000 of these borrowers, but now the 
Department has conceded that it was illegally collecting on 
about 45,000 borrowers.
    In sum, the defrauded borrowers have been cheated twice: 
first, by their college, then by the Department of Education 
that refused to make them whole. In court filings, the 
Department admitted to gross negligence in handling the 
Borrowers Defense Rule.
    Throughout the last year, this committee has been--has sent 
multiple requests for information and documents in an attempt 
to understand the rationale for changing the Department's 
policy. The Department has continually refused to comply with 
those requests. This lack of transparency was in full display 
yesterday when a media outlet published documents revealing the 
Department's own staff conducted an extensive review of claims 
from former Corinthian and ITT Tech students and found that 
student borrowers who attended these schools deserved full debt 
relief. Those memos should have been provided to the committee 
in response to our repeated requests. Their existence raises, 
unfortunately, two important questions. One, why was there a 
refusal to provide relief and immediate debt relief to 
defrauded borrowers, despite the clear finding of the 
Department staff? And, two, are there other relevant documents 
in the Department that the Department is withholding from the 
committee and the public that would shed light on policy 
decisions?
    Today's hearing is intended to get answers to these and 
other questions on the--about the Department's policy on behalf 
of roughly 240,000 borrowers awaiting relief. So, thank you, 
again, for joining us today. And I yield now to the ranking 
member, Dr. Foxx, for the purpose of making an opening 
statement.
    [The statement by Chairman Scott follows:]

    Prepared Statement of Hon. Robert C. ``Bobby'' Scott, Chairman, 
                    Committee on Education and Labor

    We are here to examine the Department of Education's implementation 
of the Borrower Defense rule. I want to thank you, Madame Secretary, 
for appearing before the Committee to discuss this important issue.
    Borrower Defense is a rule grounded in basic fairness. Student 
borrowers who are defrauded by their college face severe financial and 
emotional consequences. It is therefore cruel and counterproductive for 
the federal government to compound their misfortune by collecting on 
their student loans.
    Accordingly, the Higher Education Act requires the Secretary of 
Education to provide debt relief to defrauded borrowers. Until 
recently, that authority was rarely needed because institutional fraud 
was uncommon. But in 2015, Corinthian Colleges - a large for-profit 
chain - abruptly closed its doors in the face of widespread allegations 
of fraud.
    Those allegations were later substantiated with countless reports 
of schools luring students with false promises of guaranteed jobs upon 
graduation and inaccurate information about the transferability of 
credits. A year later, a second for-profit chain, I-T-T Tech, closed 
under similar circumstances.
    In response to a surge in claims, the Obama administration issued a 
new Borrower Defense rule to streamline the process for providing 
relief to defrauded students.
    By the time the Trump administration took office, 28,000 Corinthian 
Colleges students had already received relief, and the Department was 
on pace to process the remaining 54,000 claims pending by the Spring of 
2017.
    However, under the present leadership, the Department refused to 
implement the Borrower Defense rule. Instead of providing defrauded 
borrowers full and timely relief - as the law allows - the Department 
halted processing of claims so it could invent a new formula that 
ensured most defrauded borrowers would get only a fraction of the 
relief they were eligble to receive.
    The Department's initial partial relief formula would have deprived 
93 percent of defrauded students of full relief.
    In 2018, a federal Court blocked the intial partial relief formula 
because it misused students' personal data. But even after the Court's 
ruling, which specifically asserted the Department could provide timely 
and full relief to eligble borrowers under the Obama-era framework, the 
Department refused to do so.
    In fact, in the 18 months between the Court's June 2018 ruling and 
Tuesday's announcement of a new revised partial relief formula, the 
Department did not process a single Borrower Defense claim.
    Meanwhile, victims of predatory schools are being left in limbo. 
The number of borrowers awaiting relief has grown from 54,000 to 
roughly 240,000.
    Madame Secretary, your refusal to process claims is inflicting 
serious harm on the students you have a duty serve. While the 
Department has been searching for a legal method of shortchanging 
defrauded borrowers, those defrauded borrowers have been left with 
mountains of debt, worthless degrees, and none of the job opportunities 
they were promised. In many cases, they have been unable to go back to 
school, start a family, and move on with their lives.
    Not only has the Department refused to provide relief to defrauded 
students, it also illegally collected on 45,000 borrowers who are 
waiting for you to take action on their claims. In some cases, these 
individuals had their wages and tax returns garnished by the very 
government that was supposed to be providing them relief. The Court 
found you in contempt of court for collecting on roughly 16,000 of 
these borrowers, but now the Department is conceding that the illegal 
collection involved 45,000 borrowers.
    In sum, defrauded borrowers have been cheated twice: First by their 
college, and then by a Department of Education that refuses to make 
them whole. In Court filings, the Department admitted to ``gross 
negligence'' in its handling of the Borrower Defense rule. This is 
perhaps one of the few areas on which we can agree.
    Throughout the last year, this Committee has sent multiple requests 
for information and documents in an attempt to understand the rationale 
for changing the Department's policy. The Department has continually 
refused to comply with those requests.
    This lack of transparency was on full display yesterday, when a 
media outlet published documents revealing that the Department's own 
staff conducted an extensive review of claims from former Corinthian 
and ITT Tech students, and found that student borrowers who attended 
these schools deserve full debt relief.
    Those memos should have been provided to the Committee in response 
to our repeated requests. Their existence raises, unfortunately, two 
important questions:
    1. Why was there a refusal to provide full and immediately debt 
relief to defrauded borrowers, despite the clear findings of your own 
staff?
    2. What other relevant documents is the Department withholding from 
this Committee and the public that would shed light on its policy 
decisions?
    Today's hearing is intended to get answers to these and other 
questions about the Department's policy on behalf of roughly 240,000 
borrowers awaiting relief.
    Thank you, again, for joining us today. I now yield to the Ranking 
Member, Dr. Foxx, for the purpose of making an opening statement.
                                 ______
                                 
    Mrs. Foxx. Thank you, Mr. Chairman. Thank you, Secretary 
DeVos, for being here today. It is my hope that today's hearing 
will provide members of the committee with the chance to 
understand how the Department of Education is working to 
address borrowers' defense claims that have been filed with the 
Department.
    Mr. Chairman, I would like to make one thing abundantly 
clear. Above all else, committee Republicans support smart, 
focused, and constructive oversight. Members of Congress have 
an important responsibility to protect every single tax dollar. 
Everyone in this room knows how seriously we take that 
responsibility. Strong and effective oversight can strengthen 
the integrity of our institutions, including the Department of 
Education. Ensuring the Federal Government is efficient and 
accountable should be a top priority for all members in 
Congress.
    Sadly, this committee is missing an opportunity to address 
serious oversight issues. We could investigate the widespread 
and brazen lawmaking by the United Autoworker Union Leaders, 
who betrayed hardworking Americans in favor of self-enrichment. 
We know the UAW's senior union leaders engaged in money 
laundering, tax fraud, bribery, and embezzlement, but this 
committee has taken no action.
    We could investigate the potential fraud within Head Start. 
A recent report from the nonpartisan Government Accountability 
Office, GAO, indicated there was income fabrication and 
doctored applications to impact an individual's eligibility.
    We could investigate how potentially tens of thousands of 
people may be committing student loan fraud, as a GAO report 
found borrowers may have understated their income or overstated 
their family size to reduce their student loan payments.
    There are real opportunities to work together to address 
these serious issues that require honest oversight. Instead, 
committee Democrats will choose to use their time today 
attacking Secretary DeVos for delays in responses to oversight 
requests she is responding to. Let me remind everyone here 
today that the process to produce the oversight documents 
requested by any member of Congress, including the committee 
chairman, requires reviews across multiple offices within the 
agency. All of this takes time and is necessary to produce 
documents and answers that are, actually, responsive to 
members.
    Despite the limitations of the bureaucracy, the Education 
Department is trying to work with the committee Democrats to 
respond to all their requests. So, contrary to claims, I expect 
to hear today from my colleagues across the aisle, Secretary 
DeVos and the Education Department are committed to providing 
relief to students who have been harmed by fraudulent practices 
and are reforming the Borrower Defense to Repayment Rule, both 
to clarify standards and make the process more accessible.
    Since taking office, Secretary DeVos has spent more than 2 
years on deliberations, public hearings, negotiations with 
higher ed stakeholders, and considering, incorporating, and 
responding to public comments on this issue. They did so with a 
regulatory reset in mind to hold colleges and universities 
accountable, and provide relief to students who have been 
harmed by deceptive practices.
    Claims that Secretary DeVos is unnecessarily or 
purposefully delaying relief for these borrowers is false--are 
false. Secretary DeVos is putting reforms in place that will 
help defrauded students navigate the process of getting the 
loan relief they deserve, and committee Republicans are 
supportive of these efforts.
    Defrauded students who have been financially harmed should 
get relief. I thank Secretary DeVos, again, for being here 
today, and look forward to our discussion about how the 
Education Department is working to protect student borrowers 
and American taxpayers by not only holding fraudulent 
institutions accountable, but also working to prevent fraud 
from happening in the first place. Thank you, Mr. Chairman.
    [The statement by Mrs. Foxx follows:]

Prepared Statement of Hon. Virginia Foxx, Ranking Member, Committee on 
                          Education and Labor

    Thank you, Secretary DeVos, for being here today. It is my hope 
that today's hearing will provide Members of the Committee with a 
chance to understand how the Department of Education is working to 
address borrowers' defense claims that have been filed with the 
Department.
    Mr. Chairman, I'd like to make one thing clear, above all else, 
Committee Republicans support smart, focused, and constructive 
oversight. Members of Congress have an important responsibility to 
protect every single tax dollar. Everyone in this room knows how 
serious we take that responsibility.
    Strong and effective oversight can strengthen the integrity of our 
institutions, including the Department of Education. Ensuring the 
federal government is efficient and accountable should be a top 
priority for all Members of Congress.
    Sadly, this Committee is missing an opportunity to address serious 
oversight issues. We could investigate the widespread and brazen 
lawbreaking by the United Auto Worker (UAW) union leaders who betrayed 
hardworking Americans in favor of self-enrichment. We know the UAW's 
senior union leaders engaged in money laundering, tax fraud, bribery, 
and embezzlement, but this Committee has taken no action. We could 
investigate the potential fraud within Head Start. A recent report from 
the nonpartisan Government Accountability Office (GAO) indicated there 
was income fabrication and doctored applications to impact an 
individual's eligibility. We could investigate how potentially tens of 
thousands of people may be committing student loan fraud, as a GAO 
report found borrowers may have understated their income or overstated 
their family size to reduce their student loan payments.
    There are real opportunities to work together to address these 
serious issues that require honest oversight.
    Instead, Committee Democrats will choose to use their time today 
attacking Secretary DeVos for delays in responses to oversight requests 
she is responding to.
    Let me remind everyone here today that the process to produce the 
oversight documents requested by any Member of Congress, including the 
Committee Chairman, requires reviews across multiple offices within the 
agency. All of this takes time and is necessary to produce documents 
and answers that are actually responsive to Members.
    Despite the limitations of the bureaucracy, the Education 
Department is trying to work with the Committee Democrats to respond to 
all their requests.
    So, contrary to the claims I expect to hear today from my 
colleagues across the aisle, Secretary DeVos and the Education 
Department are committed to providing relief to students who have been 
harmed by fraudulent practices and are reforming the borrower defense 
to repayment rule to both clarify standards and make the process more 
accessible.
    Since taking office, Secretary DeVos has spent more than two years 
on deliberations, public hearings, negotiations with higher education 
stakeholders, and considering, incorporating, and responding to public 
comments on this issue. They did so with a regulatory reset in mind to 
hold colleges and universities accountable and provide relief to 
students who have been harmed by deceptive practices.
    Claims that Secretary DeVos is unnecessarily or purposely delaying 
relief for these borrowers is false.
    Secretary DeVos is putting reforms in place that will help 
defrauded students navigate the process of getting the loan relief they 
deserve. And Committee Republicans are supportive of these efforts. 
Defrauded students who have been financially harmed should get relief.
    I thank Secretary DeVos again for being here today, and I look 
forward to our discussion about how the Education Department is working 
to protect student borrowers and American taxpayers by not only holding 
fraudulent institutions accountable but also working to prevent fraud 
from happening in the first place.
                                 ______
                                 
    Chairman Scott. Thank you. And, Dr. Foxx, without 
objection, all other Members who wish to insert written 
statements into the record may do so by submitting it to the 
Committee Clerk electronically in Microsoft Word format, by 
5:00, by 14 days--within 14 days of today.
    I would like to welcome Secretary DeVos, and thank her, 
again, for appearing before the committee. I will now yield to 
the gentleman from Michigan, Mr. Walberg, who has requested the 
honor of introducing the Secretary.
    Mr. Walberg. I thank you, Mr. Chairman, for your deference 
to allow me this opportunity. We Michiganians are proud people. 
And I know there will be disagreements here in this hearing 
today about what the Secretary is doing, but having had the 
privilege and honor of knowing her and her family, going back 
into the early 1980s, and knowing the impact that her family, 
as well as the family she married into, has had in not only 
Michigan, but all across this country, not because they were 
pushed into it, but because they had a passion for seeing young 
people educated from K through college, and to make sure it was 
done in appropriate ways and that people have had choices that 
would not have had choices before. They have done it in a way 
that has made a difference, and it continues on into their 
children, as well in cultural areas, educational areas, 
manufacturing, bringing up people that would not have had the 
opportunity that they had.
    So, I understand that this will be a challenging hearing 
today. I do know, from personal experience, that our Secretary 
wants to do things right, wants to do it according to law, 
wants to make sure that things are carried out on both sides of 
the ledger, and especially that students and taxpayers are 
treated fairly. And I know that because of knowing how she and 
her family have carried on the life in Michigan, and touching 
lives who would not have been carried on in a way before that 
led to success.
    So, I just want my colleagues to know that background 
information, as well, even though she is a Secretary of 
Education and is entirely capable of answering all the 
questions we have. I welcome you, and thank you for being here.
    Chairman Scott. Thank you very much. Before you begin your 
testimony, Madam Secretary, I would like to acknowledge the 
presence of retired Air Force Major General Mark Brown, chief 
operating officer of the Office of Federal Student Aid, for 
agreement with the committee. General Brown is here to assist 
the Secretary in her answers. He is not a witness at this 
hearing. In the course of answering a question directed to her, 
the Secretary, according to the agreement, may consult with 
General Brown or direct him to assist her in the response. But 
insofar as he is not a witness, members are reminded that 
questions, including follow-up questions, may not be directed 
to him personally, but must be directed to the Secretary.
    Let me remind you, Madam Secretary, that we have received 
your written statement and it will appear in full in the 
hearing record pursuant to Committee Rule 7(d) and committee 
practice. You are asked to limit your oral presentation to a 5-
minute summary of your written statement pursuant to Title 18 
U.S. Code Section 101. Are you aware of that code section, 
prohibiting false statements to committee?
    So, we will forego the spectacle of the swearing in. 
Therefore, before you begin your testimony, please remember to 
press the button on the microphone in front of you so that it 
will turn on and the members can hear you. As you begin to 
speak, the light in front of you will turn green. After 4 
minutes, the light will turn yellow to signal that you have 1 
minute remaining. When the light turns red, your 5 minutes have 
expired and we would ask you to wrap up. During member 
questions, in answering a question, please remember to, once 
again, turn on your microphone.
    I now recognize the Secretary of Education, Secretary 
DeVos.

    TESTIMONY OF THE HONORABLE BETSY DeVOS, SECRETARY, U.S. 
                    DEPARTMENT OF EDUCATION

    Secretary DeVos. Thank you so much, Mr. Chairman. Thank 
you, Congressman Walberg, for that very kind introduction.
    Chairman Scott, Ranking Member Foxx, and members of the 
committee, let me, first, thank the committee for its 
willingness to make this a productive hearing. We have provided 
the committee 18,000 pages of documents during the past month 
on Borrower Defense alone. We have briefed you several times, 
and I am hopeful we can use today's hearing to continue in that 
spirit of constructive dialogue.
    Let me also thank you for the opportunity to set the record 
straight on this administration's approach to Borrower Defense 
to repayment. I want to be very clear. Students are my number 
one priority. 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. But if 
claims are false or students did not suffer financial harm, 
then hardworking taxpayers, including those who scraped and 
saved to faithfully pay their own student loans, should not 
have to pay somebody else's student loans, too. It is a matter 
of fairness.
    Adjudication of these claims must treat all students and 
taxpayers fairly. Simply discharging all of these loans, as 
some on this committee suggest be done, is not fair to 
taxpayers, nor to those who have paid or are paying their 
loans.
    This administration's commitment to fairness and the rule 
of law continues to guide our thinking with regard to Borrower 
Defense. When Borrower Defense arrived in 1995, it was a 
regulation in the Higher Education Act that was little known 
and little used. In fact, in the 20 years from 1995 to 2015, 
fewer than 60 claims were filed. Then the previous 
administration weaponized the regulation against schools it 
simply did not like. They applied the law in a discriminatory 
fashion. So, since 2015, there has been a 5,000 percent 
increase in Borrower Defense claims.
    This administration is committed to pulling back the 
previous administration's overreach, and will enforce a 
Borrower Defense Rule that is consistent with Congress' intent, 
that protects all borrowers and that treats taxpayers and 
schools fairly. Before I discuss the important distinctions of 
our Borrower Defense Rule, let me begin by saying what it does 
not do.
    First, it does not apply retroactively. When our rule goes 
into effect on July 1st next year, it will apply only to loans 
first disbursed after that date. This means that the Department 
will continue to enforce, in good faith, the previous 
administration's 2016 rule for all loans disbursed between July 
1, 2017, and July 1, 2020.
    Second, our rule does not shield any school from 
accountability, nor does it relax oversight of bad ones. All 
institutions, no matter their tax status, are held accountable 
under our rule.
    Finally, our rule does not demand that students prove that 
their school intentionally deceived them. Instead, the rule 
provides due process for all parties. Our process focuses on 
individual students and requires evidence from both the 
borrower and the school before deciding a claim. And unlike the 
prior administration's rule, the student always has the 
opportunity to respond to the school's case.
    Now, let me discuss the basics of what our rule does do. 
First, our rule puts into place a process that is clear, 
understandable, and easily accessible for borrowers. It also 
ensures that claims are processed efficiently, carefully, 
transparently, and fairly.
    Second, students may file either affirmative or defensive 
claims, all of which will be judged using a preponderance of 
the evidence standard.
    Third, our rule provides a legally grounded, reasoned, and 
appropriate definition of misrepresentation. It enables both 
borrowers and institutions to present evidence, obtain relevant 
evidence we are considering in the case, and respond to any 
evidence in the record.
    These reforms constitute much needed course corrections to 
the 2016 rule currently in place. The Obama Administration's 
rule punishes for-profit schools, but gives nonprofits a pass 
for the very same conduct.
    Now let me turn to the ongoing adjudication of existing 
claims before the Department. Yes, there is a backlog of 
Borrower Defense claims at Federal Student Aid. To say that I 
am frustrated by that is an understatement. But rather than 
focus on why there is a backlog, too many have, instead, 
focused on creating more chaos in a circus-like atmosphere. 
Here are the inconvenient facts about Borrower Defense.
    First, we inherited from the Obama Administration more than 
64,000 Borrower Defense claims. So, I asked the IG to 
investigate why they had made such little progress processing 
these claims. The IG found material weaknesses in the previous 
administration's procedures for approving and denying claims. 
In fact, the prior administration was encouraging claims to be 
filed, knowing full well it lacked the ability to even 
accurately track them. It had no process in place for reviewing 
any claims, and it knew that the Department could not quickly 
and legally give blanket forgiveness of all loans. So, when 
they left office, they left tens of thousands of claims behind.
    Greeted by this crushing number of applications, and 
without effective guidance from Congress, we took action to 
establish a process for reviewing the backlog using the prior 
administration's categories as our baseline. We quickly 
adjudicated 32,400 claims. Our relief methodology was based on 
the same data, Social Security Administration data to be exact, 
that the Obama Administration used to measure schools under 
their Gainful Employment Rule.
    Unfortunately, in May of 2018, a Federal District Court in 
California determined that using that data violates the Privacy 
Act. We strongly disagree, and have been waiting for a decision 
on appeal from the Ninth Circuit for well more than a year.
    The Department stands ready to process these claims. I want 
to process these claims. We simply need a decision from the 
court. In the meantime, we are doing everything we can to 
process claims in another manner. I recently approved a new 
scientifically robust methodology that relies on publicly 
available 2017 Gainful Employment earnings data, Social 
Security Administration earnings, College Scorecard data, and 
IRS information to determine harm and calculate the amount of 
relief.
    Ultimately, what the Department wants, what I want, and 
what taxpayers deserve, is to provide fair relief to all those 
borrowers who actually have been harmed. That is what the law 
requires. That is what you intended by the Borrower Defense to 
Repayment Law, and that is what we are doing. Thank you. I will 
be happy to answer your questions.
    [The statement of Secretary DeVos follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    Chairman Scott. Thank you, Madam Secretary. Under Committee 
Rule 8(a), we will now question the witness on the 5-minute 
rule. As I mentioned earlier, as Chair, I have decided to go to 
the end. So, I will yield to the next senior Member, the 
Majority side, who will be followed by the Ranking Member or 
her designee. We will then alternate between the parties.
    And I remind Members, again, that all questions are to be 
directed to the Secretary, who can consult with General Brown, 
or--and I would also remind members that the subject of the 
hearing is Borrower Defense. Per agreement with--and per our 
agreement, members should limit their questions to that issue. 
I now yield 5 minutes to the gentlelady from California, Ms. 
Davis.
    Ms. Davis. Thank you. Thank you, Mr. Chairman. And, Madam 
Secretary, welcome. We are glad that you are here. In the 
course of our discussion with you today, I hope we can 
determine your interest and your thinking on this issue. One of 
your roles, of course, is to protect the taxpayer, but we hope 
you will also want to protect students from the harm caused by 
predatory for-profit programs.
    Today, you are here to get credit, I think, for the new 
partial relief formula, but it does deny full relief to the 
vast majority of defrauded students. Can you tell us how many 
partial relief funding formulas you discussed with your 
Department before settling on this one?
    Secretary DeVos. Well, thank you, Congresswoman, for that 
question and for your continued concern about and focus on 
students. We share that concern and want to do what is right 
for all students.
    We considered a number of different methodologies once the 
court shut us down in May of 2018. And we wanted to make sure 
that we had a scientifically robust and defensible approach to 
being able to determine whether a student was, indeed, 
financially harmed, and we believe that this new methodology 
addresses those concerns, and will indeed treat and consider 
each student and their individual circumstances very fairly and 
straightforwardly.
    Ms. Davis. But I think you must be aware that the new 
formula does rely on incomplete earnings data which represents 
only about 20 percent of all programs. Would you agree that is 
incomplete?
    Secretary DeVos. Well, it relies on a number of different 
data sets, and it is all publicly available. It is all--it is 
actually more expansive than just the gainful employment data, 
and it is taking into consideration--
    Ms. Davis. But we hope--
    Secretary DeVos.--programs at schools at which the student 
has filed a claim versus programs, like programs, across the 
country.
    Ms. Davis. Well, I certainly hope that you will look at 
that again because the 80 percent of all borrowers only 
includes borrowers who completed degrees, and most students 
seeking relief under Borrower Defense do not complete their 
degrees. So, I want to read to you a quote from a story, which 
came from the recent NPR story. Are you familiar with that 
story at the NPR?
    Secretary DeVos. I have heard about it. I have not listened 
or looked at it in depth.
    Ms. Davis. Okay, and I believe that was one that really had 
to do with the work in your Department, and I quote, ``I was 
also told by the recruiters from the school,'' and this is a 
student speaking about what happened, ``I was also told by the 
recruiters from the school about wages I could make that I have 
yet to be able to earn due to the fact that the school is and 
was not very credible. The ITT Tech recruiters assured me AA 
students graduate making around 50,000 to 60,000 a year, and a 
B.S. graduate would be around 80,000.''
    So, they misrepresented their product, their name brand, 
and their education. Would you say that student has been 
harmed?
    Secretary DeVos. I am not going to comment to 
hypotheticals. I am sympathetic to that student's plight, and 
if that student has filed a claim, it will, of course, be 
adjudicated and processed appropriately through what--our 
efforts with--at the Department and FSA.
    Ms. Davis. Well, you know, does the university not have a 
responsibility to provide what it claims it will? There is 
literally no other consumer protection that does not restore 
full repayment of a fraudulent product. We are all aware of 
that. We have probably been through it.
    NPR reported yesterday that internal memos in your own 
Department show that career staff advocated for defrauded 
students to receive full relief from Borrowers Defense. Did you 
review the memos that came from your own Department?
    Secretary DeVos. I am not sure which memos to which you are 
referring. There are lots of memos generated within the 
Department of Education. There are hundreds and hundreds of 
lawyers, and many of them have lots of opinions. So, if you 
would like to share the specific documents, I would be happy to 
review them.
    Ms. Davis. I believe there were thousands of them, and I am 
just wondering, I mean, according to the report, the majority 
of career staff disagree with you. And so, that was clear in 
the report and you will, I am sure, have a chance to have a 
look at that..
    And I think there is also, you know, a concern that if you 
weren't listening to the career staff that were telling you 
what they were seeing with students that were definitely 
harmed, but did you rely on that same staff for the partial 
defense plan that you came up with?
    Secretary DeVos. Congresswoman, what I know when I came 
into my job is, there were tens of thousands of claims and 
there was no process and no structure for actually considering 
them. We worked on and developed a process and a structure, 
implemented it, and we are well down the way of considering all 
of the claims that we had pending and then the court shut us 
down. We had to develop another process. We are still waiting 
for the court to opine on the ruling that they made in May of 
2018.
    Davis. Thank you. Mr. Chairman, my time is up. I was also 
going to go into the Federal Trade Commission coming up with 
the University of Phoenix ruling. And the interesting thing 
about that is that if students had a Federal loan, they will 
probably not be made whole, but if they got their yield, their 
loans through the school, they will, which is an interesting 
dilemma that we are going to have to face. Thank you, Mr. 
Chairman.
    Chairman Scott. The gentlelady's time has expired. Dr. 
Foxx?
    Mrs. Foxx. Thank you, again, Mr. Chairman. Secretary DeVos, 
it is important to conduct good oversight and to do that we 
need to have a good working relationship with the Department. I 
know you are trying to cooperate with congressional oversight, 
so thank you for those efforts.
    Madam Secretary, I know there are several letters that you 
have received from the chairman that his staff has also sent a 
significant number of emails with additional requests. Is that 
accurate?
    Secretary DeVos. Yes, it is.
    Mrs. Foxx. My understanding is that you are diligently 
working to address those requests. Is that correct?
    Secretary DeVos. Yes, it is and we have been for sure.
    Mrs. Foxx. More generally speaking, how many letters have 
you received from Congress since taking office and what is your 
overall response rate?
    Secretary DeVos. Since I took office, on average, we 
receive 1.8 letters every day from members of Congress to 
address specific issues. We have responded to 95 percent of 
those letters and I have placed a high priority on making sure 
we are responsive and timely in our responses.
    Mrs. Foxx. So, 1.8 letters per day,--
    Secretary DeVos. Per day.
    Mrs. Foxx.--from members of Congress.
    Secretary DeVos. Yes.
    Mrs. Foxx. Then moving on to Borrower Defense, these 
questions might require more technical information. So, I am 
fine with General Brown sharing information with you to answer 
the question. There is a report the Department issued before 
you were there that claimed FSA was on target to clear all 
eligible Borrower Defense claims by spring of 2017. Are you 
familiar with this report?
    Secretary DeVos. Yes, I am.
    Mrs. Foxx. Do you know how many claims the administration 
had processed at that point and how many remained then?
    Secretary DeVos. I believe there were 16,000. Is it 16,000 
that had been processed before I came in and then--
    Mrs. Foxx. Sixteen thousand?
    Secretary DeVos. Sixteen thousand and there were 64,000 
awaiting me when I came.
    Mrs. Foxx. Okay. So, could you tell us why you were not 
able to clear pending claims by spring of 2017?
    Secretary DeVos. Well, as I mentioned in my opening 
comments, there was no process in place to actually consider 
the claims. The ones that had been processed early on were 
clearly ones that there was a hundred percent relief involved. 
But as more of those claims were considered, we consider--they 
continued to deteriorate, to use the Federal Student Aid 
terminology, in terms of their validity of claim. And so 
without a process in place, we had no way of actually 
determining what the relief could or would be.
    Mrs. Foxx. It sounds as though from the information that we 
have been given and things you have either said or alluded to, 
it was as though the Obama Administration just okayed every 
single claim, if there was no process. Is that an accurate 
thing to say? So, it would not have mattered what the students 
said, but they just said, I want my loan forgiven and it was 
forgiven?
    Secretary DeVos. Yes. That is based on the data that we 
have seen and the information that we have been able to find 
from that time period.
    Mrs. Foxx. So, no proof was required of the students that--
a student that he or she actually had been defrauded? Secretary 
DEVOS. No. Once again, there was no real process in place. So, 
it was a matter of looking at claims and then forgiving them. 
And that had been done for a number of thousands of students 
before I arrived.
    Mrs. Foxx. All right. And much has been made about the 
``career staff'' who made some recommendations to you early on 
about how to handle these claims. My assumption is those would 
have been the same career staff, that that had just been simply 
sending out forgiveness for loans to these people.
    What is your understanding of your role when you get a 
recommendation from a staff person?
    Secretary DeVos. Well, I get many recommendations from 
staff, both career and politically appointed staff and take 
them all into consideration. I clearly understand and 
acknowledge the expertise--of those who have been in the 
Department for some time. But in this case, I--for one thing, I 
am not sure to what documents are even being referred to. So, I 
do not want to comment on specific documents when I am not sure 
what they exactly say.
    And secondly, like I said, there are hundreds of lawyers in 
the Department of Education, many of whom generate lots of 
ideas and lots of recommendations and I take those, I do not 
review all of them. I get--some come to me, but I take the 
recommendations, I take the input. And ultimately, I need to 
make sure I am following the law and that I am establishing 
policies and practices that are consistent with the law.
    Mrs. Foxx. Thank you, Madam Chairman. Thank you, Mr. 
Chairman. I apologize for going over.
    Chairman Scott. That is okay. The gentleman from Arizona, 
Mr. Grijalva.
    Mr. Grijalva. Thank you, Mr. Chairman. There is no question 
that Corinthian borrowers were defrauded and that fraud was so 
severe that they were entitled to full relief. In fact, the 
Department of Education found the Corinthian education provided 
little or no value. Madam Secretary, do you agree Corinthian 
defrauded students?
    Secretary DeVos. Congressman, I know that there were a 
number of students that attended Corinthian programs that have 
claims with--for financial harm based on their experiences and 
their individual circumstances. And we are continuing to work 
to make sure that those claims are ultimately processed and 
those students are responded to. Again, unfortunately, the 
courts have stopped our processing of those.
    Mr. Grijalva. But there has been countless memos developed 
by your own attorneys and the Department of Education about the 
wholesale defrauding of students by Corinthian. And, in fact, 
the court filings by over 20 state attorney generals would 
disagree that this is a widespread issue. But do you agree that 
Corinthian misled students on the college's graduation rates? 
They falsely asserted a degree would result in a guaranteed 
employment and that academic credits from Corinthian would be 
accepted and transferable to other colleges? Do you agree that 
those students were misled?
    Secretary DeVos. I think in some cases that was probably 
the case, but I also know that the prior administration 
basically forced schools like Corinthian out of business. They 
put financial restrictions on Corinthian that allow--that did 
not allow the school to even continue operating anymore. What 
we need to do--
    Mr. Grijalva. But the fundamental question with Corinthian, 
you can agree or disagree, and I will ask that Corinthian 
provided no educational value to its students as a result of 
fraud and that was pervasive before any discussion by any 
administration regarding that program?
    Secretary DeVos. I do not agree with that narrative. I 
think there are many students that received valuable education 
from Corinthian just like they do from many other institutions. 
The question is what students among them were financially 
harmed - that is part of the process--
    Mr. Grijalva. Referencing the statement that my colleague, 
Ms. Davis, referenced from yesterday, that internal 
communication in the Department of Education from January 10, 
2017, concludes, ``Given this extensive, well-documented, 
pervasive, and highly publicized misconduct, the Department has 
determined that the value of an IT&T education, like 
Corinthian, is likely either negligible or nonexistent. 
Accordingly, it is appropriate for the Department to award 
eligible borrowers full relief.''
    So, though, do you agree that those loans before July 1, 
2017, are subject to the Borrower Defense Fund standard?
    Secretary DeVos. They certainly are subject to the Borrower 
Defense Rule, but they are not subject or they are not 
automatically subject to full and complete forgiveness of every 
single loan.
    Mr. Grijalva. Okay.
    Secretary DeVos. That is, I mean, even the prior 
administration, individuals acknowledged that there were up to 
40 percent of the Corinthian claims filed that were not even 
eligible for consideration. And so--
    Mr. Grijalva. But the 1994 standard--
    Secretary DeVos.--again, I go back, I am sorry, I go back 
to the fact that there was--
    Mr. Grijalva. Madam Secretary--
    Secretary DeVos.--no process.
    Mr. Grijalva. I have limited time.
    Secretary DeVos. There was no way to really consider these 
claims. I inherited no process. We had to create a process.
    Mr. Grijalva. But the 1994 standard--
    Secretary DeVos. I understand that some of you here want to 
just have blanket forgiveness for everyone, anyone who raises 
their hand and files a claim, but that simply is not right.
    Mr. Grijalva. No, I think most of us here want justice for 
these taxpayers that happen to be borrowers, for them to 
receive the relief that they need to receive. And the 1994 
standards established that these claims are subject to state 
law standard, meaning those 20 states that found that the 
college engaged in fraud, those students are entitled to 
Borrowers Defense. And how many of these loans, pending loans, 
fall within that criteria of the loans that you are talking 
about, that we are talking about with Corinthian, and that are 
seeking relief from the Department? It is a question.
    Secretary DeVos. Is it a question?
    Mr. Grijalva. Yes.
    Secretary DeVos. I do not have the specific number of 
Corinthian claims that are still pending. Perhaps General Brown 
can help.
    Mr. Grijalva. Well, I think Judge Kim in her decision said, 
``This is a problem that the government created. Madam 
Secretary, you have an obligation to provide relief to those 
borrowers regardless of costs.'' Do you agree with that?
    Secretary DeVos. We have an obligation to follow the rules 
and to follow the law and we have implemented a process that 
will actually allow us to do that. We had implemented one.
    Mr. Grijalva. Well, in the defense of--
    Secretary DeVos. The court did not agree with the data we 
were using--
    Mr. Grijalva. In the protection of taxpayers, we have to 
agree that seeking--that those seeking relief are taxpayers and 
the Department should be doing something about protecting them 
as well. Thank you, Mr. Chairman.
    Chairman Scott. Thank you. And I am going to have to be a 
little stricter with the time because we may run over. So, with 
that, Dr. Roe, you are recognized.
    Dr. Roe. Thank you, Mr. Chairman, and thank you, Madam 
Secretary, for being here and your work on simplifying the 
FASFAFAFSA form. And, General Brown, thank you for your 
service, sir.
    Today, Madam Secretary, I would like to discuss your 
authority when it comes to awarding relief or a defense to 
repayment claim. I know this was discussed in your testimony, 
but I would like the record to be clear. If you believe General 
Brown can provide a more technical answer, please feel free to 
call on him. Many of the questions are a simple yes or no.
    Number one, you have the authority under the law to provide 
borrowers filing a Borrower Defense claim full, partial, or no 
relief. Is that correct?
    Secretary DeVos. That is correct, Congressman, and I would 
love to refer everyone to Exhibit 5 that demonstrates or that 
shows the portion of the law that clearly states this. I think 
this has been a question for a lot of people and I want to make 
sure it is very clear that it is the Secretary's prerogative to 
have--to establish full or partial relief.
    Dr. Roe. Thank you. The statute is silent on full or 
partial relief, but the regulation specifically discussed 
partial relief. Is that correct?
    Secretary DeVos. That is correct.
    Dr. Roe. The Department defended partial relief in both the 
2016 rule under President Obama and your 2019 regulations. Is 
that correct?
    Secretary DeVos. That is correct.
    Dr. Roe. The lawsuit and ManriquezManriquez case is about 
the data used to determine partial relief. Is that correct?
    Secretary DeVos. That is correct. Not the methodology.
    Dr. Roe. Okay. I know that many of my colleagues believe 
you should just reward full relief if you find there was harm, 
but you have decided, as you are authorized to do, to grant 
partial relief in some circumstances. Is that correct?
    Secretary DeVos. That is correct.
    Dr. Roe. Simply following the statute on the rules. Can you 
please explain why you believe partial relief is important and 
what are some examples of where partial relief is appropriate?
    Secretary DeVos. Certainly. Well, the previous approach was 
either all or nothing and the new methodology that we have 
developed is a very scientifically defensible approach that 
looks at standard deviations from median earnings in a program 
and compares it to median earnings. So, if a claimant makes a 
claim against a school with regard to a specific program, we 
will take the median earnings data from that program, from that 
school, and compare it to like programs from other schools 
across the country. And if it is more than two standard 
deviations below that median, the individual would get a 
hundred percent relief. If it is between the median and two 
standard deviations, it will be a tiered relief. If they are 
earning more than the median for the rest of the schools, then 
they would not be entitled to relief. They cannot demonstrate 
that they have been financially harmed.
    Dr. Roe. So, that seems very fair to me to be able to do it 
that way. If you have a situation where your earnings are what 
they said they would be, then I agree you should not have 
relief.
    I would like to yield, Mr. Chairman, the rest of my time to 
the ranking member, Dr. Foxx.
    Mrs. Foxx. Thank you very much, Dr. Roe. Madam Secretary, 
the ManriquezManriquez case is related to Corinthian borrowers, 
is that correct?
    Secretary DeVos. Yes, specifically to Corinthian borrowers.
    Mrs. Foxx. Okay. And the plaintiffs in that suit are 
seeking relief from their loans because they claim that schools 
misrepresented their job placement rates, is that correct?
    Secretary DeVos. Yes.
    Mrs. Foxx. Okay.
    Secretary DeVos. Primarily, they are primarily job 
placement claims.
    Mrs. Foxx. Sure. And the plaintiff specifically challenged 
your methodology for determining partial relief, is that 
correct?
    Secretary DeVos. Well, I believe they were taking issue 
with the entire methodology and the court held that the data we 
were using was the issue.
    Mrs. Foxx. Okay. And then the judge issued an injunction 
preventing you from using the methodology because it violated 
privacy protections, is that correct?
    Secretary DeVos. That was that judge's opinion, yes.
    Mrs. Foxx. Okay.
    Secretary DeVos. We disagree with that and have appealed 
it.
    Mrs. Foxx. That injunction prevents the Department from 
collecting on the loans of the covered borrowers while the case 
is pending, is that correct?
    Secretary DeVos. Correct.
    Mrs. Foxx. Okay. However, there was a problem and those 
loans were collected, continuing to be collected on, is that 
correct?
    Secretary DeVos. Well, no. Let me put that in context. So, 
a couple of things I think are important to know.
    First of all, before that court case was ever--or that 
injunction was ever handed down, I had directed that all of the 
pending student loan or student Borrower Defense applications 
be put in forbearance and also not continue to accrue interest. 
So, while this was going on for months and months and months, 
those students were not going to be sinking deeper and deeper 
into their whatever problem. So, that was done before the court 
injunction when the court--when the judge issued that 
injunction. That was already the directive and that directive 
was the policy or the practice that I expected would be carried 
forward.
    After a year, there were some processing errors within 
Federal Student Aid and with our servicers, so, human beings 
made mistakes. As soon as we became aware of it, we said we 
acknowledge it and we will correct the issues, which we did 
immediately.
    And I would like to ask General Brown to just talk briefly 
about the numbers and how quickly we have--
    Mrs. Foxx. Madam Secretary, we will come back to that when 
we have a chance. I do not want to go over.
    Secretary DeVos. Okay.
    Mrs. Foxx. Thank you.
    Chairman Scott. The gentlemen from Connecticut, Mr. 
Courtney.
    Mr. Courtney. Thank you, Mr. Chairman. Thank you, Madam 
Secretary, for being here today. Again, I just want to go back 
to your response to Mr.--Dr. Roe about--and again, you were 
very, I think, specific about the fact that your discretion, it 
is vested in you by the 1993 Student Loan Reform Act, allows 
you to provide both partial and full relief, that you just said 
that, is that correct?
    Secretary DeVos. Yes, yes.
    Mr. Courtney. Thank you. Okay. And I appreciate that 
answer. Mr. Chairman, I just want to now enter into the record 
a memo dated December 14, 2017, published in the New York Times 
from Steven Menashi, who was a political appointee acting 
general counsel at the Department of Education to James 
Manning, who at the time had been delegated the authority to 
perform the duties of Under Secretary.
    Chairman Scott. No objection.
    Mr. Courtney. Thank you, Mr. Chairman. In that memo, Madam 
Secretary, Mr. Menashi, who is now Judge Menashi, wrote that, 
``It is now OGC's position that the Borrower Defense Unit's 
analysis that Department regulations in the Borrower Defense 
Statute allow the Secretary to assess relief at her 
discretion.''
    Do you believe that this memo again provides you the legal 
basis to provide, in some instances, full relief to defrauded 
students based on your discretion?
    Secretary DeVos. I am not referring to the memo. I am 
referring to that section of the rule that existed in both the 
95 rule and the 2016 rule.
    Mr. Courtney. Great. Well, thank you, which again, 
basically says that you have that--
    Secretary DeVos. There is, yes, that the Secretary has 
discretion--
    Mr. Courtney. Right.
    Secretary DeVos. And again, because there was no process in 
place--
    Mr. Courtney. We agree. We agree. I am not--
    Secretary DeVos. There was no process in place and--
    Mr. Courtney. Thank you for your answer. I just want to 
keep going here because on page 6 of the memo it goes on to say 
that, ``In fact, the only limit to the Secretary's ability to 
grant relief is that no student may recover in excess of the 
amount that the borrower has repaid on the loan,'' which is 
certainly a commonsense statement. And I think we can all agree 
on that, that you cannot overpay with restitution. Is that 
correct?
    Secretary DeVos. Yes.
    Mr. Courtney. Thank you.
    Secretary DeVos. I mean, I think that would--
    Mr. Courtney. So, again, since you took office, I know you 
did process some of the pending claims from the prior 
administration, but after that cohort, have you provided any 
defrauded loan borrowers full relief since that first tranche?
    Secretary DeVos. Well, we could not, frankly, because the 
process was shut down and we could not--
    Mr. Courtney. Let me talk about that because actually, if 
you look at the court order, which, again, shut down your 
partial relief program because of what the judge felt was 
improper use of Social Security data, the judge actually 
stated, and I quote, ``Nothing in this order prohibits the 
Secretary from fully discharging the loans of any borrower who 
successfully completed or who successfully completes an 
attestation form.''
    So, I mean, she actually still left the door open for the 
Department to continue to process these Borrower Defense 
requests.
    Secretary DeVos. Yes. But without a methodology that we 
could access the appropriate data, we could not. I could not go 
ahead and say, we can just go ahead and forgive a whole bunch 
of loans 100 percent because, number one, each student, each 
student's application needs to be considered individually. The 
circumstances are different and the facts are different. And so 
without a methodology to utilize, we could not continue to 
process. Now, we continued--
    Mr. Courtney. So, the--
    Secretary DeVos.--let me just clarify.
    Mr. Courtney. Okay.
    Secretary DeVos. We continued to adjudicate and we have 
many claims that are awaiting now being processed to be able to 
respond specifically to whether there was financial harm or 
not. And so now that we have another methodology up and 
running, we are going to be able to, I think, move through 
those fairly quickly. And--
    Mr. Courtney. So, again, if I could just follow up with a 
question, again, because my time is about to run out. So, what 
I hear you saying is that these claims, after the judge's 
order, stopped being processed because you, through your 
discretion, determined that they had to come up with another 
way of processing the claims. But again, that is not because 
the judge handcuffed you in terms of providing full relief. Her 
order specifically says that she left that door open for you. 
It really was your decision based on whatever priorities and 
policies that you had to not continue to process those pending 
applications.
    I would just say Congresswoman Hayes and I have about 1,100 
Borrower Defense applications from the State of Connecticut 
that have been sort of stuck in this queue during that time 
period. And that is based on June data; I am sure that the 
numbers have grown. ITT Tech is pretty much the driving 
institution, which is now defunct.
    So, again, we at least made some progress here in terms of 
at least verifying what the scope of your authority is and my 
time has run out. So, thank you, Mr. Chairman.
    Chairman Scott. Thank you. The gentleman from Pennsylvania, 
Mr. Thompson.
    Mr. Thompson. Thank you, Chairman, thank. Thank 
youSecretary DeVos, for being here. Much appreciated. I will 
say, my friend, we worked a lot together and a lot of different 
issues were brought to my attention. I am appalled that this 
judge did what they did and what they put forward to basically 
providing a license to not to--just to allow the continued 
abuse. I appreciate the fact that you came into this particular 
position and, unfortunately, what you inherited from the last 
administration, which was really no structure, quite frankly, 
just providing loan forgiveness which we were warranted were 
harmed. I think that is important, but there is a duty and a 
responsibility to do this diligently in the right way. And so I 
appreciate that last, my colleague bringing that up, brought 
that to my attention how abusive that this judge was with the 
ruling.
    Madam Secretary, there are a few myths out there about the 
2019 Borrower Defense regulation that I would like to discuss 
with you today. And General Brown might have some of the 
technical answers to these questions. So, please certainly feel 
free to ask him to answer if you believe that is better. Pretty 
straightforward.
    The first myth is that the 2019 role eliminates $11 billion 
in relief. Is that true? If not, can you explain it for me?
    Secretary DeVos. Congressman, that is indeed a myth. The 
presumed savings assume and count on the fact that with much 
more clarity around a school's responsibility and what a 
student's claim would and could mean that we will have 
ultimately fewer Borrower Defense claims going forward. Let us 
just recall the fact that from 1995 to 2015, there were a total 
of 59 claims filed and then a 5,000 percent increase from 2015 
to where we have almost 300,000 claims today.
    And so going forward we have just released a ton of data on 
the College Scorecard that individuals--if an institution is 
making claims about a program, it is going to be easy to check. 
You can go to that school and that field of study and see what 
the earning is for the first year. And we are going to continue 
to add the data for years after that. So a lot more 
transparency for students and for schools, frankly. And so 
going forward, the savings are going to be around the fact that 
I--we are not going to have as many claims.
    Mr. Thompson. Yeah, a great tool for financial literacy.
    Secretary DeVos. It is a good argument for financial 
literacy, yes.
    Mr. Thompson. Yeah. Another myth is that the role 
eliminates accountability for for-profit schools. Is that true?
    Secretary DeVos. Not at all. Indeed, it really treats all 
schools equally and I think that is one of the major 
deficiencies of the 2016 role. It was strictly focused on for-
profit institutions.
    In fact, I saw some internal stuff at the Department saying 
we are not going to pay attention to any claims or any schools 
that had a liberal arts program because it is presumed that 
they are of the, you know, full value. Well, that is just 
wrong. I mean, if a student has a claim against a school for 
being fraudulent and deceptive, that should apply across the 
board to every school.
    And we know that UC Berkley fudged their numbers to get 
bumped up rankings in U.S. News and World Report's college 
rankings. Should those be subject to Borrower Defense claims 
like the others were?
    Mr. Thompson. And yet another myth is that the rule is 
cumbersome or overly burdensome to comply with from a 
borrower's perspective. Is that true?
    Secretary DeVos. No, in fact, we have made it very easy for 
students to find the information they need. It is prominently 
located on Federal Student Aid's website and we want to make 
sure that if and where there are these claims that are, you 
know, legitimate, that students have a very clear path to 
understanding how they proceed.
    Mr. Thompson. Thank you. Chairman, I yield what little bit 
of time I have to our--the Republican leader, Dr. Foxx.
    Mrs. Foxx. Thank you. And rather than ask a question, I am 
going to make a statement. Just tell me if I am saying this 
correctly. It was asserted before that the judge gave you 
discretion to go ahead and discharge these loans. But my 
understanding from you is, yes, you have processed all the 
applications and once you understand you have a way to do this 
that is not going to be challenged in court, then you will, 
what you say, adjudicate, meaning give an answer to the 
students, is that correct?
    Secretary DeVos. Close. I would actually love to have 
Exhibit 1 put up for the--
    Mrs. Foxx. Next--well, okay.
    Secretary DeVos.--for the process because it shows where 
things are and I would like General Brown to actually speak to 
you--
    Mrs. Foxx. Well, I am going to have to cut you off one more 
time, but I promise you the next time we will come to General 
Brown. Thank you, Mr. Chairman.
    Secretary DeVos. Okay.
    Chairman Scott. Thank you.
    Secretary DeVos. We are going to get there yet.
    Chairman Scott. Thank you. The gentlelady from Ohio, Ms. 
Fudge.
    Ms. Fudge. Thank you very much, Mr. Chairman, and thank 
you, Madame Secretary, for being here today. Once again, I find 
myself agreeing with the ranking member.
    We could be investigating other things today, but there are 
so many in this administration I don't know where I would 
begin. Maybe I would start with the three USDA rules that are 
getting ready to cut 4 million poor people off of SNAP, 1 
million of them children. Or maybe I could talk about the daily 
travesty on our borders, but that is not what we are here to do 
today.
    But it is unfortunate that my colleagues are suffering from 
amnesia on the other side of the aisle because I remember well 
how they treated the last administration. So they can't take 
this holier than thou kind of attitude. Let us all be nice and 
get along. I remember. I was here.
    And the other thing I just want to bring to our attention 
is you talked about the two letters or less that you are 
getting every day. We get that every day, too, and we have a 
lot less staff than you do. So I don't feel it is something 
that is onerous and something that you cannot respond to.
    Secretary DeVos, is it fair or lawful to defraud students?
    Secretary DeVos. No, it is not.
    Ms. Fudge. Very good. Should those people that are 
defrauded be made whole?
    Secretary DeVos. If they have been financially harmed 
indeed they should, there should be relief for them.
    Ms. Fudge. Thank you very much. I yield the balance of my 
time to my colleague from Connecticut, Ms. Hayes.
    Mrs. Hayes. Thanks, Secretary DeVos. Just really quickly, 
Mr. Chair, I would like to enter into the record the January 
10, 2017, memo from the Borrowers Defense Unit to then Under 
Secretary Ted Mitchell.
    Chairman Scott. Without objection.
    Mrs. Hayes. Which this memo was drafted by your office 
after the previous administration left and I just want to say 
something. As I am sitting here and I am listening, I remember 
our last interaction where you at that point had also not read 
the memos that came from your office.
    And I just find it just a total lack of regard that after 
the NPR story broke on Friday and you knew you were coming here 
for a memo about--I mean, for a hearing about Borrowers 
Defense, that you wouldn't even take the time to acquaint 
yourself with the memo that was talking about that your staff 
recommended that borrowers be given full and complete relief. I 
mean, there is nothing, as my colleague Congresswoman Fudge 
said, so incredibly onerous about 1.8 letters a day from 
Congress.
    You have over 3,000 staff and a budget of $60 billion 
around plus dollars. I get more than two letters a day and I 
make it my business to respond to them. So I am going to follow 
up about this same memo and I hope that--I mean, as you said 
before you don't know what anyone is talking about, you haven't 
read it, you heard of the story, but don't know the memo.
    But in this memo, your staff recommended that full relief 
for borrowers who are enrolled in ITT colleges and campus be--
in California, be granted. Can you explain why you ignored that 
memo and then why you did not include it in the documents that 
were sent to this committee?
    Secretary DeVos. Well, Congresswoman, once again, without 
having the document in front of me I am not going to continue 
to comment.
    Mrs. Hayes. Did you not know you were coming here today?
    Secretary DeVos. Congresswoman, there are hundreds of 
documents written--
    Mrs. Hayes. You are absolutely right and I would accept 
that--
    Secretary DeVos. And I would just--I would just--
    Mrs. Hayes.--but the fact that on Friday this story broke 
and this document specifically was referenced, I don't think it 
is unreasonable. I know I am a freshman Congresswoman. If I 
were coming to a committee and I had taken the time to prepare 
and a document was revealed in an NPR story that went 
nationwide 5 or 6 days before the hearing, I would say to my 
staff ,can you get this document for me so that I can read it 
for myself because I am sure that this committee will have 
questions in relation to this memo. That didn't cross your mind 
at all?
    Secretary DeVos. January 10, 2017--
    Mrs. Hayes. No, Friday. Last Friday.
    Secretary DeVos. January 10, 2017, was the last 
administration.
    Mrs. Hayes. Did it not cross your mind--
    Secretary DeVos. I was not in my office until February 7, 
2017.
    Mrs. Hayes. Did it not cross your mind when the story 
broke--
    Secretary DeVos. There are hundreds of documents that are 
pumped out from--
    Mrs. Hayes. You are absolutely right, but on Friday, when 
this specific document--
    Secretary DeVos. And it is--
    Mrs. Hayes.--was revealed, did it not cross your mind that 
maybe I should read it? On Friday?
    Secretary DeVos. No. I don't need to read the document--
    Mrs. Hayes. So in December 2019--
    Secretary DeVos. I know what I have--
    Mrs. Hayes.--when NPR ran a story, it didn't cross your 
mind that maybe I should read this document?
    Secretary DeVos. I don't need to read every document 
originating--
    Mrs. Hayes. No, this one specifically. Not the thousands of 
others, just this one.
    Secretary DeVos. Because a news outlet chose to print it?
    Mrs. Hayes. Yes. Is that a no?
    Secretary DeVos. I should read everything that a news 
outlet chooses to print?
    Mrs. Hayes. Yes or no. Did it not cross your mind that--
    Secretary DeVos. I should read--
    Mrs. Hayes.--you should read this document?
    Secretary DeVos. I am--ma'am, I am focused getting a--
    Mrs. Hayes. So no?
    Secretary DeVos.--process right--
    Mrs. Hayes. So no?
    Secretary DeVos.--for students and for taxpayers.
    Mrs. Hayes. So no.
    Secretary DeVos. On getting a process right for students 
and taxpayers.
    Mrs. Hayes. So no.
    Secretary DeVos. And that is what I am doing.
    Mrs. Hayes. Part of getting that process right, requires 
reading. Thank you, Mr. Chair.
    Chairman Scott. Gentlewoman's time has expired. The 
gentleman from Michigan, Mr. Walberg.
    Mr. Walberg. Thank you, Mr. Chairman. And thank you, 
Secretary, for being here, General Brown as well. Again, 
January 10 was before the inauguration and February 17 was when 
you were confirmed. And I hope it doesn't concern my 
constituents too much that I don't read every article that is 
written about me either. There are certain articles that would 
be a waste of time and take me away from doing the jobs that I 
have been asked to do, especially when you know what you are 
supposed to do and follow the law.
    Talk to us, if you will, about your Exhibit Number 1. Give 
you the opportunity this time.
    Secretary DeVos. So exhibit number--thank you, Congressman. 
Exhibit Number 1 shows the process through which we go with 
every Borrower Defense application. And I would like to ask 
General Brown to talk just briefly about it so we can 
understand where we have come, where we have brought the 
Borrower Defense claims to prior to having the new methodology 
to process.
    General Brown. Thank you, Madame Secretary, and thank you, 
Congressman, for that question. I would just remind the 
committee that overall, we are fastly approaching what will be 
almost 300,000 Borrower Defense applications by the end of this 
calendar year.
    And each case is adjudicated on its own merit and what that 
means is there is no blanket way to do them all because they 
vary greatly in how, what data is there, and also the validity 
of each case without regard to which school the person went to, 
the student went to.
    And we do not look at them per se by school. We adjudicate 
the individual cases. So the type of school is less of an issue 
than the validity of the case.
    For every one of those cases, we bring them in that top bar 
that you see and we have our administrative people as well as 
our attorneys take them apart, look for supporting 
documentation and check the validity of that documentation. And 
this is the first part for the case. If it happens to be under 
the 2016 rule and the case is determined to, in fact, be a 
valid case, then the school would be notified under the 2016 
rule and those going forward. Not all are under the 2016 rule.
    At that point, the case would start the adjudication 
process. All cases get to that point. At that point, that is 
the Borrowers Defense regulations that you all have supported 
across administrations and we looked at this across 
administrations because only because those were the questions 
that we have gotten.
    The percent of those that were valid and invalid really has 
held true. It has been about 62 percent to about 38 percent 
throughout both of those times and for the first 65,000 of 
those cases that have been completed, adjudicated, and 
processed back down to the students.
    However, at that point, if the case is, in fact, either 
ineligible or eligible, if it is eligible, that is a point at 
which, as the Secretary said earlier, she has the discretion to 
determine some or a methodology that will determine some, none 
or all.
    When you talk about a backlog, when you use that term, 
those cases got to that final point, had to be stopped, as you 
all have already referenced, by the Ninth Circuit and so that 
is the backlog. And it is the decision upon which the Ninth 
Circuit either answers the appeal or a new methodology has to 
be determined. And so when you use the term ``backlog,'' that 
is what we are taking each case based on its individual merits 
through.
    Mr. Walberg. Thank you for that explanation. Previously, 
there was no official source a student could access to see 
college outcomes at the programmatic level. You recently 
unveiled new information on the College Scorecard that would 
allow families for the first time to compare programs within an 
institution or similar programs at different institutions.
    Could you please explain what consumer information is 
included in this tool and how providing this information up 
front will help students make informed decisions before 
starting their school?
    Secretary DeVos. Sure, Congressman, I would love to talk 
about it a little bit more. Previously, you could go to look at 
a school, a cost of attending a school, average cost of 
attending a school, and then what the average earnings could 
be, would be expected for a graduate of that school. That is 
nice information, but it is not particularly useful for 
students based on programs that they choose.
    Now, with this new data release and this new approach, you 
will be able to go look at a school and then go into the field 
of study within the school and see what your cost is for 
attending that program and then what your earnings potential 
is, what the earnings have been for students who have graduated 
from that field of study their first year. And we are going to 
be able to add subsequent years as more data becomes available.
    But this is going to give students a whole new tool to use 
in making--in decision-making around what kind of education to 
pursue post high school and it is going to be--it is useful for 
2-year programs, for certificate programs. We are also linked 
to apprenticeship opportunities through the Department of 
Labor.
    So a very robust set of data and important tools to be used 
for students as they begin to think about their futures and I 
think, importantly for institutions, to maybe ask some hard 
questions about some of the programs they have been offering 
that may not be, you know, the value for cost that they should 
be.
    Mr. Walberg. Glad to hear. I yield back.
    Chairman Scott. Thank you. Before I recognize the next 
member, I would like to ask unanimous consent that documents, 
the document from January 10th from the Borrower Defense Unit, 
has been entered in the record. There is also a January 9th and 
an October 24--January 9, 19, 2017, and October 24, 2016.
    These memos describe an extensive review of claims for 
Corinthian, ITT Tech, and Everest Whyotech where students--
where the staff recommended full debt relief for borrowers from 
these schools. These memos, 14 pages, 14 pages, and 18 pages, 
reflect a clear process and evidentiary review conducted by the 
Obama administration. So that, we just want those in the 
record. The gentlelady from Florida, Ms. Wilson.
    Ms. Wilson. Thank you. Mr. Chairman, for holding this 
hearing. I am so happy that Secretary DeVos' schedule has 
finally allowed her to address this pressing issue here today.
    Madame Secretary, there are 200,000 students that are still 
waiting to have their Borrower Defense claims processed by your 
Department. The Education Department has not approved a single 
new claim for lone relief in the past 18 months. If a student 
takes out a Federal loan to study at an institution that 
behaved fraudulently or deceptively, that student's loan should 
be forgiven.
    Mr. Chairman, tens of thousands of borrowers acted in good 
faith as they applied to school and took out loans looking to 
better their lives. Because of bad actors they were left with 
unfulfilled promises, outright lies, and mountains of debt. I 
believe that it is incumbent upon us to provide relief for 
those harmed by schools that acted in a fraudulent matter.
    Secretary DeVos, you wrote with extreme displeasure on the 
document that discharged loans that had already been through 
the BD process prior to your appointment. Why would you write 
that? Why would providing relief to defrauded borrowers whose 
claims have been reviewed by experienced professionals 
displease you?
    Secretary DeVos. Congresswoman, very good question. Very 
simply, there was no process. The claims were simply forgiven 
without consideration for the individual circumstances.
    Ms. Wilson. Secretary, I heard you say that.
    Secretary DeVos. Congresswoman--
    Ms. Wilson. I want to tell you a story about a borrower 
from Florida named Jessica Matterson that gives me extreme 
displeasure.
    In January 2017, Ms. Matterson was told her Borrowers 
Defense application had been approved and that her $19,000 in 
student debt would be forgiven in 60 to 120 days. It was not. 
And instead, the government began garnishing her paycheck to 
recoup the money. As a result, she did not have electricity for 
weeks because her garnished checks couldn't cover the bills.
    How is it possible that the Department of Education could 
have continued to collect Ms. Matterson's loans after she had 
already been approved for borrowing defense loan?
    After the Washington Post wrote about her story in July 
2017, the garnishment stopped. They did not refund her money. 
Just $2,000 were refunded, was refunded of the 12,000 that had 
been garnished from her wages. Do you believe it is appropriate 
to not fully refund wages that were garnished for student loans 
that were deemed fraudulent?
    Secretary DeVos. Congresswoman, when a student's Borrower 
Defense claim is deemed to be--they have been financially 
harmed and we have a process to consider that, the level of 
that, the students are made whole and the students--we address 
each student's issue and situation individually. That is why it 
is important to have a process because every student's 
situation is unique.
    Ms. Wilson. Do they get all of their money back--
    Secretary DeVos.--is unique and different.
    Ms. Wilson.--that was taken from them?
    Secretary DeVos. It depends on the various claims. I 
can't--
    Ms. Wilson. Because of these wage garnishments, Ms. 
Matterson could not afford to see a doctor to address the 
intense pain she was experiencing. When she finally did go to 
the hospital, she was diagnosed with cancer. In October of this 
year, she passed away.
    Secretary, can you commit to me today that you will 
personally ensure that Jessica's wife will receive the 
remaining $10,000 owed to her by the government?
    Secretary DeVos. Congresswoman, I can assure you that we 
can and will look into that specific situation if provided the 
details. And once again, I go back to the fact that all of 
these claims--
    Ms. Wilson. Secretary DeVos--
    Secretary DeVos.--all of these student claims need to be 
considered individually.
    Ms. Wilson.--I have worked in education my entire life. I 
have dedicated my life to this work and I have worked with 
Democrats and Republicans to advance the goal of quality 
education for young people.
    I have had some honest disagreements with my friends in the 
Republican Party about how to move education forward, but I 
have never, not one time believed that they were out to destroy 
public education until I met you.
    Why has every decision you have made harmed students 
instead of empowering them? Are you the Secretary of Education? 
You are supposed to be their champion. When you approach a 
public school, you are protested. If you enter, you are booed. 
When you spoke at an HBCU in Florida, 2 months later, the 
president was made to resign.
    You are the most unpopular person in our government. 
Millions will register to vote in 2020. Many will vote to 
remove you more than to remove the president. I yield back.
    Mrs. Foxx. Mr. Chairman, I just have to say one of those 
last comments was over the line. Absolutely over the line. To 
say that Secretary DeVos is trying to destroy public education 
is going too far. And I believe every one of my colleagues 
agrees. We all sat up very quickly when that comment was said.
    Now, I like Representative Wilson. She and I have talked a 
lot and we are very concerned about education, but that kind of 
comment cannot stand in this committee. The Secretary has come 
here to help us with our--oversight
    Mr. Takano. A point of order, Mr. Chairman. The gentlelady 
is taking time that was not recorded.
    Chairman Scott. The ranking member is making a point of 
order.
    Mr. Johnson. Mr. Chairman, point - Mr. Chairman
    Mrs. Foxx. Mr. Chairman, I believe it took--if that had 
been said on the floor of the House it would have been--those 
comments would have been taken down.
    Chairman Scott. The--
    Mrs. Foxx. Thank you.
    Chairman Scott. The gentlelady's comments are well taken. 
Next person to be recognized is the gentlemen from Kentucky, 
Mr. Guthrie.
    Mr. Johnson. Mr. Chairman, I have a point of parliamentary 
inquiry.
    Chairman Scott. I am sorry. The gentleman from South 
Dakota.
    Mr. Johnson. I am just a freshman, sir, so I don't know the 
rules backwards and forwards. Is there a mechanism by which a 
vote of this committee could strike those comments from the 
record?
    Chairman Scott. Just a minute. The comments from the 
gentlelady from North Carolina have been part of the record so 
I think we have both sides and I think we have agreed with the 
ranking member.
    Mr. Johnson. Mr. Chairman, my point of parliamentary 
inquiry is--
    Chairman Scott. And we should--
    Mr. Johnson.--whether or not we should--
    Chairman Scott. We should refrain from questioning the 
motives of the members.
    Mr. Johnson. Thank you, Mr. Chairman.
    Chairman Scott. And the witnesses. Thank you. The gentleman 
from Kentucky, Mr. Guthrie.
    Mr. Guthrie. Thank you. Thank you, Mr. Chairman, appreciate 
the opportunity to be recognized and sorry that the tone in 
Washington has reached the way it has reached the last year. I 
apologize for that.
    As somebody that has been here for a while, we hate to see 
it has deteriorated the way that it has. We need to be working 
together to get big things done for this country and, 
unfortunately, we are where we are. But I want to get to my 
questions.
    I am sure you are--you agree that Congress has a 
responsibility to do oversight of the administration and I 
believe you said that 95 percent of all congressional requests 
have been met. You said that earlier?
    Secretary DeVos. With regard to the letters--and let me, 
yeah, let me just add, you know, the 1.8 letters are not just 
like constituent nice, can you respond with a half-page or a 
page response.
    These are voluminous responses required that require a lot 
of research to respond to and often hundreds, if not thousands, 
of pages to be responded in each of them.
    Mr. Guthrie. I was going to ask if it included phone calls, 
emails, and written response, and I think you answered that.
    Secretary DeVos. Well, but no, these are voluminous 
responses of writing.
    Mr. Guthrie. And long ones as well. And I am sure you agree 
that it is important for all parties involved to communicate 
directly, that is what you said. So I am going to get to this 
hearing.
    I agree that borrowers are harmed--borrowers that are 
harmed should be granted relief as quickly as possible. After 
diving into some of the nuances about this issue, I understand 
why you have decided to grant partial relief in some cases.
    Now, it is my understanding that there was a report that 
estimated the Borrower Defense claims would be cleared by the 
spring of 2017. But your decision to review those cases and 
grant partial relief meant that the estimate proposed in the 
report would not be met. Is this correct?
    Secretary DeVos. Yes. Again, Congressman, there was no 
process and short of simply deciding to forgive all of the, and 
accept all the claims with 100 percent validity or not, we 
needed to get a process in place to consider each claim.
    Mr. Guthrie. So the--thank you. So the memo I just 
mentioned, was that an official memo that included promises or 
any guarantees to borrowers?
    Secretary DeVos. I am not sure what memo you are referring 
to.
    Mr. Guthrie. It is the one that said about spring of 2017 
you would--so, but anyway, so it wasn't official. So I will get 
to this.
    So there wasn't anything illegal about your decision, about 
your determination. It was the best interest of taxpayers to 
review these claims and make sure the relief granted was 
correct.
    So I guess my question is there was nothing legally 
requiring you by the spring of 2017 to make those decisions and 
you made the decision to put in a process that made sure that 
fraudulent claims were paid, but need to make sure their claims 
were fraudulent and so you made those. So nothing illegal about 
where you are today about not getting that done by 2017?
    Secretary DeVos. No. It was a matter of building on a lack 
of policy and process from the previous administration. The 
policy of the previous administration was to simply forgive 
claims.
    However, there was also some opinion expressed that up to 
40 percent of some of the claims that had been submitted did 
not qualify. So again, without a process and a framework, we 
couldn't proceed and progress any of those claims forward, 
which is exactly what we did when coming into office in 2017.
    Mr. Guthrie. Thanks, I appreciate that. And I want to yield 
to the ranking member or the Republican leader.
    Mrs. Foxx. I want to thank the gentleman from Kentucky. I 
want to point out, I want to make several clarifications.
    Number one, some of our colleagues don't know evidently the 
calendar in 2017. Because the memorandum under consideration 
hereunder that has been brought up was a memorandum to Under 
Secretary Ted Mitchell who worked in the Obama Administration.
    The Obama Administration was in office until January 20 
when the President, President Trump, took office. You again 
pointed out you did not come into office until February. So if 
they have an argument with anybody, it ought to be an argument 
with these folks who got the memo on January 10. This sounds 
like a lot of other memos that came out around that time.
    I would also like to point out that contrary to what has 
been said, that for-profit schools have no value, 1995 was when 
Borrower Defense rules went into effect. Corinthian Colleges 
were formed in 1959. ITT was around since 1969.
    Between the time Borrower Defense went into effect, as you 
said, Madame Secretary, until 2015, 59 claims were filed. So 
obviously, something happened. Yes, those schools closed. But 
there has been a culture change I believe in our country in 
terms of what people believe they are owed.
    Thank you, Mr. Chairman. I yield back.
    Chairman Scott. Thank you. The gentlelady's time has 
expired. The gentlelady from Oregon, Ms. Bonamici.
    Ms. Bonamici. Thank you, Mr. Chairman. Thank you, Secretary 
DeVos, for being here. And thank you, Mr. Chairman, for 
introducing into the record the January 9 and January 10, 2017, 
memos.
    Secretary DeVos, when you made opening remarks you said 
that some on this committee suggest full relief for defrauded 
borrowers. The point is that it is not just some on this 
committee. It was the Borrower Defense Unit in the Education 
Department as well, people who had been working on these cases. 
That is the point.
    And, Secretary DeVos, the mission of the Department of 
Education is to promote student achievement in preparation for 
global competiveness by fostering educational excellence and 
ensuring equal access.
    And when I look at how the Department and you have been 
handling the borrower defense cases, I just don't see that is 
consistent with the message and the mission of the Department. 
With so many hundreds of thousands of students, including 
thousands in my home state of Oregon, stuck with loan balances 
and a worthless degree if they even got a degree.
    I am a former consumer protection lawyer for the Federal 
Trade Commission and I know fraud when I see it. And these 
students were misled and cheated, and the fact that some of 
them may be making money doesn't mean that they weren't 
defrauded.
    If somebody went into one of these programs hoping to 
become a nurse, for example, and now they are selling clothes 
at a department store, it doesn't mean that they weren't 
defrauded. And I hope you can put yourself in the shoes of some 
of these borrowers.
    I know it is challenging, but they went to try to find a 
better path for themselves and instead of getting a good 
education, they got collection notices and wage garnishments. 
And in September, the Department admitted to violating a court 
order by illegally demanding loan payment from more than 16,000 
Corinthian borrowers seeking Borrower Defense. And that number 
has now increased to 45,000.
    And the issue came to the public's attention only after you 
were held in contempt for violating a court order. So this is 
not a new problem. In fact, more than a year ago, a court 
ordered the Department to stop seizing tax returns of Borrower 
Defense applicants. That was the Williams case.
    So, you and the Department have known about this issue for 
years. So why did the Department continue to bill more than 
16,000 Corinthian borrowers in violation of the law?
    Secretary DeVos. Well, Congresswoman, I am sorry you 
weren't here when I talked about that earlier on, but what we 
said, what I said, was it was very clear that the borrowers 
that made claims for Corinthian College programs were in 
forbearance, were not accruing interest per my direction prior 
to the court order in--court injunction in May of 2018.
    Since then, a year later, there were errors made within 
Federal Student Aid and with some of our servicers. Human 
errors that once we were, became aware of them we immediately 
acknowledged and immediately went to work to correct and 
rectify the problems for those impacted students--
    Ms. Bonamici. And I am going to reclaim my time and ask 
another question.
    Secretary DeVos. And it is not--it is 99.8 percent--
    Ms. Bonamici. Secretary DeVos, I am going to reclaim my 
time and ask another question. And I was here, I just didn't 
find the answer satisfactory.
    How many times has a court already found that the 
Department has illegally collected payments from borrowers or 
sieged their--seized their wages or tax returns?
    Secretary DeVos. How many times? It was--
    Ms. Bonamici. Have other courts found that?
    Secretary DeVos.--in relationship to the court injunction 
from May 2018 and General Brown can comment to the specific 
numbers of impacted borrowers. And frankly, what we--
    Ms. Bonamici. Just for the record there were other--
    Secretary DeVos.--have done--what we have done to--
    Ms. Bonamici.--cases as well.
    Secretary DeVos.--to make sure all of those cases were 
addressed and taken care of, which they have been.
    Ms. Bonamici. And you say, Secretary DeVos, that you care 
about the responsible use of taxpayers' dollars. So the judge 
in the ManriquezManriquez case imposed sanctions in the amount 
of $100,000 for violating an injunction. So who paid that? You 
personally or the taxpayers?
    Secretary DeVos. I am not aware that it has been paid. It 
is an injunction in a judgment against the Department of 
Education. So--
    Ms. Bonamici. So you are not aware if it has even been 
paid?
    Secretary DeVos. I don't believe--I don't know. I can--
    Ms. Bonamici. And who do you expect to pay that? Will you 
pay that personally or will the taxpayers pay that?
    Secretary DeVos. Well, I think there is an appeal to 
suggest that it is not appropriate to fine a Federal--another 
Federal department.
    Ms. Bonamici. So in my remaining time, it was the borrowers 
who discovered that the Department was billing them improperly. 
This is not a result of the Department's oversight.
    So we know there are many Borrower Defense claimants who 
are watching today. How are you going to assure them that you 
are doing everything in your power to help them get relief and 
that they won't have their wages garnished or their tax returns 
taken in the future?
    Secretary DeVos. Well, I am very hopeful that we will be 
able to continue to move ahead with our new methodology and 
assuming no challenge from through the courts of that 
methodology, we will be able to process these claims that have 
been pending for many years--
    Ms. Bonamici. And that is the methodology that if--
    Secretary DeVos.--and that is--
    Ms. Bonamici.--someone is making money, they weren't 
defrauded.
    Secretary DeVos.--a focus. That is a--
    Ms. Bonamici. And that is not justice, Madam Secretary, and 
I yield back.
    Chairman Scott. Thank you. Before I recognize the next 
witness I would like to enter into the record a OIG report in 
response to this report. The present Department of Education 
FSA stated by the previous administration's process for 
adjudicating claims they said, and I quote, ``Despite these 
challenges, we are pleased to note that the OIG did not 
identify any errors in adjudicated claims, that the review for 
each of the sample claims was properly documented. In addition, 
OIG found that FSA created policies and procedures for Borrower 
Defense that have evolved over time as FSA has continued to 
redefine its processes.'
    The OIG report is dated December 8, 2017, so that is during 
the present administration. Without objection, so ordered. And 
the gentleman from Alabama.
    Mr. Byrne. Thank you, Mr. Chairman. Secretary DeVos, 
General, thank you for your service to our country. It is not 
often said enough, but people like you have given a lot to this 
country and continue to do so. We appreciate you being here 
today and we appreciate your service.
    I am going to ask some questions about oversight and I am 
going to direct them to the Secretary, but, General, if it is 
something that you need not be the one to answer to just feel 
free to jump in.
    Let us just begin with the basics. Do you believe in the 
need for congressional oversight?
    Secretary DeVos. I do, Congressman.
    Mr. Byrne. Well, I think your presence here today proves 
that, but I wanted you to be on the record to say that you 
believe in it. Have you informed your staff of the need to be 
responsive to Congress to help us do our job?
    Secretary DeVos. Indeed I have. I am very keen on making 
sure we are responsive and have repeatedly directed all of my 
team that we must be and we must do so in timely fashions.
    Mr. Byrne. And how do you follow up with them to make sure 
that they are doing that?
    Secretary DeVos. Have regular reporting relationships 
depending on the area and the department. And with respect to 
the issue that we just talked about, I get daily reports on how 
those claims have been restored back to their standing that 
they should be in forbearance and we are continuing to have 
regular dialogue and updates on those. And, General Brown, did 
you want to?
    General Brown. Yes, sir. I can provide you one example of 
those daily reports. On Exhibit 7, we are asked for all of 
those students that had some element of error that were 
involved in the ManriquezManriquezs case when they were 
erroneously put out, taken out of forbearance and perhaps 
billed. Since that time, we have done daily reports on each one 
of those cases.
    This is not a report that we created for this committee. In 
fact, it is 2 days old. It talks about .5 or so percent of 
those cases having not been remediated, and today that is 
actually less than 30 of those cases that have not been 
remediated.
    We are responsible for giving that report to the Secretary 
each day. And even if it is at 99.5 percent, we won't be 
through doing that daily report until it is 100 percent, 
meaning every particular person, specific person that had any 
element of harm done to them has been corrected.
    So if they had a Treasury offset, like I heard earlier in 
the statement, that the Treasury would have had to refund that 
money for us to put them in a remediated status. And that is 
one way that we provide oversight of this process and in 
responsiveness to the Secretary's request.
    Mr. Byrne. Well, thank you. That was very helpful. Thank 
you for providing that to us. Now, I know you get multiple 
requests from the same member or several members of Congress.
    How do you prioritize requests when you get multiple ones 
from the same member and what kind of communication do you have 
in place to ensure that your staff is still able to meet the 
standard for response that you have set?
    Secretary DeVos. Well, our prioritization is really based 
on responsiveness in general. And we try to be--we try to be 
able to respond within 30 days of receipt of one of those 
requests.
    Sometimes it has to go longer than that depending on the 
volume of material requested and required, but we are very 
focused on ensuring that we continue to work through these 
issues as promptly as we possibly can.
    Mr. Byrne. And I think you have already said this, but you 
can remind me. What is your response rate to Congress since you 
have taken office?
    Secretary DeVos. Ninety-five percent.
    Mr. Byrne. Pretty good. Some of us would like to have that 
rate in our--with our constituents if I might say. Is there a 
different standard for oversight in the Federal Student Aid 
office and in other offices at the Department?
    Secretary DeVos. No, we have high expectations for 
ourselves across the board.
    Mr. Byrne. And, General, this may be for you. How does the 
FSA balance a request for data and information with the need to 
get your job running the loan program done?
    General Brown. I thank the Congressman. We--our desire is 
to answer all correspondence within 30 days. However, I will 
tell you that those that are very data-centric that require 
special pulls from what is 11 loan servicers across the 
country, often will require more time because that data simply 
doesn't exist in the systems that we are working to reform. But 
all--for most data requests we try to do those within 30 days.
    Mr. Byrne. Thank you for that. Thank you for your hard work 
and trying to be responsive to Congress and trying--and thank 
you for your professionalism and for understanding that the 
taxpayers' money is precious and that we have a responsibility, 
all of us, including those of us in Congress, to safeguard that 
money.
    And with that Mr. Chairman, I yield back.
    Chairman Scott. Thank you and I will remind the members to 
please direct the questions to the Secretary. The gentleman 
from California, Mr. Takano.
    Mr. Takano. Madame Secretary, you have twice testified 
today that all pending claims in the Manriquez case you had 
ordered the forbearance and not to collect interest prior to 
that court decision of 2018. And you referred to processing 
errors were made a year later.
    Are you aware, in fact, that your Department submitted in a 
compliance report to the court on October 8, 2019, that the 
compliance errors that we are talking about at issue were not 
the result of willful or intentional conduct on the part of the 
Department, but as the court has recognized gross negligence, 
including negligent oversight over the Department services. You 
are aware of that. That is your own Department's words. Are you 
aware of that?
    Secretary DeVos. Congressman, what I know is that once we 
became aware--
    Mr. Takano. It is a simple yes or no question. I have many 
questions.
    Secretary DeVos. Yeah, I know, but it is not a simple yes 
or no answer.
    Mr. Takano. No, but it--I am just asking if you are aware 
that is what is in your own Department's submission to the 
court, that your Department conceded that it was gross 
negligence for the loan processor error.
    Secretary DeVos. There were human errors made on both 
Federal Student Aid's end of things as well as certain--
    Mr. Takano. Madam Secretary, on November 21, 2019. your 
Department--by the way, I wanted to enter this into the record, 
Mr. Chairman. The statement of the Department, their response 
to the court.
    Chairman Scott. Without objection.
    Mr. Takano. Madam Secretary, on November 21, your 
Department held its first-ever quality assurance and 
performance meeting with executors from all the loan services 
to review the Manriquez case. Why did it take your Department--
why did you and your Department take 18 months for this first 
meeting to occur with your loan service providers? Why did it 
take 18 months to do that?
    Secretary DeVos. The loan servicers are--we are continually 
in dialogue with the loan servicers. I think--
    Mr. Takano. It took you 18 months to have your first 
meeting with these executives.
    Secretary DeVos. Congressman, it--you--
    Mr. Takano. Why did it take so long to do that?
    Secretary DeVos. Are you interested in learning or are you 
just interested in making a point?
    Mr. Takano. It is a simple question, why did it take so 
long for you to meet with these loan servicers?
    Secretary DeVos. I am very pleased with the leadership of 
General Brown, who came to Federal Student Aid 9 months ago, 
assuming the chief operating officer role. He is responsible 
for the operations of Federal Student Aid--
    Mr. Takano. Madam Secretary, he came on board much later in 
the process.
    Secretary DeVos.--as well as the relationships with the 
loan servicers.
    Mr. Takano. Moving on, Madam Secretary, on May 25, 2018, a 
Federal Court ordered you to stop collecting on former 
Corinthian borrowers in the Manriquez case. Seventeen months 
later in October 2019, Federal Judge Sallie Kim was highly 
critical of you and your Department's attempts to comply with 
the preliminary injunction and she stated it consisted of 
inadequate communication with each of your nine loan service 
providers.
    Is it correct that your Department's only communication 
with loan service providers during this time was through email?
    Secretary DeVos. No, that is incorrect.
    Mr. Takano. Mr. Chairman, I would like to enter into the 
record the emails cited in Judge Kim's order. One email only 
was three sentences long. The other emails to loan service 
providers didn't even cite the fact that the Department was 
under a court order.
    Chairman Scott. Without objection.
    Mr. Takano. The judge was astounded, Madam Secretary, that 
your Department only sent emails and did not have in-person 
meetings or phone calls with the loan service providers 
explaining the court order.
    Judge Kim asserted that would have been normal for any 
entity under such a mandated court order to have in-person 
meetings with the contractors immediately following the 
preliminary injunction and not several months later on November 
21, 2019, which is 18 months later.
    Mr. Chairman, I have already asked you consent to enter the 
emails. Mr. Chairman, I want to point out that on May 29, the 
May 29 email was only three lines providing instructions to 
loan servicers, and on July 5 the email that they sent to an 
additional five servicers contained no mention of the 
preliminary injunction.
    Madam Secretary, who at the Department did you assign 
responsibility for ensuring that the loan servicers complied 
with the preliminary injunction?
    Secretary DeVos. Congressman, I am very pleased with 
General Brown's leadership at Federal Student Aid. He is 
responsible--
    Mr. Takano. When did Mr. Brown come on board?
    Secretary DeVos. Congressman, can I please finish my 
sentence?
    Mr. Takano. When did Mr.--my question was when did you 
assign--who did you assign responsibility for compliance?
    Secretary DeVos. Federal Student Aid has a chief operating 
officer responsible for the operations of Federal Student Aid. 
General Brown is responsible as the chief operating officer--
    Mr. Takano. When did he come on board?
    Secretary DeVos.--for those operations. He assumed the COO 
role 9 months ago. He was with the Department for 4 months 
before that. And prior to that--
    Mr. Takano. So he was responsible--
    Secretary DeVos.--there were acting individuals.
    Mr. Takano. You immediately assigned him responsibility to 
ensure that your department complied with the court order? Who 
did you put in charge?
    Secretary DeVos. We have continued to be intentional about 
complying with the court order. We have acknowledged that 
mistakes--
    Mr. Takano. Madam Secretary, you are going to answer my 
question?
    Secretary DeVos. Can I finish?
    Mr. Takano. Who did you assign responsibility to comply 
with the court order for your department?
    Secretary DeVos. Chief operating officer of Federal Student 
Aid is responsible for the operations of Federal Student Aid.
    Mr. Takano. You are referring to Mr. Brown, but he didn't 
come into this role until 9 months ago.
    Secretary DeVos. There was an acting chief operating 
officer who--
    Mr. Takano. Who was that?
    Secretary DeVos. That preexisted him. It was James Manning 
as an acting. And prior to that there--when I came into the 
Department I inherited a chief operating officer who left his 
role rather than come and testify here before you.
    Mr. Takano. I yield back, Mr. Chairman.
    Chairman Scott. The gentleman's time is expired.
    The gentleman from Indiana, Mr. Banks.
    Mr. Banks. Thank you, Mr. Chairman.
    Secretary DeVos, thank you for your service and your 
leadership. A lot of discussion today has been about what 
happened in the past on this issue, but I want to take a moment 
and focus on steps moving forward.
    General Brown might have more of the detailed answers to my 
questions, so feel free to have him answer if you prefer.
    First of all, for the borrowers that are waiting for 
relief, when can they expect to hear from the Department on 
whether they are eligible for relief? And if a borrower is 
indeed eligible for relief, approximately how long will it take 
for an individual to hear how much relief they are going to 
receive? Will it take years or are you working to make sure the 
borrowers are aware as soon as possible?
    Secretary DeVos. Congressman, thanks for that question.
    Now that we have a new operable methodology, we are going 
to be able to process the pending claims much more quickly, 
assuming we don't get stopped in some way by a court order.
    General Brown can comment to the specifics of how quickly 
those claims can be processed, but I know that he has continued 
to increase the staff in this area to be able to really address 
them in a very timely manner and has hired many additional 
attorneys to be able to look at each claim individually, as it 
must and should be done.
    General, would you like to comment to the timing?
    General Brown. Yes, Madam Secretary. I would say that 
within the last--even within the last 24 hours we are notifying 
students of their eligibility or ineligibility if they have 
given--if they have provided a claim. We continue to do that. 
Those claimants, they would know now and if they got relief 
they would know so within the next--or actually have it done 
within the next 60 to 90 days.
    I would also say though that the staff at its height was 14 
in previous years. We have more than tripled that with a 
special emphasis on hiring attorneys. And, frankly, the more of 
those that you have the quicker you are able to get to these 
cases. So minus any litigation, we expect to get to those cases 
fairly quickly.
    But another part of this is the system, which we have been 
rebuilding over the last 12 months and that system's platform 
is ready.
    So to answer your question, Congressman, we expect to clear 
the majority of this backlog, minus any further litigation, 
over the next 12 months.
    Mr. Banks. Do you have the staff that you need to do that 
currently?
    General Brown. So I am happy to say that both the systems 
and the authority and resources to hire the personnel has been 
given to us by the Secretary and we have either hired them or 
are in the process of on-boarding them.
    So, again, minus any litigation, we have what we need or 
will have very shortly.
    Mr. Banks. Are these permanent or temporary staff people?
    General Brown. The majority of them--some of them are what 
we would call term employees. We did that out of consideration 
and out of stewardship, frankly, for the fact that we would not 
expect to forever receive what we are receiving now, which is 
somewhere in the neighborhood of 1,200 cases per week. So these 
are temporary 3-year term hires and we will see at that point 
if we need to extend them further.
    Mr. Banks. Secretary, who is involved in how a final 
decision on relief is made? Do all of the Borrower Defense 
claims come to General Brown or you for final approval? Or are 
lower-ranking employees empowered to make that final decision?
    Secretary DeVos. Well, Congressman, I have approved the 
policy, the process for which--by which these claims will be 
determined. And it is General Brown and Federal Student Aid's 
role to implement that policy and see through the processing of 
the claims.
    It is really a mathematical scientific formula and 
approach, so the policy lays out that framework clearly.
    Mr. Banks. Okay. Let me change my line of questioning just 
a little bit. Borrower Defense seems like an inefficient way to 
protect taxpayers from fraud, given that the government is 
losing money in the end. What reforms are you making to help 
prevent the need for borrowers to use this provision in the 
first place?
    Secretary DeVos. Congressman, thanks for asking about the 
College Scorecard. We have made considerable changes to and 
enhancements to the data available to students and, frankly, 
broadly to taxpayers and institutions. So now, prospectively, 
students can look at the cost of a college program, a field of 
study, what the cost is going to be, and what their earning 
potential is the first year after. We will be adding data and 
information to that as subsequent years become available. But 
this is going to help clearly reveal whether the value for a 
program is there. And, frankly, I think it is going to help a 
lot of schools make some decisions about whether to continue 
programs that they have been offering as well.
    Mr. Banks. Thanks to both of you for being here and thanks 
for always being willing to answer my questions and provide 
anything that our office needs along the way as well.
    With that, I yield back.
    Chairman Scott. Thank you. The gentleman from New Jersey, 
Mr. Norcross
    Mr. Norcross. Thank you, Mr. Chairman, and, Madam 
Secretary, thank you for being here today.
    I want to start out by saying I agree with my colleague on 
the other side that we wish that we would work together much 
more often. So let us see if we can start with you and I, that 
we get direct responses to direct questions and be respectful 
of each other, which is something that I am sure you want to 
do.
    Let me start out by asking you about the partial relief 
formula that uses the College Scorecard data. Talk to me about 
that, how after 18 months I guess since the court order you 
rolled this out, why you thought this was the best Scorecard, 
particularly when you only have 20 percent of the programs 
involved in that now. How did that become the best one?
    Secretary DeVos. Well, Congressman, just to be clear, we 
are using several different data sets to--
    Mr. Norcross. But aren't you using the Scorecard?
    Secretary DeVos. As one of the data sets, yes.
    Mr. Norcross. And do you agree that it only has 20 percent 
of the programs?
    Secretary DeVos. Yes. Well--
    Mr. Norcross. Okay. So please continue.
    Secretary DeVos. So we are using several different datasets 
and in looking at each Borrower Defense application the field 
or the program of study that the applicant is claiming was 
fraudulent in some way, the median income for that program is 
compared against the median income for programs, like 
programs--
    Mr. Norcross. Yeah, I understand, but--
    Secretary DeVos.--from other institutions.
    Mr. Norcross. But what are--you were going to tell us what 
else you were using.
    Secretary DeVos. The other pieces that we are using are 
Social Security Administration data and the 2017 Gainful 
Employment Earnings data and IRS information.
    Mr. Norcross. But they don't reflect back to the individual 
programs that people are looking for. So if my son goes to look 
at it and says, gee, let me go to the Scorecard, that is the 
only piece of information that program would reflect what the 
reality is, even though it is 20 percent.
    Secretary DeVos. The College Scorecard actually--the 
programs that are included include about 80 percent I believe--
80 to 85 percent of the students pursuing fields of study. The 
smaller programs that are not included in College Scorecard are 
simply because the cohorts are too small to be able to 
consider.
    Mr. Norcross. Well, actually, it makes up 80 percent of the 
entire programs, so it is the exact opposite. And it only has 2 
years.
    So if it took you 18 months to come up with this new one, 
it just seems to me to use something that is such a small part 
of the solution of what is actually going on, because you agree 
with me you are trying to get students, potential students that 
information, right? So that they can make an informed decision.
    Secretary DeVos. We are trying to consider each student's 
claim individually and the circumstances.
    Mr. Norcross. No. No, this is being used, the Scorecard, to 
give potential students an idea of the cost involved and the 
outcomes. We understand that. But using only 20 percent--and, 
General, thank you for your service, but I guarantee you 
wouldn't want to send somebody into a warzone with only 20 
percent of the information.
    The point I am trying to make here is--
    Secretary DeVos. It is 20 percent of the programs, but it 
represents 80 percent of the students attending higher ed 
institutions.
    Mr. Norcross. But 80 percent are the smaller programs--
    Secretary DeVos. So it is a pretty significant number.
    Mr. Norcross. Can we agree that the program information is 
less than you would desire and I would desire?
    Secretary DeVos. We would love to include additional 
programs--
    Mr. Norcross. Okay, so that is the point I am trying to 
make.
    Secretary DeVos.--but we need to have larger cohorts.
    Mr. Norcross. Because when we looked at this--and again, 
let us be respectful of each other's time here--10 percent 
relief for the Corinthian borrowers, you made the decision to 
give them 10 percent whether your new formula was involved or 
not. I have a disabled vet in my district; ITT Tech, which is 
one of the horror stories, he went there for a digital design 
degree. The school told him he could use his GI Bill. Long 
story short, he used those stipends to pay for this and then he 
found out ITT lied to him and he is into a $50,000 student 
loan. Now he has got no job, no degree. I know that tugs at 
your heart, as it does mine. You know, why is it the 
Corinthians will get a 10 percent flat over there, but this 
young man who defended our country gets nothing until you get 
to his application? How did you decide they are worthy, but 
this veteran wouldn't be because he was in a different program?
    Secretary DeVos. Sir, the Corinthian students have had 
their institution attacked mercilessly in the media for years, 
and so in consideration of that and the consideration of the 
length of time that has lapsed since we were first able to 
process a number of those claims before the court shut us down, 
the determination was made that all of them would receive at 
least some--some level of relief depending on--
    Mr. Norcross. So because of media reports you are going to 
give them 10 percent, but this veteran--listen, my time is 
expired.
    On behalf of all those students, which I know we all care 
about, this is impacting their life. I can't suggest to you how 
important this is to expedite this in a fair and balanced way.
    Chairman Scott. The gentleman's time has expired.
    The gentleman from South Dakota, Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman. Thank you, Madam 
Secretary.
    I found myself most interested on the conversations we have 
been having about the new methodology, so I just wanted to 
learn a little bit more about that. You have talked a number of 
times about using the median rather than the--I think the 
median salary for individuals in these groups. Why does the 
median make more sense than the mean?
    Secretary DeVos. I am not a mathematician, but the median 
methodology and the standard deviation methodology is a 
scientifically proven approach to be able to consider these 
individually and yet fairly. And so the goal was to have an 
approach that would not only allow for full relief if the 
student is significantly financially impacted, but also partial 
relief if there is some financial impact, but not as 
significant perhaps as others.
    Mr. Johnson. So when we--I mean the heart of this 
methodology really comes down to comparison to peer groups and 
peer academic programs. How do you decide what that cohort of 
comparison programs looks like?
    Secretary DeVos. Well, there are similar programs with 
codes that are considered for each of those programs and they 
line up across the board. The previous questioner's line around 
the percentage of programs included in the College Scorecard, 
captures-- the data captures the bulk of the students and the 
programs that students have and are attending. And so there are 
always like comparisons to be able to use when using the new 
methodology.
    Mr. Johnson. So we have had some discussion today about to 
what extent the new methodology is fair or unfair to people who 
have gone on to better themselves, maybe through, you know, 
extraordinary efforts on their own. Talk to us a little bit 
about the methodology and whether or not you think it fairly 
has an impact on students given their different economic salary 
outcomes in the years after their education.
    Secretary DeVos. Well, it actually looks at program to 
program versus their specific salary. So if an individual has 
done very well themselves financially, but they have a claim 
against a school and that particular program, that is what the 
comparison--that is the comparison that is made between the 
programs.
    Mr. Johnson. So that is an important distinction. I mean, 
if somebody--I mean, they get credit or dispensation for the 
average impact, negative impact of their program. In that way 
their extraordinary efforts, that would accrue benefit to them. 
They wouldn't be punished for that. Am I saying that right?
    Secretary DeVos. Correct.
    Mr. Johnson. Okay. And then I want to talk a little bit 
about the timeline for applying for relief. I think if memory 
serves, your new rules allow for a 3-year filing timeline. 
Number one, is my memory right? Number two, why is that the 
right timeframe?
    Secretary DeVos. We decided on a 3-year timeframe because 
following a completion of study in a program, 3 years after 
seems to be a reasonable amount of time, particularly 
considering the fact that generally speaking, if there was a 
claim to be made, that presumably would have occurred at the 
beginning of the decision to take that program. So the length 
of time that a student has is really I think pretty 
substantial. Because it could be up to 7 years, frankly.
    Mr. Johnson. Do we have a sense--I mean, you talked about 
how--and I don't want to put words in your mouth--so pushback 
if I am categorizing your statements wrong, but I think you all 
had a methodology you were pretty happy with. The courts have 
told you can't use that particular data set. When you spoke 
about that earlier it didn't seem as though you had any idea of 
a timing on a final decision. Is that right?
    Secretary DeVos. That is correct. We have appealed that 
decision. We believe the dataset was a viable use and the court 
has not yet opined for over a year.
    Mr. Johnson. So have all legal filings been made before the 
Appellate Court? I mean, are all the parties, all their stuff 
is in, we are just waiting on a decision?
    Secretary DeVos. We are waiting on the court's decision, 
yes.
    Mr. Johnson. Okay. Very good. Thank you, Mr. Chairman. I 
yield back.
    Chairman Scott. Thank you. The gentleman from New York, Mr. 
Morelle.
    Mr. Morelle. Thank you so much, Mr. Chairman, for hosting 
this hearing. And thank you, Madam Secretary, for being here 
this morning to answer our questions.
    I do find interesting the conversation about taxpayers' 
rights and interests versus students who have made claims. And 
I suppose one way to save taxpayer dollars will be to deny all 
the claims, and I am not suggesting you say that, but I just 
find it interesting. What we need to do is find balance because 
if we simply just denied all the claims that would neither be 
legally or, in my view, morally defensible. But it would 
certainly save taxpayer dollars. So we obviously want to strike 
the right balance here.
    I want to just touch on a few things that I find 
interesting about the Department rules. One of them relates to 
what they call frivolous factors. And I want to read, under the 
new rule the Department states institutions that include the 
nicest dorm on campus as part of the college tour cannot 
guarantee that every student will have the opportunity to live 
in that dorm. How many students have submitted a Borrowers 
Defense claim that they didn't like their dorm room? Do you 
either know the number or percentage?
    Secretary DeVos. I don't have the number for that, but I do 
have a case file of one that submitted a claim who is trying to 
claim Borrower Defense for the fact that he or she did not like 
their professor.
    Mr. Morelle. Okay. But as it relates to--in the rule it 
actually cites the nicest dorm rule and I am just curious 
whether or not you could follow up to determine--since it is in 
the rule, I assume that there were concerns that claims had 
been made by students that they didn't get the nice dorm room 
that they saw on the tour.
    Secretary DeVos. There have been a number of different 
quite unbelievable claims made.
    Mr. Morelle. Can you give me a sense of how many frivolous 
claims in your view the 2016 regulations allowed to be--forced 
the Department to discharge?
    Secretary DeVos. I don't have a specific number to cite 
because not all of those claims have been not only adjudicated 
but processed. But I do know that there have been a number of 
claims made that, you know, your jaw would drop if you actually 
read the reason for their claiming fraudulent activity.
    Mr. Morelle. I am not sure my jaw would drop, but perhaps 
other people's would.
    But, one of the things that I was struck by in reading 
through this, and I am relatively new to this, my background is 
in the New York State legislature and we obviously are heavily 
involved in higher education, but not Federal programs, but the 
new rule states that it made the changes to the application 
process so ``borrowers shop wisely, take personal 
responsibility for seeking the best information available, and 
make informed choices and accept the benefits of student loans 
with the full understanding that they generally are legally 
obligated to repay these loans in full.''
    I was struck by some of the conversation because the 
institutions that qualify for this and the guaranteed loan 
program, the requirement is that they be accredited, either by 
a national or regional accreditation organization. And given 
the nature of some of the students, particularly that attended 
Corinthian and other schools that have had claims of 
significant fraud, it seems hard to me as just an average 
citizen that you would put the burden on an individual who is 
looking to go to school. And these are in often cases, 
nontraditional students. So they are at work, they may have 
families, they are challenged, but they want to pursue new 
careers. It would seem to me that the fact that they are 
accredited should mean something. And the sort of suggestion 
that I get is that the expectation is that they would not only 
take the accreditation, but be obligated to do additional 
research on the claims made by the college when they go.
    So if the college says or a representative says 100 percent 
of our students find jobs after taking this course in the field 
in which they study, it is accredited by the Federal 
Government, you know, has the Federal Guaranteed Loan Program, 
and they are accredited by a national or regional organization, 
why should that student be obligated to do further research? 
Why shouldn't they essentially take that as a proxy, the 
accreditation that is required by the Federal Government?
    Secretary DeVos. Why shouldn't they take the--
    Mr. Morelle. Yeah.
    Secretary DeVos. I am not sure I am clear on your question.
    Mr. Morelle. So the suggestion is, as I understand it, the 
suggestion is that there is a responsibility on the prospective 
student to do more research on the credibility of claims being 
made by people representing various colleges. I would just 
assume if they had been accredited either regionally or 
nationally and there is a Guaranteed Loan Program, that is an 
indication that the Federal Government has essentially put the 
Good Housekeeping seal of approval. Why would the Department, 
as it seems to suggest in the regulations, require a student to 
do additional research on the validity of the claims being made 
by an accredited college?
    Secretary DeVos. Well, I think it is imperative that we 
provide as much information for all parties. And clearly 
accreditors have a role, institutions themselves have a role, 
and the Federal Government, as a lender, has a role to play. 
That is why we have continued to improve the information 
available and to insist on an approach with the regulation that 
is balanced and that treats all institutions equally.
    Mr. Morelle. Well--and I apologize, I am out of my time, so 
I am going to yield back. But I would just say that 
accreditation should seem to me to shift the balance and the 
requirement for the student so that they should be able to rely 
on that. And I don't think that is what the rule says.
    Chairman Scott. Thank you. Dr. Murphy from North Carolina.
    Mr. Murphy. Thank you, Mr. Chairman. Thank you, Secretary 
DeVos for coming today.
    I just want to say, I appreciate the effort that your 
Department is doing to try to be good stewards of the taxpayer 
money. And I think this entire issue highlights some of the 
problems that the Federal Government actually has in education. 
That is a different diatribe I will go on a little bit later. 
But I appreciate you trying to be a good steward because we are 
striking a balance between individuals that want to better 
themselves, to pursue higher education, and also to be one that 
just doesn't dole out money just because someone claims that 
they deserve money. I can understand some of the comments or I 
would probably shake my head at some of the comments and the 
reasons that some people claim that they should be reimbursed 
or whatever.
    Let me ask you a couple of questions, because accreditation 
to me, jut in the medical sphere, seems to be in my opinion, a 
way to get a lot of money for institutions that accredit other 
institutions. And so by definition, in my opinion, 
accreditation really means about as much as it is worth. You 
can be accredited by different bodies. And so I don't give a 
stamp necessarily to some institution that has been accredited. 
And there is a phrase, caveat emptor, you know, let the buyer 
beware. So we do take risks whenever we venture into something.
    But on the other hand, what strategies, what practices does 
the Department use to conduct oversight for these higher 
education institutions to make sure they are not fraudulent 
institutions?
    Secretary DeVos. Well, the Department has a lot of 
responsibility to ensure that all institutions are treated 
equally and fairly. And this rule--and I want to get us back to 
the reason that we are here today, to talk about Borrower 
Defense and our approach to handling these claims and ensuring 
that students are treated fairly and taxpayers are treated 
fairly in the process. We are committed to following all of the 
rules and the regulations that Congress has--the laws that 
Congress has provided for us and continue to do so regularly.
    Mr. Murphy. Thank you. What form of penalization, if you 
were, is used by the Department for institutions that are 
having practices that are causing students to have to lose 
money to--in other words, what type of deceptive practices are 
penalized and how are they penalized by the Department by some 
of these institutions?
    Secretary DeVos. Well, the Department has primarily 
fiduciary tools and responsibility. It is a balance between 
accreditors and states and the Department to ensure that 
institutions are holding up their end of the bargain. And the 
fiduciary role is primarily through the Department of 
Education.
    Mr. Murphy. Okay. Just one final question. Of the students 
who have submitted claims, what percentage would you say are 
folks that are doing this as a second--while they are also 
working at a second job or working a job and doing versus 
people who are primarily just using this as their main focus as 
far as higher education versus doing it as a second--trying to 
get a second career?
    Secretary DeVos. Yeah, that is a good question. I am afraid 
I don't have the granular data on that. I don't know, General 
Brown, if you have a breakdown on?
    General Brown. No, ma'am. So, sir, we don't collect the 
data at that level to see if they are doing additional jobs or 
those kinds of things. We simply adjudicate each case based on 
its own merit, what is presented.
    Mr. Murphy. And just to follow up with that, I just--you 
know, I feel for individuals who are working and then trying to 
better themselves, by all means. You know, education is the key 
to a lifelong career and prosperity.
    I do think the Federal Government has led to some of the 
problems that we are having in higher education now because the 
money is so free. It comes without many strings, and if you 
want to get money and go on, you do. And instead, I think it 
has led to a lot of bloat within higher education and we have a 
lot of kids going to higher institutions that really should be 
going to community colleges first.
    And so to be honest with you, we are part to blame for all 
this nonsense.
    So, anyway, I thank you for your work and I thank you for 
trying to keep us informed and doing the right thing.
    Secretary DeVos. Thanks, Congressman.
    Mr. Murphy. I yield back my time.
    Chairman Scott. Thank you. The gentlelady from 
Pennsylvania, Ms. Wild.
    Ms. Wild. Thank you, Mr. Chairman.
    I would like to first address the new partial relief 
formula released by the Department. An expert in the field, Dr. 
Douglas Webber, who is an associate professor of economics at 
Temple University and was a bipartisan witness before this 
committee, recently said that the new Borrower Defense scheme 
is nonsensical and harmful to students. In particular, he 
pointed out that the standard deviation, the main tool used by 
the Education Department, is defined based on the mean and has 
no direct relationship to the median.
    In short, his analysis finds that the Education Department 
has proposed a formula which misunderstands and misapplies 
fairly basic statistical techniques in a way that makes it 
materially harder for defrauded students to find relief.
    I would like to enter his analysis into the record.
    Chairman Scott. Without objection.
    Ms. Wild. Thank you.
    Moving on, Secretary DeVos, over the past year the number 
of pending Borrower Defense claims has ballooned to 227,000. 
Many of these are part of group claims submitted by 20 separate 
state attorneys general, including the one in my state, 
Pennsylvania. And some borrowers have been waiting for more 
than 4 years for relief. These group claims represent thousands 
of students who were defrauded by predatory colleges. There is 
no question that these colleges engaged in fraud. Twenty-four 
members of this committee, on both sides of the aisle represent 
students in those states.
    Now, initially, when those claims were brought, your 
Department attempted to have them summarily dismissed by 
arguing that state attorney general could not assert a Borrower 
Defense on behalf of a group of borrowers. Is that still your 
assertion?
    Secretary DeVos. Congresswoman, thanks for that question. 
Let me just correct you. We have now--
    Ms. Wild. Well, let me just have an answer first. Is that 
still--
    Secretary DeVos. Let me just correct you, we now have 
almost 300,000 claims filed.
    Ms. Wild. Okay. All right. Thank you.
    Secretary DeVos. And--
    Ms. Wild. Is it still your assertion that a state attorney 
general cannot assert a Borrower Defense on behalf of a group 
of borrowers?
    Secretary DeVos. It is the assertion that it is the Federal 
Department of Education that has through Federal Student Aid 
the oversight responsibility and the claims continue to be 
filed by individuals and are considered as individuals.
    Ms. Wild. So I take it then that your answer to my question 
is yes, that you still maintain that a state attorney general 
cannot assert a Borrower Defense on behalf of a group of 
borrowers.
    Secretary DeVos. I know that there are many--
    Ms. Wild. Yes or no.
    Secretary DeVos. I know there are many attorneys general 
who are marketing the opportunity to file claims. We have seen 
Facebook ads and many other sources of--
    Ms. Wild. Madam Secretary, I am sorry, but you seem to be 
incapable of answering yes or no, so let me just remind you 
that in October of 2018 a Federal Court ruled in Williams v. 
DeVos that the Department's actions were unlawful and ruled 
that the Education Department must review applications 
submitted by states attorney general and cease involuntary 
collection activities against those borrowers.
    So why are those claims still sitting at the Department?
    Secretary DeVos. The claims cannot be processed without a 
methodology to do so. We now have one and they are being 
processed again.
    Ms. Wild. And how many of those claims have been processed 
that were brought by the--the collective claims that were 
brought by the state attorney general since that court ruling?
    Secretary DeVos. General Brown will have to answer about 
the specific claims that have currently been--
    Ms. Wild. Why don't you--I am going to ask you to get that 
information--
    Secretary DeVos. That have currently been processed because 
we just started processing within the last week. So, General 
Brown, if you would like to--
    Ms. Wild. Well, no, I don't--the question is directed to 
you. If you would like to turn to General Brown and ask him--
    Secretary DeVos. I have just done that.
    Ms. Wild.--for that information, that is fine, but I want 
the answer to come from you please.
    General Brown. So, Madam Congressman--
    Ms. Wild. General Brown, would you inform the Secretary 
please of your answer? How many of those claims?
    Secretary DeVos. We don't process by attorneys' general 
claims. We are processing--
    Ms. Wild. Notwithstanding the fact that the Federal Court 
directed you to do so?
    Secretary DeVos. We are processing the pending claims that 
we have had and we will take them as the Federal Student Aid 
department decides they need to be--the ones that they are able 
to process and are processing first.
    Ms. Wild. All right. I am going to reclaim my time.
    In June of 2019, 22 senators wrote to you asking for an 
update on the status of each of the group discharge 
applications submitted by the state attorneys general and your 
Department responded stating that the request for group relief 
are in various stages of review by the Department, correct?
    Secretary DeVos. They are indeed. All--
    Ms. Wild. And what stage of review is that?
    Secretary DeVos. All of the claims are going to be 
considered individually.
    Ms. Wild. On your timetable? Did you not state at the very 
beginning of your testimony that students are your number one 
priority? Because listening today, I have a hard time believing 
that a defrauded borrower would think that you are in their 
corner.
    With that, I yield back.
    Secretary DeVos. I was very clear from the start that while 
this process--
    Ms. Wild. I yield back.
    Secretary DeVos.--was being set into place, that no student 
would assume more interest on their student loan debt and that 
they would be held in forbearance. I don't like the fact that 
they have been sitting there as long as they have anymore than 
you do. I said that at the beginning, I will say it again now. 
Our goal is to get these claims processed and to take each 
student's claim individually, acknowledging that each student 
has unique and separate circumstances. I am committed to doing 
it--
    Ms. Wild. I am sorry, but, Secretary DeVos, you have--
    Secretary DeVos. I am committed to doing that.
    Chairman Scott. The gentlelady's time has expired.
    Ms. Wild. Thank you, Mr. Chairman.
    Chairman Scott. Thank you. The gentleman from Kansas, Mr. 
Watkins.
    Mr. Watkins. Thank you, Mr. Chairman, and thank you, Madam 
Secretary. It is good to see you again. And I noticed also that 
you tweeted that students are my number one priority. That is 
why I come to work every day. I know that to be the case as 
with other educators, one being my mother who is here, was an 
educator in Kansas for many years and reminded me of what she 
would say when she came home, and students are her number one 
priority. And that is why she went to work every day. That is 
why you go to work every day, and I thank you for that.
    Obviously, you are trying to work and do the best you can 
at an intersection between politics and education where 
everybody is very emotional about the way ahead. And so thank 
for your best efforts. You're a patriot and certainly doing the 
best under the situation.
    Now, during your tenure--well, before your tenure, a lot of 
things happened. So I am going to just ask a bit about the 
timeline, about let us see--and you can feel free to have 
General Brown answer if you would like. November 2016, the 
Department published new Borrowers Defense regulations. Now, 
that was the first in some 11 years, I believe, in accordance 
with the Higher Education Act. The final regulations were 
published in November 2016, were scheduled to go into effect 
July 1, 2017. But you put a hold on them. Why was that?
    Secretary DeVos. Congressman, thanks for the question.
    We were hopeful to be able to delay the implementation of 
the 2016 rule in order to further refine the rule, which we 
have now done with the rule that will go into effect next July.
    As it stands now, we have three different sort of buckets 
of claims and rules under which we will ultimately have to 
operate. The '95 rule, the 2016 rule, and then prospectively 
the 2020 rule.
    Mr. Watkins. Can you tell us when that process began and 
how long it took to issue the final rule? And during that time 
did you consider and incorporate feedback from higher education 
stakeholders including the public?
    Secretary DeVos. Oh, yes. We went through the rulemaking 
process and received input and feedback during the public 
comment period, and responded to that appropriately. Yes.
    Mr. Watkins. Thank you. And again, I just want to say thank 
you for your hard work, and thank you for all that you do. And 
I would like it to be a reminder that the challenge here is to 
ensure that we provide and empower the--in the case of primary 
education, the decision-making power to teachers and to 
parents, and assure that we understand what our role--what our 
limited role as oversight ought to be, because I believe it is 
best done by the parents and the teachers.
    And so thank you again for being here, Madam Secretary. And 
I yield the remainder of my time to the ranking member.
    Secretary DeVos. Thanks, Congressman.
    Mr. Walberg. I thank the gentleman. Madam Secretary, if you 
could enlighten us a little further on how FSA communicates in 
a constant way with loan services and how they communicate the 
changes in borrower status, when the court intervenes or the 
borrower files a claim.
    Secretary DeVos. Well, Congressman, the communication with 
the servicers is an ongoing and regular effort, and continues 
to be a challenge, frankly. And I would love to have one of the 
exhibits that we have along here put up, Exhibit 2, to better 
understand the complexity. You know, when Federal Student Aid 
was created I don't think Congress ever envisioned the kind of 
complex organization that it would be today, and I think you 
will see with this chart, how many different elements there 
are.
    The loan servicers all operate on different platforms, so 
there is not an efficient and effective way to communicate, it 
makes communication challenging, but one for which we have 
continued to take responsibility. That is why we have continued 
to move to the modernization of Federal Student Aid's platform 
and framework, what we call NextGen, and we are going to be 
able to have a much and better and smoother process and 
communications flow when we are ultimately able to migrate 
completely to that NextGen framework.
    And if you are interested in hearing more about it, I know 
General Brown has a lot more detail about that process.
    Mr. Walberg. Well, with 8 seconds, 7, I don't think we have 
that detail, but we will look forward to it. But delighted to 
hear that while it is cumbersome right now, we are moving 
NextGen to do it better and complete those 300-and-some 
thousand.
    Thank you. I yield back.
    Chairman Scott. Thank you. The gentleman yields back. The 
gentlelady from Washington, Dr. Schrier.
    Dr. Schrier. Thank you, Mr. Chairman. And thank you, Madam 
Secretary, for joining us today. I come from Washington State, 
and nearly 6,500 students there are stuck. They took out 
student loans and enrolled in bad actor, for-profit colleges 
that intentionally deceived them. The colleges closed, credits 
were worthless, they got stuck with thousands of dollars of 
debt, and nothing to show for it. No degree, no credits that 
could transfer.
    One of my constituents from Pitfall, Washington is a single 
mother, and she found herself broke because she wasn't able to 
get a degree, her so-called education prepared her for nothing. 
She earned very little, was stuck still paying back these 
loans, even though they gave her no education, and she could 
not afford to even leave her parents' home.
    She said, and quote, ``My son has asthma and sometimes 
needs hospital visits. When he gets really sick, I can't even 
take him anywhere. It makes my life a living hell.'' She has 
had to take out loans because she has continued to have to pay 
on this debt.
    Now there was a consensus in your own Department that all 
of these Corinthian and ITT loans should be forgiven, that 
uniformly students got no benefit. And under the Obama 
Administration a policy was enacted to forgive that debt 
because they were victims of fraud.
    But you have continued to collect on those loans, and so 
students sued, and a judge held you in contempt for continuing 
to take their payments and to this day, the Department of 
Education is still making students pay off Federal loans for 
this fraudulent education, sometimes even garnishing wages.
    And so my question for you, who considers students their 
number one priority, is, do you really believe you have done 
everything you possibly can to help these students and make 
them whole?
    Secretary DeVos. Well, Congresswoman, let me first disagree 
with the narrative that you just advanced. I have continued to 
respect the fact that many students' Borrower Defense 
applications have been pending, and I have directed that all 
students whose applications are pending are in forbearance, and 
are not having interest accrue.
    So, the narrative that you have advanced is not accurate, 
and I am committed to continuing to implement this methodology 
to now process the pending applications, and I am very hopeful 
that we are going to be able to continue to do it, without 
litigation, and that ultimately these borrowers will have their 
questions answered, and I can--
    Dr. Schrier. Here is my concern, is that you say they are 
in forbearance, but people are still paying on these loans. 
They are still racking up--
    Secretary DeVos. In the case that they were, they have been 
remediated, and where we have become aware that they have been 
inaccurately taken out, we have remediated them, and we will 
continue to be vigilant about that.
    Dr. Schrier. I would like to know about what kind of 
timeframe we are looking at. Because you have mentored 
children, precisely the kinds of kids who grow up, and go to 
institutions like this. And I wonder if you could just put 
yourself in their shoes and feel what it would feel like to go 
to one of these institutions, be defrauded, be deceived, told 
they were going to have a degree, that credits would transfer, 
that they would have an income afterwards, and then not.
    And then have to wait this long for forgiveness. Being in 
forbearance is one thing, but you are continuing to collect on 
these students, and my understanding is that only about 1,500 
cases have been truly processed through to date.
    So, your new process looking at one case at a time, 
anticipating another year of waiting that seems like too long 
to me. Can you tell me when you anticipate that they will have 
relief?
    Secretary DeVos. I can indeed feel for the students that 
are going to any institution and having hopes that far exceed 
what they realize and what they ultimately experience. And we 
are committed to ensuring that every student that submits a 
Borrower Defense claim is considered on its individual merits, 
and that we have a fair and robust way of considering each of 
those claims.
    We are moving as expeditiously as possible--
    Dr. Schrier. This is my issue that--
    Secretary DeVos.--to address those claims now that we have 
a new methodology underway.
    Dr. Schrier. So, the new methodology has multiple flaws, 
but there is also nothing that prevented you from simply 
stopping collecting payments while it was going through this 
process. But the students are still paying and some of them 
going into debt, some of their credit rating is damaged, and I 
would just like to know what you are going to do to fix this. 
To give the money back to them to repair their credit ratings, 
because there is a long chain of suffering that happens when 
you are forced to continue to pay on fraudulent debt.
    Secretary DeVos. Again, any student that ultimately has a 
claim that has merit, and that for which they have experienced 
financial harm, we are committed to ensuring that they are made 
whole in that process.
    Dr. Schrier. Corinthian students and ITT students 100 
percent have valid claims because they got zero benefit.
    Secretary DeVos. That is simply not true, there are many 
Corinthian students and ITT students who have done very well--
    Dr. Schrier. Your own staff determined it was true. Thank 
you.
    Chairman Scott. Your time has expired. The gentleman from 
North Carolina, Mr. Walker?
    Mr. Walker. Thank you, Mr. Chairman. I have been watching 
some of the hearing over my office, and having some other 
meetings. You know, I thought all the painful stuff was 
happening in another committee, but obviously we are making 
some space on this one, even though we are not the feature 
primetime spot, it doesn't mean you can't still say some crazy 
things on this committee as well.
    I have got a couple questions, but I am just kind of 
pausing to commend you on your strength. Listen, the reality 
is, is all of us when we transition into the political 
environment, my background as a pastor, some educators, you are 
not going to get everything right at first, but we are taught 
to look at the heart.
    And I think with your career, before coming to this 
wonderful position of Secretary of Education, that you have, 
and other things that you have done, I think the heart is 
pretty clear here on what you have tried to do.
    It is a little embarrassing to see when it goes personal, 
like it has, but I don't know how you have continued just to 
kind of--to take it for 3 years and just keep moving forward. 
But you have, and I think that shows great resolve. I think 
sometimes when people have disagreements, it is a shame that we 
make it personal, because I would tell you, I think only God 
sees the heart, and I just commend you for trying to do the 
right thing.
    And I guess I will ask a few questions, if that is okay at 
this point. So, after my commentary is completed. You have 
released a new methodology for determining relief for 
borrowers. Can you please walk me through the methodology, and 
explain why you think this is fair and appropriate measure? If 
General Brown needs to provide some specific information, to 
have you do that as well? So, I will toss it to you.
    Secretary DeVos. Well, thanks Congressman, and thanks for 
the encouragement. The top line is the new methodology really 
treats students individually, and fairly, and also respects the 
taxpayer. It has established a process of scientifically proven 
demonstrable process to consider students that made claims 
against whatever institution, by the program they attended.
    And it compares the earnings, the median earnings from that 
program at that institution with median earnings from like 
programs from other institutions, and so--
    Mr. Walker. I am sorry, go ahead, finish.
    Secretary DeVos. If it falls outside of two standard 
deviations from that mean, or median, the borrower would 
receive 100 percent relief.
    Mr. Walker. Right.
    Secretary DeVos. And between the median and two standard 
deviations, it would be a tiered approach, and so we believe 
this is a very fair and good way of demonstrating that.
    Mr. Walker. So which of these loans does this methodology 
apply to?
    Secretary DeVos. Well, all of the pending claims with the 
exception of the Corinthian college students that have been 
carved out by the previous lawsuit, and we are hopeful that the 
judge will review this process and permit it for the claims 
that were pending there as well.
    Mr. Walker. My understanding is that the system used to 
process these claims and match borrower information, is 
significantly out of date and lacks the capacity to efficiently 
process the exponential growth in claims since 2015. At least 
that is our understanding.
    Could you or General Brown, if this requires a more 
technical answer, please elaborate as to why this backend 
system is deficient in handling these claims, and how this can 
be contributed to the backlog of claims processed.
    Secretary DeVos. Well, first of all, Federal Student Aid as 
an organization in general is a very complex organization.
    Mr. Walker. Yes, it is.
    Secretary DeVos. Congress never envisioned, I don't think, 
when it was founded, what it would become today. And we are in 
the process of updating that foundation and framework so that 
it does more smoothly and easily talk within itself, and with 
its servicers.
    But I think the ponderousness around this whole thing all 
speaks to the complexity of Federal Student Aid, and the 
federalization of student lending. And it has continued to 
manifest itself, 1995 to 2015, only 59 Borrower Defense claims 
in that 20-year period, since then, nearly 300,000.
    Mr. Walker. Wow.
    Secretary DeVos. And it was frankly an all-out attack in 
the last administration on specific institutions, and I think 
that is very unfortunate. Our rule, going forward, will treat 
all institutions equally. You know, the last administration 
said they weren't going to look at materials or realities from 
you know, liberal arts programs because the value was assumed 
there. Well, that is just not a reasonable approach going 
forward.
    Mr. Walker. Sure. And I wanted to hear more from General 
Brown, but my time has expired, so I yield back to the 
chairman.
    Chairman Scott. The gentlelady from Illinois, Ms. 
Underwood?
    Ms. Underwood. Thank you, Mr. Chairman, Secretary DeVos. Do 
you know how many Corinthian students had negative information 
wrongly added to their credit reports?
    Secretary DeVos. How many students with the mistake that 
was made most recently?
    Ms. Underwood. How many students had negative information 
wrongly added to their credit report?
    Secretary DeVos. Hmm?
    Ms. Underwood. I am not asking about your staff, ma'am, I 
am asking about you. Do you know the exact number? Ma'am? 
Secretary DeVos, do you know the exact number?
    Secretary DeVos. Congresswoman, I am consulting with the 
chief operating officer of Federal Student Aid, who is charged 
with the running and implementation of this program.
    Ms. Underwood. Right. I appreciate that, but if you didn't 
know, the answer could be just be no, and that is okay.
    Secretary DeVos. I am trying to find out if I can give you 
an accurate answer.
    Ms. Underwood. Okay.
    Secretary DeVos. The reality is, we don't distinguish 
within the loans that have been pending in process. So, the 
answer is we don't - that information is not collected.
    Ms. Underwood. Okay. Well, so far your Department has 
publicly released the number, and it is 5,900 Corinthian 
students whose credit reports were wrongly affected. Now, you 
are aware that negative information on your credit report, like 
information that says you are not paying your student loans, 
can lower your credit score. Is that correct?
    Secretary DeVos. All of the students who were impacted by 
the mistake that was made have been remediated.
    Ms. Underwood. We are going to get to the remediation. I 
was just asking--
    Secretary DeVos. Well, I am going to get to the remediation 
now because it has been done.
    Ms. Underwood. Ma'am, it is my time. Reclaiming my time--
    Secretary DeVos. So let us go on to the next question 
please--
    Ms. Underwood. Mr. Chairman, reclaiming my time.
    Chairman Scott. Go ahead.
    Ms. Underwood. Secretary DeVos, have you ever been denied a 
home or a car loan because your credit score was too low?
    Secretary DeVos. I do not.
    Ms. Underwood. Okay. But you do know how an unfairly low 
credit score or a bad credit report can affect students. What 
are some specific examples of those harms?
    Secretary DeVos. In fact, all of the students that had 
credit reports affected have been remediated and--
    Ms. Underwood. Thank you so much, ma'am.
    Secretary DeVos.--we will continue to pay attention to not 
having it happen again.
    Ms. Underwood. So, do you know what, ma'am? Thank you. So, 
we know that students whose credit reports get harmed it 
impacts their ability to buy a home and auto loans, it can lead 
to job loss, the consequences are real and they are personal, 
and they have really devastating impacts on students.
    So, I want to share a few of their stories. Loquisha 
Johnson from my home state of Illinois earned a degree as a 
medical administrative assistant from a Corinthian school, but 
we now know that degree is almost worthless. But Ms. Johnson is 
left with those student loans. She just had a job offer 
rescinded because her credit score shows delinquent loans.
    Julie Decker from Indiana lost her home and her car while 
waiting for the debt relief that she is legally entitled to. 
Now, her credit has suffered so much that she can't find a new 
apartment to rent.
    So, let us go back to that 5,900 number. You previously 
said that only 900 students' credit scores were affected, but 
last week you disclosed an additional 5,000 students. Are there 
more disclosures to come? Or can you commit right now that you 
have discovered and corrected every unfair report on the 
Corinthian students' credit?
    Secretary DeVos. Congresswoman, I, too, feel for the 
individuals that you have cited in your examples and, again, 
once again, I am committed to ensuring that we do what is right 
for all students who have submitted Borrower Defense claims. We 
have continued to be diligent, correcting the errors that were 
made, we have acknowledged them, we have said we are sorry for 
them, and we are going to continue to be vigilant to make sure 
that we do not incur more of them.
    We have put notices in the servicers' files, which has 
significant implications for future federal contracts.
    Ms. Underwood. Sure.
    Secretary DeVos. We have continued to make sure that 
consequences for the mistakes that were made are levied and 
that students are continuing--that we continue to put students 
first in this case. The ones that did have credit ratings 
impacted, again, we have addressed those. We will continue. If 
there are instances in the future, we will do so with them as 
well.
    Ms. Underwood. Right. My concern, ma'am, is that this group 
of students may just be the tip of the iceberg. Your Department 
just disclosed this larger number, the additional 5,000 
students last week, as a result of one lawsuit, as a result of 
a court order. It doesn't include the Corinthian students who 
are not involved in this particular class action, or who joined 
a different lawsuit, with their State Attorney General, or 
otherwise.
    It doesn't include the hundreds of thousands of students 
who went to fraudulent schools that aren't Corinthian schools, 
who may also be eligible for Borrower Defense. And even whereas 
your own former deputy, Wayne Johnson, gave an interview a few 
weeks ago about student loans where he said, quote, ``Right 
now, I know that millions of people have unfair information in 
their credit files that is causing them to pay more on car 
loans, and on apartments.''
    So, Secretary DeVos, you both have the responsibility and 
the existing authorities to do something about it, and what we 
are trying to determine is, what is the right number? Is it 
900? Is it 5,000? Or are we into the millions, ma'am? I yield 
back.
    Chairman Scott. The gentlelady's time has expired. The 
gentleman from Georgia, Mr. Allen--excuse me, excuse me. The 
gentleman from Pennsylvania, Mr. Keller. I am sorry.
    Mr. Keller. Thank you, Mr. Chairman. Secretary DeVos, 
General Brown, thank you for being here today, thank you for 
your service to America's students and education. I appreciate 
it very much. I have a couple of things that I would like to 
get into after I just make a couple observations.
    Secretary DeVos, I know that we all agree, all students who 
were defrauded by their schools should receive relief. I also 
want to focus on fairness.
    Since joining the committee we have marked up a one-sided 
Peter robs Paul Higher Education Reauthorization Act. The 
Democrat bill struck me as being incredibly unfair to the 
students we are trying to help, and insulting to the 
intelligence of the students who made the educational decision 
in their best interest.
    As Democrats continue to push policies that double down on 
failed policies and cuts out specific educational providers 
that are only harming our students, we do a disservice to the 
students when they focus in our school's tax returns, rather 
than the educational experience delivered.
    We can discuss how there are bad actors across the board, 
but what we should focus on is how we allow students to find 
the school or educational program that best fits their needs 
and helps them achieve their goals. And I heard a lot earlier 
today about not having a process and many things in place for 
you to be able to do that from the previous administration. So, 
I just have a couple questions.
    Can you tell us about what the Department is doing to help 
students and prospective students better understand the options 
available? Like does the College Scorecard cover more than just 
baccalaureate degrees?
    Secretary DeVos. Congressman, thanks for that question. 
Yes. As I mentioned a little earlier, the College Scorecard 
that we have recently enhanced the data for, now contains 
information at a field of study level for not only 4-year 
colleges, but also 2-year institutions, for some certificate 
programs, some graduate programs, and also has links to the 
apprenticeship programs through the Department of Labor. So, we 
believe this is going to be a really good and important tool 
for students to be able to access and use as they consider 
future fields of study in future programs.
    Mr. Keller. So prior to, the previous administration, did 
they cover that broad range of programs available or were they 
just focused on the baccalaureate degrees?
    Secretary DeVos. They were focused on 4-year institutions 
and by institution level. Now we are down to the program level.
    Mr. Keller. Okay. So what that would do then would be 
improving any student at any field of study, depending on how 
long that takes?
    Secretary DeVos. To acknowledge, there are many pathways to 
a successful adult life, and we encourage students to look at 
all of their options and, in fact, look at them starting in 
middle school, frankly.
    Mr. Keller. So your scorecard will actually protect more 
students than the previous administration's did because you are 
including at the degree level, and not the institution level, 
and you are considering all programs, not just baccalaureate?
    Secretary DeVos. Correct.
    Mr. Keller. So you have done more to help students since 
you have been Secretary than previously?
    Secretary DeVos. I would argue with that to be, yes.
    Mr. Keller. Yes? Because previously if I had been going for 
a 2-year agree or an apprenticeship, I wouldn't have had that 
information available to me. Correct?
    Secretary DeVos. That is correct.
    Mr. Keller. Thank you for that. I appreciate it very much. 
Also, Secretary, has the information shared on the College 
Scorecard been expanded? Of course, that is--expanded of 
course, that it has been expanded under your watch. Can you 
highlight what changes have been made, what the additional 
educational pathways are available?
    And I know you talked a little bit about that, but, you 
know, when you look at that, how do you think that its helped 
some of the other people that aren't going for a baccalaureate, 
but they may be going for 2-year associates degree or a 
training program?
    Secretary DeVos. Well, this is relatively new, so it was 
just within the last several weeks that this data was made 
available, and so I think prospectively students are going to 
be able to make better comparisons, and to be able to compare 
between institutions, compare between programs, compare 
different kinds of fields of study, and again, just give 
students and prospective students many more tools to be able to 
make good decisions for their future.
    Mr. Keller. I appreciate that. And I just want to follow 
up. I know there has been some previous remarks made about 
certain, you know, students, they haven't, but the courts have 
really held you up on getting relief to all students. Is that 
correct?
    Secretary DeVos. Correct. We had a process well underway in 
2018, and the court stopped us from continuing it in May of 
2018, and we have been waiting for the court on appeal; since 
then, have developed a second methodology, and have just been 
able to unveil that and begin implementing it last week.
    Mr. Keller. So, really, the courts have caused some 
people's credit scores to be harmed more so than the 
Department?
    Secretary DeVos. Indeed. Indeed.
    Mr. Keller. Thank you, Madam Secretary.
    Chairman Scott. The gentleman's time has expired. The 
gentlelady from Connecticut, Ms. Hayes?
    Mrs. Hayes. Thank you, Mr. Chair. I would like to return 
just for a moment to that January 10, 2017, memo from the 
Borrower Defense Unit to Under Secretary Ted Mitchell, who is 
the top lieutenant of former Secretary of Education John King. 
I just want to point out, while this memo was written before 
you took office, it serves as a fundamental transition memo 
between administrations.
    And I have the benefit of sitting next to a former 
Secretary who assured me that there are meetings and a briefing 
book and letters, so I just think that it would be vital for 
you and your Department to read what you inherited, especially 
since you were saying there was no plan, and, in fact ,there 
was a plan as this memo indicated. You know, we operate in a 
country where there are--
    Secretary DeVos. It was not a process, and I will continue 
to--
    Mrs. Hayes. That wasn't a question. We operate in a country 
where we have peaceful transitions of power, and it is 
understood that we have changed from administration to 
administration. And then just the last thing I would say before 
I move on to my questions, is that it has been suggested by my 
colleagues on more than one occasion that I don't understand, 
this I understand, everything about these hearings I 
understand.
    So, Secretary DeVos, in March, you told Senator Murray 
that, and I quote, ``The Department had decided to move forward 
with processing--the Department had decided to move forward 
with processing denials while awaiting the court's decision 
regarding the Borrowers Defense partial relief methodology. It 
turns out, in fact, that your Department has been sitting on 
approximately 18,000 denial claims.''
    My question is, why would the Department purposely not 
inform borrowers that their claims had been denied?
    Secretary DeVos. First of all, the claims are ineligible, 
and we decided not to release a whole bunch of them early 
before we were able to implement this new methodology, because 
we didn't want to concern students that had pending 
applications that perhaps this was going to be the case for 
everyone.
    So while we could reach the conclusion and reach the 
decision for a number of them, we intentionally, did not want 
to, I think, concern students with pending applications because 
there are, because there are many pending applications that 
they have relief.
    Mrs. Hayes. I got it. I got it. But don't you think that a 
borrower who has no chance of getting forgiveness, should be 
told their status? Is it unfair for borrowers to be waiting up 
to 4 years for a resolution when some of them may have, in 
fact, already been denied? The institutions have closed, they 
are losing access to critical documents, the interest is 
building up. Is there any, I don't know, political reason for 
doing that so as the number of denials would not be increased? 
If you have the information.
    Secretary DeVos. Yeah, we were concerned about the message 
that it would send to pending students with valid applications, 
and so that was the reason.
    Mrs. Hayes. But wouldn't a student want to know if they are 
waiting for a decision. It has been 4 years, and a decision has 
already been made that their application was denied so that--
    Secretary DeVos. I am sure all students want to know, that 
is why we are really focused on trying to get this new 
methodology fully implemented, and, frankly, have been very 
disappointed that the court has not opined on our appeal to the 
previous methodology.
    Mrs. Hayes. But the court has not prevented you from 
informing students of denials. Is it not true that in a sworn 
declaration filed last month in court that Principal Deputy 
Under Secretary Diane Auer Jones stated that the Department did 
not want to notify borrowers about the denials because of 
concerns about the public perception of the process?
    Secretary DeVos. Again, just what I said, we did not want 
students with pending applications to somehow think that their 
application was not going to have any chance of approval or of 
relief.
    And so, now that we have the new methodology, it is kind of 
a moot point actually. We are well underway with processing 
again, and we will be able to inform borrowers, hopefully, many 
of them very quickly with regard to the status of their 
application.
    Mrs. Hayes. To me this looks like a political decision 
because you aren't approving any claims. It would look bad if 
you were ratcheting up the denial rates, if the approvals were 
flat, and the denials were up. So, instead you are just sitting 
on everything to keep better optics at the cost of students, 
who just want a resolution.
    I will ask again, if you know a borrower does not have a 
valid claim, or that he has been denied for other reasons, what 
is the benefit of sitting on that information and not sharing 
it with the student?
    Secretary DeVos. I would like to refer us to Exhibit 6, 
which demonstrates the percentage of claims that had relief 
on--
    Mrs. Hayes. I am talking about the claims that you know are 
denied.
    Secretary DeVos. I am just--I am talking about the history 
of the claims that we were able to process before the courts 
stopped us. And compare that to the percentage of claims that 
the previous administration, and they were consistent, you will 
see 62 percent--
    Mrs. Hayes. My time has expired. I have to yield back.
    Secretary DeVos.--62 percent, and so we have continued to--
    Mrs. Hayes. My time has expired. I have to yield back. I am 
sorry.
    Chairman Scott. The time has expired. The gentleman from 
Georgia, Mr. Allen?
    Mr. Allen. Good morning, Madam Secretary. And I thank you, 
too, for I know that you and I share a common faith in I think 
just probably what has sustained us in these things, 
persecution is just a part of it, and there is a lot of 
disagreement about how to do things here. But I do remember, 
and, of course, we are in a different Congress, but--and a lot 
of different, new faces here, and a lot of new ideas. But in 
the last Congress we actually marked up the Higher Education 
Authorization.
    And one of the most criticized pieces of that by my 
Democratic colleagues was a piece we put in there holding both 
public and private schools of higher education accountable to 
both students and the Federal Government for the federal debt. 
In fact, later if we go back and pull the records, but I would 
like to enter the record of exactly that language that went 
there, the vote on it, and the comments about that, making 
schools of higher education more accountable, because obviously 
young people had been misled.
    I come across young people all the time and, you know, 
their first request is could you please forgive my student loan 
debt? Because they were ill-advised, and frankly, this thing 
kind of ramped up in the last, you know--well, I have been a 
member, this is my third term, but I think I began hearing 
about this about 10 years ago. Because the idea then is every 
young person should get a college degree so the idea is, okay, 
we are going to loan people the money and not tell them how in 
the world they are going to pay it back. And that is wrong.
    And the Federal Government should have--I mean, I put the 
blame right here on this body. I mean, whoever came up with 
this idea in the beginning, and did not put into place and 
provide for and to keep young people from being misled, that is 
the tragedy here.
    And I realize you inherited a lot of this, and so what I am 
going to do right now--and, General Brown, you have got some 
charts over there, if you haven't been able to share exactly 
what you are trying to do to correct this situation, I welcome 
that opportunity.
    For you to have that opportunity, we have got 2 minutes and 
22 seconds remaining. If there is something over there that you 
think would help my colleagues here understand what you are 
trying to do and how quickly you are trying to do it, I would 
be glad for you to share with us.
    Chairman Scott. If the gentleman would direct the question.
    Mr. Allen. All right, well, Secretary DeVos, if you would, 
whatever you have to do, to defer to General Brown or whatever, 
however you want to do that, please proceed.
    Secretary DeVos. Well, Congressman, thanks for that. And 
you are right, we inherited a difficult situation. We are 
trying to put in place a process, and we have now a second time 
put in place a reasonable process, one that treats students 
fairly, taxpayers fairly, institutions fairly, one that is 
balanced in its approach.
    And I will just stop and see if there is something that 
General Brown feels we have not been able to share with regard 
to that new process.
    General Brown. Yes, ma'am. Just very quickly, I will show 
you on Exhibit 2. And while he is getting that up, just to 
correct one error here, 100 percent of those people who were 
impacted with credit report ratings have been corrected, and 
almost all with very few exceptions, and those we work today 
have had refunds given to them. We have a system of 11 loan--
    Mr. Allen. I have to add one thing, that was a mistake with 
my credit report that I didn't know about when I went to buy 
something and so it happens. Okay. So, go ahead.
    General Brown. Yes, sir. I will just quickly tell the 
committee that we have 11 loan services and 13 collection 
agencies across the country, and those are not systems that 
work together. Those are individual silos of at least four 
different systems, so to get information from these systems, 
you actually have to go out to the individual loan servicers 
and craft the questions exactly right to get it back, which is 
not the way any of you do your consumer banking, it is not the 
way that most people do business in this century.
    So, what we are trying to do is to take ownership of loan 
servicing back into Federal Student Aid, so that there is one 
system that we own, so that if you ask us a specific question 
we can get it from our systems without going out to the loan 
servicers and, therefore, reduce the errors.
    We call that the next generation of Federal Student Aid, 
and we are almost there. Some of it we are implementing now, 
and most of it we have implemented next year.
    Mr. Allen. All right. Secretary, hang in there. I am with 
you. Thank you.
    Chairman Scott. The gentleman's time has expired. The 
gentlelady from Florida, Ms. Shalala.
    Ms. Shalala. Thank you very much. Thank you, Secretary, for 
joining us today. Secretary DeVos, you have repeatedly said 
that your new partial formula is necessary for individualized 
review of claims from defrauded borrowers. Is that correct?
    Secretary DeVos. Yes.
    Ms. Shalala. Isn't it true--
    Secretary DeVos. But not only for individual, but just for 
a framework and a process.
    Ms. Shalala. All right. Isn't it true that your new partial 
relief formula does not allow for individualized review of 
claims?
    Secretary DeVos. No, it does allow for individualized 
review of claims.
    Ms. Shalala. You are sure of that?
    Secretary DeVos. Yeah, each is being reviewed individually, 
by General Brown's robust--
    Ms. Shalala. So the partial review relief formula does 
allow for individualized review of claims?
    Secretary DeVos. Yes. Yeah, I mean, each of them are being 
reviewed individually, that is why there are three times the 
number of attorneys that we have had previously.
    Chairman Scott. The gentlelady yields. Ms. Shalala?
    Ms. Shalala. Yes.
    Chairman Scott. Are you asking whether or not the 
individual case is reviewed, or whether or not the individual 
dynamics, whether that person's income is individually 
reviewed?
    Ms. Shalala. The latter.
    Secretary DeVos. Oh, well, no. It is a program-to-program 
review, so if a borrower has submitted a claim with regard to 
the specific institution, and the program that they studied, 
the information, the median earnings information from that 
program, from all of those who graduated from that program at 
that institution is reviewed against the median earnings of 
like programs from other institutions around the country.
    Ms. Shalala. That is not an individualized review, you have 
set up a formula there.
    Secretary DeVos. It is individualized to program, because 
as someone said earlier, you could have an individual who has 
done remarkably well financially that has made a claim against 
a program that, upon review, falls short simply because that 
individual has earned more they should not be penalized in that 
case.
    Ms. Shalala. Okay. Let me ask a quick question to follow up 
with colleague, and I have another question. At what date are 
you going to notify the 18,000 people that have claims have 
been denied?
    Secretary DeVos. I believe that has been rolling out, and 
continues to roll out, and General Brown would have the 
specifics.
    General Brown. It is happening, ma'am, even as we speak.
    Ms. Shalala. And when will all of them be notified by?
    General Brown. That first tranche, I suspect they will be 
notified over the next couple of weeks, some of which have been 
notified.
    Ms. Shalala. Okay. Right, but when will the 18,000 be fully 
notified?
    Secretary DeVos. As part of that.
    General Brown. Over the next couple of weeks, ma'am, they 
will be. And it has already started.
    Ms. Shalala. All right. Let me ask a question. How many 
staff people does the General have for these individualized 
reviews?
    Secretary DeVos. I am going to ask him to comment how he 
has staffed up at my urging the area reviewing them.
    General Brown. So, ma'am, we will have up to 64, and we 
have most of those already hired now, that's more than three 
times as many as we have ever had, the peak of which, if you go 
back over the last 3 years or 4 years, has been 14, we will 
have up to 64.
    Ms. Shalala. So, Madam Secretary, let me ask you a very 
specific question about this. So, if he has around 60, and you 
have 227,000 claims that have to be individually reviewed, and 
you have already indicated that you intend to do that over 12 
months, that is about 300 per person. Even the VA and Social 
Security with the equivalent of a brigade can't review that 
many.
    So, explain to me how in 12 months, you're going to be able 
with that limited number of people to process, individually, 
200--over 200,000 claims.
    Secretary DeVos. Well, General Brown has assured me that he 
has the personnel in place to be able to do that, and he has 
followed through on all of his commitments to do PSA and--
    Ms. Shalala. Madam Secretary, that is about 300 a day for 
an individual. That is technically impossible. The VA cannot do 
it. Social Security cannot do it. We have a lot of experience 
in government. So, I am questioning the credibility of being 
able to do that in 12 months, which you have assured us you are 
going to be able to do.
    Secretary DeVos. I am going to ask--again, I am going to 
ask General Brown to comment more specifically on that.
    General Brown. So, ma'am, I would say that all claims are 
not the same. The complexity of some are far more than the 
others. The amount of--so our documentation is far greater than 
the others. So, we have people that have been working at this. 
They have looked at the various complexities. The number that 
we are at, today, for processing, we are very early in the 
process. We hope to grow that to a number that exceeds the 
amount that are coming in, and we are not stagnated. So, if 64 
is the wrong number, then we will hire more. We will go back to 
the Secretary to ask for more resources, and we will look at 
the production on a weekly basis.
    So, I would not get fixated on 64 other than to say that is 
greater than the amount that we have had in the past. We are 
looking at this each month, and if we need to bring on more 
attorneys, we will.
    Ms. Shalala. Yes. With all due respect, Madam Secretary, I 
am focused on 200,000, not on the number of staff people. I am 
simply suggesting that the--that, technically, given the number 
of staff people, you actually cannot process that number and 
you ought to look at that. If I have one more second--
    Secretary DeVos. Congresswoman, if I could just--
    Ms. Shalala. Yeah.
    Secretary DeVos.--comment. There are--many of these claims 
have been adjudicated to the point of being able to be 
processed. So, there are a lot that are already several steps 
into the process. Now, they have to just complete the process.
    Ms. Shalala. I yield back.
    Chairman Scott. Thank you. Thank you. Who do you have next? 
Comer?
    Mrs. Foxx. Mr. Smucker.
    Chairman Scott. Oh, oh, I am sorry. Mr. Smucker? Gentleman 
from Pennsylvania, Mr. Smucker.
    Mr. Smucker. Thank you, Mr. Chairman. Thank you, Madam 
Secretary, for being here. I appreciate your work, appreciate 
your comments earlier in regards to the need for congressional 
oversight, which you stated you understand the need for. You 
have done, I think, an excellent job of outlining your response 
and the Department's response to the questions that have been 
raised, legitimately, here today, but I find it unfortunate 
that, you know, you continue to be asked about reading a 
specific memo, and that, you know, I do not understand what 
that has to do with your Department policy on these issues, 
which is important that we understand. And, in fact, the memo, 
that you are being asked about was written in January 10, 2017, 
prior to you taking office. So, I just want to make that clear 
for the record.
    I also find it offensive, earlier comments that were made, 
in regards to your view of public education. Anyone who looks 
at your body of work and says that you do not care about 
children, does not care about public education, that is untrue. 
It is false and it is offensive. I also find it offensive that 
the same statement was made about Republicans, and anyone can 
look at my record and others on the Republican side of the 
aisle and know that we have worked hard to ensure that every 
child gets the education that they deserve, and that public 
education is working effectively in our states. So, the 
committee has reached a new level when we were throwing those 
kind of accusations against the other side, and it is 
unfortunate, and should not be part of a hearing here today. 
You do have--there have been some questions in regards to your 
authority and to the idea of partial--what is the word?
    Secretary DeVos. Partial relief.
    Mr. Smucker. Partial relief, I am sorry, and I want to make 
this clear, and I want to ask you a question in this regard. 
Partial relief could be for someone who has already graduated 
from the institution and who is in the workforce, correct?
    Secretary DeVos. Correct.
    Mr. Smucker. We are talking about someone who may have 
graduated years before the school closed, who has had a 
beneficial education, and has had a job as a result of that 
education. What I am hearing Democrats say here today is they 
do not even want us to look into that. They want, instead, you 
to make a blanket relief, 100 percent, of any additional 
student loans that student has outstanding. Am I correct on 
that?
    Secretary DeVos. Well, there is--I know there is a--an 
attitude that many, if not all, of these loans should be 
completely forgiven.
    Mr. Smucker. Okay, no court of law would look at a 
situation like this. No insurance company would look at a 
situation like this. And for us to expect that taxpayers would 
support something along that line, I think, is not a good 
precedent. I do want to put a few things on the record, and I 
am going to run down through a series of questions.
    So, Borrower Defense, first, it--you agree, it is a 
provision included in the Higher Education Act, correct?
    Secretary DeVos. Correct.
    Mr. Smucker. That statute in Section 455H of the law 
states, ``Notwithstanding any other provision of state or 
Federal law, the Secretary shall specify in regulations which 
acts or omissions of an institution of higher education a 
borrower may assert as a defense to repayment of a loan, made 
under this part, except that in no event may a borrower recover 
from the Secretary in any action arising from or relating to a 
loan paid under this part an amount in excess of the amount 
such borrower has repaid.''
    Those are the only provisions that restrict the activities 
that you can take in writing a rule. Am I right on that?
    Secretary DeVos. Correct.
    Mr. Smucker. My interpretation means this: one, that the 
Secretary will issue regulations on this issue; and, number 
two, as I said, that is the only limit that you have in 
providing relief.
    Turning to the rulemaking activity then. There are three 
different regulations: President Clinton's in 1995, President 
Obama's in 2016, and yours this year. Is that correct, as well?
    Secretary DeVos. That will take effect next July, yes.
    Mr. Smucker. Yes, and the regulation applicable to the loan 
is dependent on the date the loan was disbursed?
    Secretary DeVos. Correct.
    Mr. Smucker. Under the 1995 Clinton regulations, did the 
regulations allow the Secretary to grant partial relief?
    Secretary DeVos. Yes.
    Mr. Smucker. Under the 2016 Obama regulations, was the 
Secretary allowed to grant partial relief?
    Secretary DeVos. Yes.
    Mr. Smucker. Under the 2019 regulations--
    Secretary DeVos. Yes.
    Mr. Smucker.--was the Secretary allowed to grant partial 
relief? Do you believe that authority is clear and not in 
dispute?
    Secretary DeVos. Yes, I do.
    Mr. Smucker. If members of Congress disagree with the 
policy decision, they defer to the Department. Can they 
introduce and pass a bill mandating that--you to provide full 
relief, and would you continue to follow the law that Congress 
has written if that were the case?
    Secretary DeVos. Congress could, indeed, pass that law, and 
if that law were passed, I would, indeed, follow it.
    Mr. Smucker. Thank you, Madam Secretary.
    Chairman Scott. Thank you. The gentleman yields back. The 
gentleman from Michigan, Mr. Levin?
    Mr. Levin. Thank you. Good afternoon, Madam Secretary. I am 
going to lead you, just to let you know, through some yes or no 
questions, just like Mr. Smucker did so ably. Let us see if we 
can get a yes or no answer over here, as well.
    In a November 7th letter to Chairman Scott, you wrote the 
following in reference to claims from defrauded Corinthian 
borrowers, and I quote, ``The clear intent of the prior 
administration was to eventually provide blanket relief, 
without review of the facts and evidence.'' Does that 
accurately represent your reviews on the Obama Administration's 
process for reviewing Corinthian claims?
    Secretary DeVos. Yes.
    Mr. Levin. Okay, thank you. So, I have in my hands here two 
memos that were uncovered yesterday in a story by National 
Public Radio. These memos, which were produced by Education 
Department staff in late 2016 and early 2017, show a detailed 
analysis documenting pervasive and consistent fraud by 
Corinthian schools.
    The committee has been requesting relevant documents from 
you for the last year. Did you provide these documents to the 
committee?
    Secretary DeVos. We have been providing documents.
    Mr. Levin. Did you provide these documents, these two 
memos?
    Secretary DeVos. I cannot--I do not know what memos you are 
holding up, and I--
    Mr. Levin. They are the memos that were--we have been 
talking about all morning, ma'am.
    Secretary DeVos. Yes.
    Mr. Levin. You do not know whether you submitted them or 
not?
    Secretary DeVos. The NPR memos that--yes.
    Mr. Levin. Yes. Did you submit them or not to us?
    Secretary DeVos. I am sure that they were part of 
whatever--
    Mr. Levin. You are sure you did submit them?
    Secretary DeVos.--document dump of 18,000 pages. I cannot 
say with certainty.
    Chairman Scott. Will the gentleman yield?
    Mr. Levin. Yes, I would.
    Chairman Scott. We have not seen those documents.
    Mr. Levin. Okay. So, you did not submit those documents to 
us. So, did you halt and curtail loan relief for defrauded 
Corinthian borrowers without reading this detailed review of 
the fraud conducted by your own career staff, by these schools?
    Secretary DeVos. Congressman, I had many discussions, early 
on in my term, but can I--
    Mr. Levin. So, let me just ask you, do you know whether you 
have read these?
    Secretary DeVos. Can I finish?
    Mr. Levin. No, no, you can't. Do you know whether you read 
these or not?
    Secretary DeVos. I had discussions about the previous 
administration's views and policy toward these pending 
applications.
    Mr. Levin. Okay. So, let us move onto the substance of the 
memos. According to the memo, dated October 24, 2016, the staff 
at Corinthian-owned schools repeatedly lied to perspective 
students by telling them that their credits would transfer to 
other schools. The memo quotes one of the many similar claims 
from students. The student says, and it is on the screen, here, 
``I was told my credits would transfer to University of South 
Florida, for my B.A. in finance, and they did not. So, I was 
stuck with all these loans and no school will take them.'' 
Madam Secretary, does that sound like fraud to you, yes or no?
    Secretary DeVos. Sir, we are considering each--
    Mr. Levin. Okay. So, let me go on. There's more. That same 
memo documents another form of fraud in which Corinthian 
schools repeatedly told students they were accredited, when 
they, in fact, were not accredited. The memo quotes a claim 
from one student, typical of many, who says, ``There was 
speculation that the school was not accredited, but they 
continuously posted fake documents around the school, claiming 
that they were accredited, and that any credits we received 
would transfer over without any problem.'' Madam Secretary, 
does that sound like fraud to you?
    Secretary DeVos. Congressman, I--
    Mr. Levin. Will you go to the ends of the Earth--
    Secretary DeVos. Congressman, I am--
    Mr. Levin.--to defend a for-profit company that posts fake 
documents--
    Secretary DeVos. Congressman, I am not--
    Mr. Levin.--on its walls?
    Secretary DeVos. I am not committed to protecting any 
institution, no matter what their organization is.
    Mr. Levin. Okay. Madam Secretary, the--
    Secretary DeVos. I am committed to students and the 
students that have--
    Mr. Levin. All right. Let us talk about that, Madam 
Secretary. Let us talk about your commitment to students, the--
    Secretary DeVos. Can I finish a sentence, please?
    Mr. Levin. No, you may not.
    Secretary DeVos. I may have--
    Mr. Levin. The Consumer Financial Protection Bureau found 
fraud at Corinthian Colleges. The state attorneys general of 
California, Massachusetts, and Wisconsin found systematic fraud 
at Corinthian colleges. The career Education Department staff 
found fraud at Corinthian Colleges. Madam Secretary, you appear 
to be the only person who does not believe there was fraud at 
Corinthian Colleges. Can you state to me here whether or not 
you think Corinthian Colleges committed any significant amount 
of fraud against its students?
    Secretary DeVos. Congressman, I know that there are student 
Borrower Defense claims pending for students that attended 
Corinthian College, and--
    Mr. Levin. Do you think Corinthian Colleges--we all know 
there are--
    Secretary DeVos. Mr. Chairman?
    Mr. Levin. We all know that there are--
    Secretary DeVos. Mr. Chairman, if I cannot answer a 
question--
    Mr. Levin. So, did--do you think--I am asking about you, 
yourself, after all these many months as serving as Secretary 
of Education that Corinthian Colleges committed fraud against 
its students?
    Chairman Scott. The time of the gentleman has expired, and 
the Secretary will answer.
    Secretary DeVos. I know that there are Corinthian College 
students that have valid Borrower Defense claims, and we are 
committed to ensuring that each one of those is considered 
individually and that the relief is properly attributed to each 
student that has filed valid claims.
    Mr. Levin. Thank you, Mr. Chairman. I yield back.
    Chairman Scott. Thank you. The gentleman from Texas, Mr. 
Taylor?
    Mr. Taylor. Thank you, Mr. Chairman. Madam Secretary, 
appreciate you taking the time to be here, and, Mr. Chairman, 
appreciate this hearing. And I will just say that in my own 
experience, you know, my general experience is when talking to 
witnesses, letting them know ahead of time that there is a 
particular memo I want to talk about or a particular issue that 
might be a little off the beaten path, it is generally really 
helpful to getting a good response because then they have a 
chance to review it and read it. And the sooner you get it to 
them, the better the answers generally are and the more 
thoughtful they are. And also, I guess, I come from--I was in 
the Texas Legislature for a period of time, and served on the 
Education Committee there. And I am used to a more professional 
environment where people allow the witnesses to answer their 
questions. I generally find the answers are better if you do 
not cut them off.
    I just wanted to talk a little bit about the operational 
challenge that lies in front of you, Madam Secretary. So, you--
I believe your testimony is that there has been a 5,000 percent 
increase in the number of Borrower Defense claims. Did I get 
that number correct?
    Secretary DeVos. Yes, that is correct, Congressman.
    Mr. Taylor. And then, over what period of time have you 
seen this 5,000 percent increase?
    Secretary DeVos. Since 2015.
    Mr. Taylor. Okay.
    Secretary DeVos. It was like a spigot was turned on.
    Mr. Taylor. Right. Well, and I will just say, you know, I 
served on the Homeland Security Committee, and we saw a similar 
crisis on the U.S.-Mexican border, a 3,000 percent increase in 
the number of families that were coming over the border over a 
very short period of time. And that, of course, creates an 
operational problem.
    How do you process all of those people? And I think you 
have a very similar situation here, where a previous 
administration, for whatever reason, made a series of policy 
choices that then caused a massive increase, and then you are 
left, unfortunately, I think, in some sense, to clean up the 
mess. Can you speak to what you are--how you have ramped up 
your operation to be able to handle this kind of increase? 
Because, clearly, you did not have--the ability to handle the 
situation, as we find it now, did not exist in the previous 
administration. So, you have had to create it, whole cloth, a 
whole new process to handle this tremendous burden that has 
been placed upon you.
    Secretary DeVos. Well, thanks, Congressman. In addition to 
developing the initial methodology to--considering the claims, 
Federal Student Aid, itself, I have hired General Brown, who 
has undertaken a review of the structure internally, has made 
some significant organizational changes for operational 
efficiency, and he has also, as you heard previously, stood up 
on three time--threefold number of individuals that are 
committed to this specific area. And we will continue to 
adjust, as necessary, based on the claims that we have, with 
the hope that--I mean, frankly, we should be returning to the 
kind of level of Borrower Defense claims that were resident 
prior to 2015. From '95 to 2015, there were a total of 59 
claims. That is--I think that is what we should aspire to in 
the future, that students have the information they need, that 
institutions are very transparent about what their programs 
are, and that they are accurate in what they represent. And I 
think that we will all be in a better place, if that is the 
case.
    Mr. Taylor. Sure, and I will just make an observation that, 
in my own time, in working in the education space in the state 
of Texas, over and over again articulation between a community 
college and a public university, which is what, generally, we 
were working with, articulation, getting credits to go from A 
to B, is a real problem. And it is not just with for-profit 
schools. It is with community colleges. It is with dual-credit 
classes, and it is even within public university to public 
university. And so, this is something that, certainly, I have 
seen for many years.
    And I was intrigued that those were some of the things that 
were claimed, you know, a claim of fraud. It is like, well, I 
have seen that all over the place in the public space for 
years. Do you want to--is there anything you would like to add 
at this point? I know you have been cut off many times in this 
hearing, and it is unfortunate that you are not given a chance 
to answer your questions.
    Secretary DeVos. Well, Congressman, I would just reiterate 
the fact that nothing bothers me more than the fact that we 
have had all of these claims pending for as long as we have 
had, and I am very hopeful that with the implementation of this 
new method, we will be able to quickly address and process 
through. And, you know, I feel for the students involved--and I 
am, also, very sympathetic, broadly, to students, and we want 
to make sure that students have good experiences and that they 
have good information in making decisions about their 
experiences.
    Mr. Taylor. Sure. And, again, I just want to say I 
appreciate that you have basically been handed a mess, and that 
you have had to create a solution. And it seems like you have 
created a solution that is going to address that in a timely 
manner. And I am grateful to you for your service to this great 
Nation and to the students of this country. Mr. Chairman, I 
yield back.
    Chairman Scott. The gentlelady from North Carolina, Ms. 
Adams?
    Ms. Adams. Thank you, Mr. Chairman. Thank you for holding 
this hearing. And thank you, Secretary DeVos, for being here. 
Earlier this year, you repealed the Gainful Employment 
regulations, that the Obama--these Obama regulations evaluated 
programs based on earnings data, just like your partial relief 
formula.
    In repealing these regulations, the Department wrote that 
Gainful Employment was quote, ``fundamentally flawed and an 
unreliable proxy for program quality.'' Gainful Employment was 
a regulation to prevent low-quality for-profit colleges from 
obtaining federal funds. You are now using its data to evaluate 
colleges, exactly what you said it should not be used for. But 
instead of using it against bad schools, you are using it to 
deprive students of loan relief.
    So, Secretary DeVos, which is it? Should we grade schools 
on earning data or not? If you can just give me a simple 
answer, yes or no, I would appreciate it. Should we grade them 
on earning data or should we not?
    Secretary DeVos. Ultimately, no.
    Ms. Adams. Okay, thank you.
    Secretary DeVos. All in--unless you are going to do all 
institutions equally.
    Ms. Adams. Okay, thank you. So, you are willing to--so, we 
should not? So, you--
    Secretary DeVos. Unless you are going to do all 
institutions--
    Ms. Adams. Okay.
    Secretary DeVos.--equally.
    Ms. Adams. All right. So, you are willing to use the 
earnings data to tell defrauded students that fraudulent 
schools they attend is high quality? Will you commit to using 
this data to tell students which schools are low quality by 
reissuing the Gainful Employment regulations?
    Secretary DeVos. No.
    Ms. Adams. Oh.
    Secretary DeVos. We are moving ahead with a process--
    Ms. Adams. So--
    Secretary DeVos.--to consider all of the Borrower Defense 
claims that are pending. And we are very hopeful that, with the 
additional information, that we have--
    Ms. Adams. Oh, okay.
    Secretary DeVos.--released for the College Scorecard, 
that--
    Ms. Adams. All right, I want to--
    Secretary DeVos.--that could be--
    Ms. Adams. I need to reclaim my time.
    Secretary DeVos.--a very important and useful tool for 
students.
    Ms. Adams. All right. I need to reclaim my time because I 
really want to get through my questions so it doesn't sound 
like you are interested in doing that.
    Secretary DeVos, Gainful Employment data only seeks to, 
speaks to the outcomes of those who graduate. I was a college 
professor for 40 years. I have worked with students, I know the 
struggles that they have. I even had student loans myself.
    But we all know that many students, who attend an 
institution like Corinthian and I know it has continued to come 
up, don't graduate. They drop out with a significant amount of 
debt. So how is it possible that a metric that speaks to the 
outcomes of graduates only is being used to determine the level 
of harm for those who dropped out. Just using that one metric? 
How is that?
    Secretary DeVos. Congresswoman, we believe the methodology 
that we have just implemented is one that is very 
scientifically robust and one that is going to ultimately treat 
the, all of the pending claims fairly and will answer students' 
questions about whether they have that, had financial harm 
ultimately or not.
    Ms. Adams. Okay, let me move on. So in your statement 
regarding the new partial relief formula, you said and I quote 
we cannot tolerate fraud in our education nor can we tolerate 
frivolous giving away taxpayer money to those who have 
submitted a false claim or aren't eligible for relief end of 
quote. Yet the new partial relief formula is not about those 
false claims of those who were ineligible for relief.
    So what possible rationale would you have to deny the full 
measure of relief to students who we all agree have been 
defrauded and left worse off?
    Secretary DeVos. Every student claim is going to be 
considered and if they have received financial harm, 
demonstrable financial harm, that will be relieved at some 
level.
    Ms. Adams. Okay. I am concerned that we are one data breach 
away from hundreds of thousands of borrower's private data 
being compromised. So the Department's Borrower Defense Unit is 
currently in possession of private data from hundreds of 
thousands of students. So are you taking the appropriate steps 
to protect the personal data of defrauded borrowers?
    Secretary DeVos. I am very concerned about data security 
for all students and that is a high priority for me and my 
department and for Federal Student Aid.
    Ms. Adams. Well, are you taking any steps?
    Secretary DeVos. We have taken steps ever since I have been 
in office to ensure the protection of data and that is not a 
onetime process.
    Ms. Adams. All right.
    Secretary DeVos. And it's not an episodic one. It is a 
continuing one.
    Ms. Adams. Thank you very much and let me just make the 
assessment. Given the errors that you and your servicers have 
committed regarding borrower defense data and just borrower 
data in general, can you commit to reviewing the security of 
that data and reporting back to this committee to assure that 
current and future applicants and their data is being managed 
responsibility. Can you commit to that?
    Secretary DeVos. Yes, I commit to that.
    Ms. Adams. Great.
    Secretary DeVos. Just as I commit to continuing to be 
responsible for and responsive about data security across the 
board.
    Ms. Adams. Thank you very much. Mr. Chair, I yield back.
    Chairman Scott. Thank you. The gentleman from Wisconsin, 
Mr. Grothman.
    Mr. Grothman. Yes, first of all I would like to thank you 
one more time for over here. Thank you one more time for taking 
this job. I mean, you knew you were inheriting a mess and you, 
you know, and just looking at the student loan debt, I think 
over the past administration it more than doubled from 6 
billion to 1.3 trillion and I don't mean to be partisan here, 
it almost doubled under the Bush Administration as well. So 
this institution and prior administrations allowed the student 
debt to get completely out of control. They should have known a 
mess was here and you are the one who is stuck cleaning up the 
mess. So thank you for trying.
    I know this isn't the only mess you have. I know there has 
been fraud in the income driven repayment program. I know there 
is the public loan service--the public service loan forgiveness 
program has problems. All of which you inherited so again, we 
all know you didn't need this job and thank you. I am going to 
ask a couple questions. As I understand it, in the past, they 
have been advertising that your student loans may be eligible 
for forgiveness, right? Is that so?
    Secretary DeVos. That's my understanding as well.
    Mr. Grothman. And Facebooks ads, that sort of thing and 
obviously if, you know--if you look on--you can get your loan 
forgiven, they are going to be all sorts of people lining up to 
do that.
    Of course, some of those claims will be legitimate and some 
of the claims won't be legitimate. Have you guys uncovered any 
instances of unfounded claims filed by borrowers?
    Secretary DeVos. Of claims that are not valid?
    Mr. Grothman. Right. Anything, I think there are a lot of 
people out here that just want to forgive everything but.
    Secretary DeVos. Yes. There is, there are many of them.
    Mr. Grothman. Okay.
    Secretary DeVos. There are many of them.
    Mr. Grothman. Do you want to elaborate on that at all?
    Secretary DeVos. Well, there are different kind of invalid 
or, you know, claims that cannot be in any way relieved 
financially. Some of them fall outside the bounds of the 
various rules and times of submission.
    Some of them are clearly not based on anything close to 
fraudulent. I referenced the one about I didn't, you know, my 
professor was mean or I didn't like my professor. I'm sorry, 
that's not a valid claim for your student loan relief.
    Mr. Grothman. Okay.
    Secretary DeVos. So it's a wide variety.
    Mr. Grothman. But it's certainly indicative of why we just 
can't forgive all loans.
    Secretary DeVos. Correct.
    Mr. Grothman. Yeah. How are you mitigating cases of 
baseless claims in borrower defense? Are you doing anything to 
mitigate that?
    Secretary DeVos. Well, I am very hopeful that as we 
implement the new rule and continue to work through the 
processing of these claims that the conversation around this is 
going to be much more around ensuring that those students that 
actually have a claim of financial harm are the ones that are 
getting relief and that we will have fewer than 1,200 plus 
applicants a week accruing in the Federal Student Aid 
department.
    Mr. Grothman. When fraud is committed, do you have the 
right to go after any of the colleges and universities that 
committed fraud?
    Secretary DeVos. Well, I think that that's a very important 
question and, you know, unfortunately the bulk of a large 
volume of the pending applications are from institutions that 
have closed and in that case, obviously it's a different 
situation.
    But for those institutions that are found to have claim, 
valid claims that are in, are still operational, the schools 
would be the first place to go. The taxpayer shouldn't have to 
be footing the bill in the case that they, that the 
institutions still exist.
    Mr. Grothman. Do you think it would be better if some, if 
this institution did something in the future to make sure those 
loans didn't get so high in the first place? Or I guess I'll 
put it this way. If this institution would do more to educate 
young people that not every student loan is a good student 
loan?
    Secretary DeVos. There are many things that both Congress 
and, you know, writ broadly we all can do to ensure that 
education experiences in the future are entered into with more 
thought and more wisdom.
    Mr. Grothman. Okay. Do you, you have new regulations coming 
out. Could you, would you like to elaborate at all on how your 
new regulations protect the students but the taxpayers and the 
institutions all at once?
    Secretary DeVos. If you're speaking about the--
    Mr. Grothman. Correct.
    Secretary DeVos. Our new borrower defense--
    Mr. Grothman. The new ones, yes.
    Secretary DeVos.--regulation, it really does protect 
students, taxpayers, and gives institutions an equal footing. 
It treats all institutions equally.
    It's a much, I think a much better and more balanced 
approach to this issue and one that will continue to let 
students file and claim, make valid claims and give schools the 
opportunity to review and respond to and students respond back.
    I mean, there has to be a due process component for 
institutions and frankly we need to have a more tight 
definition of what constitutes fraud or misrepresentation which 
is part of the 2019 rule.
    Mr. Grothman. Thanks and I would like to apologize for some 
of my colleagues, you know, we got a big swamp here who 
sometimes they are a little bit intemperate but thank you for 
coming over here today.
    Chairman Scott. Thank you. The gentlemen from California, 
Mr. Harder.
    Mr. Harder. Thank you, Mr. Chairman. Secretary DeVos, I 
want to start by telling you a story about my constituent, 
Artemisia. Back in 2009, she became a student at Heald College 
in Modesto just months after it was purchased by Corinthian 
Colleges.
    Artemisia wanted to make a difference in her community. She 
was pursuing a medical assistant degree. She chose Heald 
because she saw in the commercials that it had an 85 percent 
job placement rate. Seemed like a good investment.
    But then she graduated and she couldn't find a job. And now 
she owes a whopping $40,000 in student loan debt for a degree 
that hasn't helped her get hired. That may not seem like a lot 
of money to you, Secretary DeVos, but in the real world, that 
is devastating.
    Turns out Artemisia wasn't alone in not being able to find 
a job. Corinthian Colleges across the country lied about their 
job placement rate. They told her it was an 85 percent job 
placement rate for Heald. Turns out the actual rate was zero. 
Not 85 percent, zero. That's a big difference.
    Artemisia and tens of thousands of students were defrauded 
by Corinthian. We all know this. We all agree. In 2014, the 
Department of Education fined them $30 million for this fraud. 
Everyone agreed.
    But here, five years later, Artemisia still has that 
$40,000 in student loan debt. She still hasn't found a job in 
her field and she hasn't gotten any help whatsoever.
    The reason for that is because you have put roadblock after 
roadblock in front of helping these students. Your job is to 
fight for them. But instead, your actions suggest you would 
prefer to be the chief lobbyist for the predatory schools that 
defrauded them.
    After being ordered by a Federal court to stop collecting 
debts from cheated Corinthian students, you ignored the order 
and kept stealing money from these students. You were even held 
in contempt of court because of it. You are not standing up for 
them, you are working for the schools that defrauded them.
    Maybe you have forgotten to refund these students. Maybe 
Artemisia's $40,000 in student loan debt just doesn't sound 
like a lot to you because it is only one tenth of one percent 
of one of your families' ten yachts.
    Artemisia and tens of thousands of others have been waiting 
years for your help. You have deliberately violated a federal 
court order. And I am confused why.
    So I guess I just have one question for you, Secretary 
DeVos. Are you deliberately violating this Federal court order 
because you are too corrupt to uphold the law or because you 
are too incompetent to do your job?
    Chairman Scott. The gentleman will address the facts and 
figures and not question the character of the witness.
    Mr. Harder. Secretary DeVos, why have you been held in 
contempt of court?
    Secretary DeVos. Well, Congressman, let me begin by saying 
I took great personal offense to everything you just said. I 
come to my job every day on behalf of students. I don't need to 
sit and listen to what you just spewed out of your mouth. I--
    Mr. Harder. I don't understand how you can take--
    Secretary DeVos. I did not defy any court order. I 
instructed Federal Student Aid to follow the court order. If 
you had been here earlier, you would have known that mistakes 
were made on the part of Federal Student Aid employees and on 
the part of loan servicers that when they were discovered were 
immediately acknowledged and corrected.
    Mr. Harder. Secretary DeVos--
    Secretary DeVos. They have been--
    Mr. Harder. Reclaiming my time please.
    Secretary DeVos.--remediated. They have been remediated--
    Mr. Harder. I understand that you have been held--that you 
are taking offense. The reality is there are tens of thousands 
of students whose financial futures have been ruined by three 
years of inaction. And you are just making excuses. You are 
blaming this problem on somebody else.
    You have been Secretary of Education for three years. And 
you are trying to defy the facts of this matter. Yes or no were 
you held in contempt of court and fined?
    Secretary DeVos. Congressman, I have not been able to 
address all of the Corinthian College claims because a court 
stopped us in May of 2018.
    Mr. Harder. That is simply not true.
    Secretary DeVos. That is true.
    Mr. Harder. The court said there was nothing stopping the 
Department from processing these borrower defense claims.
    Secretary DeVos. There was something stopping. There was a 
lack of process. The court said we could simply forgive them 
all but that was not the right answer.
    The right answer is to do what is right for students and to 
do what is right for taxpayers and that is my goal and that is 
going to continue to be my goal.
    Mr. Harder. Secretary DeVos, what is right for students is 
helping the tens of thousands of students who have been 
defrauded. Students like Artemisia.
    And blaming this problem on somebody else, taking three 
years to make absolutely no progress, it is not helping these 
students. It is only helping the scam colleges that defrauded 
them. Thank you, Mr. Chairman.
    Secretary DeVos. Where students have been financially 
harmed they are going to have relief. We have a new methodology 
which once again if you had been here earlier, you would have 
known.
    We have just implemented it last week. We are beginning to 
process them again and students will be considered, their 
claims considered individually and I am looking forward to 
addressing all of them.
    Nothing disturbs me more than all of the pending claims 
that have been there and that we have not been able to address 
appropriately.
    Chairman Scott. The gentleman's time has expired. The 
gentlelady from Nevada, Ms. Lee.
    Ms. Lee. Thank you, Mr. Chairman. Thank you for being here. 
This is quite a mess. I wanted to ask you, this is an important 
issue in my state in the past 10 years. 30 - for-profit schools 
have closed. In fact, a year and a week ago today Brightwood 
College closed in Las Vegas.
    And as we saw with Corinthian Colleges, ITT Tech, ECA, 
schools with shaky financials are often completely reliant on 
federal student loan dollars.
    And when they collapse until their bankruptcy it is us, the 
tax payers as well as thousands of students who are left high 
and dry. So I really want to in my line of questioning, get to 
how are we going to prevent this from happening?
    So I wanted to ask you just a simple yes or no question. Do 
you believe it is important that the Department have 
information about the financial conditions of colleges?
    Secretary DeVos. Yes, it is important.
    Ms. Lee. Thank you. You know, you spoke many times today 
about protecting taxpayer dollars and I could not agree with 
you more. Yet, I am feeling that a lot of the tension in this 
room today is because there is concern about protecting tax 
payer dollars from frivolous BD claims or like I would like to 
focus on, on how do we protect taxpayer dollars from these 
fraudulent, predatory schools to prevent this from happening 
before we throw thousands of students into turmoil? And so I 
want to ask you a second question. Isn't the point of financial 
responsibility monitoring to predict school closures before 
they happen so that something can be done proactively to 
protect the taxpayer dollars from going to those institutions 
through student loans?
    Secretary DeVos. Well, Congresswoman, let me just say first 
of all I don't think, I think levying a claim of predatory 
against any school that is organized--
    Ms. Lee. Well, these, I am talking about schools--I want to 
define what fraud means. Okay. Because it has been used here a 
lot today. The definition is the wrongful deception intended to 
result in financial or personal gain. And it is not lost on 
anyone here, the preponderance of - for-profit schools in the 
education space and -profit for-profits schools that are now 
publicly traded companies. So there is a for-profit motive. 
There has been fraud. And that students have been left on the 
hook.
    And so my question was simply yes or no. Do you believe 
that the point of the financial responsibility monitoring is to 
predict?
    Secretary DeVos. To the extent possible I think that's 
probably desirable, yes.
    Ms. Lee. Okay. I agree with you. I think that is the 
purpose. You want to predict that these schools are shaky 
operators, that they might be fraudulent because there are so 
many kids that are going to these schools and not able to come 
out and have a job and therefore defaulting on their loans 
because they didn't get the jobs that they were promised.
    And so that is the purpose of these triggers and these 
rules is to predict it so that we are not sending taxpayer 
dollars to these schools and then they go bankrupt and the kids 
can't pay them and then the taxpayers pay it. So--
    Secretary DeVos. And the same is--
    Ms. Lee.--my question--
    Secretary DeVos.--true for, of institutions that don't, I 
mean, there is lots of institutions that--
    Ms. Lee. I understand.
    Secretary DeVos.--provide--
    Ms. Lee. I am not, I understand there are great 
institutions. I am talking, I am--this is really about 
ferreting out the bad actors in this space.
    And, you know, I think the lesson for all of us is the 
regulations that we enact here have consequences intended and 
unintended which have led us to the situation where we have had 
thousands of -for-profit schools close.
    80 percent of the school closures are -for-profit schools. 
And many of these are bad actors, okay. And so and by the way, 
it is minority and low income students who are being preyed 
upon in these cases.
    So I really just want to get to one other question and talk 
about some of the changes that have been made to your borrower 
defense rule. Specifically around what these triggers are to 
identify if these schools are eventually going to go under. And 
under the 2016 rule, publicly traded for-profit schools were 
required to report any instant--incident or occurrence of an 
SEC filing or a warning letter against that institution under, 
and can you clarify this.
    Under the recent rule that was issued, isn't it the case 
that an institution would only be required to report that when 
the SEC suspends trading of that stock or if the stock is de 
listed from the exchange?
    Secretary DeVos. There are changes in the reporting 
requirements for financial measures for an institution in the 
2019 rule--
    Ms. Lee. Okay. So the--
    Secretary DeVos. But there are a number of different 
measures that are required and there are triggers that will 
happen to send up flags if an institution is in jeopardy. I 
think it is also important to distinguish--
    Chairman Scott. The gentlelady's time is expired.
    Secretary DeVos.--to acknowledge the fact that--
    Chairman Scott. Okay. Gentleman from Pennsylvania, Mr. 
Meuser. I apologize for being a little abrupt there. Expect to 
call a vote shortly and we have several members that still are 
trying to ask questions. Gentleman from Pennsylvania.
    Mr. Meuser. Thank you, Mr. Chairman, and thank you for your 
professionalism and decency as always. Madam Secretary, nice to 
sees you very much again. I want to thank you for your service. 
Clearly you work very hard and you have made a lot of progress 
which I want to ask questions about and outline.
    And if people had any idea of what your background really 
was, the level of work and philanthropy and good that you have 
done, maybe they'd act a little bit more civilly but perhaps 
not.
    You know, we are trying to--these hearings are supposed to 
be about ideas, not insults. Right. Solutions rather than 
salvos. Reality rather than revisionist history and questions 
rather than accusations. Actual problem solving rather than 
pointing out problems. But I guess that's just a tradition 
around here lately.
    So I would like to ask you when you became secretary three 
years ago, my understanding is back in 2015 the number of 
claims and problems escalated tremendously. And there were a 
number of reasons for it.
    One of them was at Vistria where low and behold the former 
number two in the Obama Education Department, Deputy Secretary 
Miller who left in 2013 and became a partner and chief 
operating officer at Vistria who was on track to become 
chairman of the university's parent company if the sale went 
through, had a little--and that is just when Vistria had--all 
its problems began.
    Would you say that was a contributing factor to this 
unbelievable escalation in claims and problems?
    Secretary DeVos. I think it is certainly possible that it 
was a contributing factor.
    Mr. Meuser. Well, what were the number of claims, what was 
the number of claims under the borrower defense repayment rule? 
It's increased exponentially in the last four years. Do you 
have any numbers on that?
    Secretary DeVos. Well, from 1995 to 2015, there were 
exactly 59 borrower defense claims made and since then, that 
number has increased 5,000 percent to now nearly 300,000 
claims.
    Mr. Meuser. And when did those increases begin?
    Secretary DeVos. In 2015.
    Mr. Meuser. 2015. So 2015, 2016, that was the Obama 
Administration. We are going to want to revise history here. 
You came in January, 2017. Right.
    Secretary DeVos. February but close enough.
    Mr. Meuser. February. Dealing with a mess, a nightmare 
situation and what did you do to work on this situation? You 
and General Brown?
    Secretary DeVos. Well, when I--
    Mr. Meuser. He wasn't there yet.
    Secretary DeVos.--took office, there were 64,000 
unaddressed claims from the previous administration. It was 
clear that promises had been made to approximately half of 
those and we followed through on the promises immediately.
    I also asked the Inspector General to do an investigation 
into what the process was for considering these claims. And 
that yielded some significant deficiencies in the--in other 
words there was no process.
    So we set forth to be, to put a process in place to be able 
to consider each claim for its merit and its validity and we 
implemented that in early 2018 and we were well underway with 
processing the pending claims and we were stopped by the court 
in May of 2018 based on the data we were using, not on the 
approach to the relief methodology.
    Since then, we have been waiting for the court. We have 
appealed it. We have, we don't agree with the court's decision. 
It's been appealed. We're still waiting.
    And in the meantime, we implemented another methodology 
which we just were able to implement, begin implementing last 
week and it will we hope be able to address the claims, the 
pending claims very expeditiously.
    Mr. Meuser. How many deserving claims were relieved, 
received relief this past year or the year previous under your 
jurisdiction versus 2015 or 2016?
    Secretary DeVos. Well, the--
    Mr. Meuser. How many more people were helped--
    Secretary DeVos. Yeah.
    Mr. Meuser. How many more people received loan relief under 
your jurisdiction and General Brown's versus your predecessor?
    Secretary DeVos. So the percentages of claims of students, 
claims that received relief were the same between the previous 
administration and the ones that we have been able to process 
thus far.
    There is a chart here that shows that 62 percent were 
approved during the Obama administration and we have continued 
at that level of approval.
    Mr. Meuser. Sixty-two percent but with many more claims so 
more people were helped.
    Secretary DeVos. Correct.
    Mr. Meuser. Thank you. I yield.
    Chairman Scott. Thank you. The gentleman from Maryland, Mr. 
Trone.
    Mr. Trone. Thank you, Madam Secretary, for your service. I 
know public service can be very hard but of course with it, you 
know, comes an accountability to help these young students who 
have been defrauded and help them if we can in a timely manner.
    Before coming to Congress, I was the CEO of a business with 
over 7,000 employees. I know how important people are to any 
organization. At the end of the day the buck always stopped 
with me to make sure we had the right staff to serve our 
customers.
    So let us talk about staffing if you don't mind under your 
leadership. To follow up on what Secretary Shalala was touching 
on a bit ago, within the first year in office, you actually cut 
the staff in the Borrowers Defense Unit, in that unit, during 
the first year by 75 percent from 29 people to 7 people.
    While this might make great sense if we saw a decrease in 
the number of claims, the opposite as you have clearly stated 
is actually the opposite. We saw a dramatic increase in claims 
from 54,000 to now as General Brown said over 300,000 are out 
there.
    So when my business had more work I hired more people. So 
why when you had in the past this dramatic increase in 
borrowers defense claims, did you decide to cut jobs instead of 
hiring more people to do that work?
    Secretary DeVos. Congressman, good question. We had 
significant attrition when I first came into office and since 
then I have instructed and urged General Brown to staff that 
segment of the Federal Student Aid office to the extent that we 
need to be able to address these claims now that we again have 
a process to be able to unveil and to implement.
    Mr. Trone. And that's great. I guess the question that is 
still there is that now three years later, you know, we are 
actually at seven--
    Secretary DeVos. Well, we were--yeah, we were--
    Mr. Trone. We were actually at 7 people at one point. 
According to the public document of March 31, 2019 you had 7 
employees remaining in the Borrowers Defense Unit.
    Secretary DeVos. Well, we were processing the claims under 
the previous methodology and--
    Mr. Trone. Yes.
    Secretary DeVos.--that was moving along well. When the 
court stopped us--
    Mr. Trone. I have heard about that and I--
    Secretary DeVos. Yeah.
    Mr. Trone.--I have been here the entire time and I respect 
that. There is still 300,000 as General Brown said of folks 
nationally who are paying the price that because the Department 
I think has intentionally slow-walked this by not having enough 
staff to process those claims for literally over three years 
now. It has been three years.
    Do you believe that the insufficient number of staff in the 
past three years is contributed to the Department's inability 
to process these borrower defense claims?
    Secretary DeVos. No, sir, I don't. It really has been the 
court decision that stopped us from continuing the process.
    Mr. Trone. But the court decision we and I know we have 
talked about that. The court decision did not stop you from 
continuing to process. You could have continued to process 
while you went through the appeal. Let's talk about the facts a 
second.
    Secretary DeVos. Only if I was going to say yes, full 
forgiveness or no, you don't qualify.
    Mr. Trone. And I'm guessing there is a lot of full 
forgiveness out there given the horrible work that Corinthian 
and others did.
    Secretary DeVos. But we couldn't use the data. We couldn't 
use the data that we were using so--
    Mr. Trone. Let's look at the data--
    Secretary DeVos.--practically speaking we could not 
process.
    Mr. Trone. Let's look at the data a second on that. Let's 
look at the data a second. So on March 31 if you have 7 
employees, how many claims does an employee process in a 40 
hour work week?
    Secretary DeVos. That is not a relevant question because we 
haven't not been able to process--
    Mr. Trone. No, how many--it's a really, really relevant 
because--
    Secretary DeVos. No, because since May of 2018--
    Mr. Trone.--you got to have the people to do the work.
    Secretary DeVos.--we have not been able to process.
    Mr. Trone. You have to have the people to do the work.
    Secretary DeVos. Since May.
    Mr. Trone. Right now you talked about ramping up the 64--
    Secretary DeVos. And we have.
    Mr. Trone. So you are clearly ramping up the people because 
now you said whoa. We missed the ball. We saw that in 2016 it 
went through the roof, the claims did. You got hammered. But 
you only, but while you were cutting back the 7 people, now you 
have done a hockey stick and ramped it back up to 64--
    Secretary DeVos. No, sir. This--it's a convenient narrative 
but it's inaccurate.
    Mr. Trone. But the only way you are going to figure out 
staffing is how much work is there to do, how long does it take 
to do that work and then I can do my staffing model from that.
    Secretary DeVos. And we have continued to staff up and will 
continue to add to that if necessary to process the claims now 
that we have been able to implement the new methodology.
    Mr. Trone. We appreciate that. General Brown told the staff 
that since you've been in office about 50,000 people have had 
their claims reviewed.
    Well, if there is 300,000 out there, at that current rate 
it is going to be 15 years for the first three years it took 
you to do 50,000.
    These young people want to be educated but they were lied 
to by these institutions and I think the response has been a 
bit to run out the clock. A bit of tough luck. So we just need 
informed decisions based on the data to keep focusing if you 
could on the customer. Thank you.
    Chairman Scott. The gentleman's time has expired. The 
gentlelady from Michigan, Ms. Stevens.
    Ms. Stevens. Thank you, Mr. Chairman. Secretary DeVos, we 
are here today to provide the public with a full understanding 
of the Department's failure to provide defrauded borrowers with 
a relief they are legally entitled to.
    I would like for you to know a fellow Michigander, Erica. 
Someone I have had the privilege of getting to know. She, when 
she was a child, she wanted to become a lawyer and growing up 
she faced multiple challenges as many Americans do. She ended 
up dropping out of high school but still managed to get her GED 
at 21 while raising two children.
    And she saw a commercial one day for Everest College, a 
Corinthian College in 2011. And she was recruited into the 
school's paralegal program. The recruiter told her that in 
order to become a lawyer, she had to be paralegal first. Erica 
was ecstatic to go back to school. She earned a 4.0 while she 
was there and after her first year, she took that next step.
    She contacted a law school to learn what she had to do next 
to become a lawyer. And that's when she learned that Everest 
was not considered a legitimate program and she felt cheated, 
she was saddled with student loan debt and realized that the 
best choice she could make for herself and her family was to 
cut her losses and leave Everest.
    Secretary DeVos, do you think Erica made a mistake in 
attending Everest?
    Secretary DeVos. Congresswoman, I can't comment to her 
decision there but I certainly can feel for her if that story 
is accurate and I look forward to if she's among the BD claims 
pending, making sure that we can address it promptly now that 
we have been able to--
    Ms. Stevens. Would you--
    Secretary DeVos.--start the process again.
    Ms. Stevens. Would you have advised Erica to continue 
attending Everest?
    Secretary DeVos. I can't comment to a hypothetical like 
that.
    Ms. Stevens. Erica is currently not working either as a 
paralegal or a lawyer but is instead living to paycheck to 
paycheck with no way to pay for more school to pursue the 
career she wanted and dreamed of and she is now in her mid-
40's.
    Do you believe she received any value from the education 
she received at Everest?
    Secretary DeVos. Again, I can't comment specifically to her 
situation. The story as you tell it is one that I can, I 
certainly feel for.
    Ms. Stevens. She, Erica applied for borrower defense in May 
2015 and had her loans placed into forbearance. Three years 
later, the Department finally approved her application but then 
denied her a full discharge and it said that they would only 
relieve 50 percent of Erica's loans.
    Why did she deserve to only have 50 percent of her loans 
relieved?
    Secretary DeVos. Well, I have to assume from what you've 
told me about her story that we were considering her under the 
first methodology that we had utilized. And that her, the 
program she attended, the earnings information from that, 
others that had graduated from that program were compared with 
earnings from like programs of other schools across the 
country.
    And that was again, a formula and process that was put into 
place to consider each student's claim individually and 
uniquely.
    Ms. Stevens. Despite a court order, Erica's servicer 
started illegally collecting on her debt in 2019, this year and 
she became extremely worried when she saw all of her loans were 
back in repayment because she knows there is no way she is 
really going to be able to pay them.
    What is stopping the Department from taking action to 
protect the hundreds of thousands of students like Erica who 
were cheated in this predatory way by these institutions?
    Secretary DeVos. Well, again, I can't comment specifically 
to her experience right now. I am happy to have General Brown's 
team look into it--
    Ms. Stevens. That would be great.
    Secretary DeVos.--and give specific information.
    Ms. Stevens. And I know Erica would, excuse me. I know she 
would love that and she said to me when I last spoke with her, 
she said, you know, the one thing I really want to do is make a 
difference for future people and make sure this doesn't happen 
again.
    And, you know, I had a little bit of time to read through 
your testimony and kind of buried in there are thousands of 
stories like Erica's and she did want me to share this story 
and I appreciate you both taking it to heart and hopefully we 
can all continue to step up to address this for all Americans, 
all Michiganders so they have the opportunity to pursue their 
dreams and provide for their families going forward. And with 
that, Mr. Chairman, I will yield back.
    Chairman Scott. Thank you. The gentleman from 
Massachusetts, Ms. Trahan.
    Ms. Trahan. Thank you, Mr. Chairman. Secretary DeVos, thank 
you for being here today. Two days ago you announced the 
Department's new formula for calculating relief for students 
who have been cheated by fraudulent predatory for-profit 
colleges.
    This formula would make, would take median earnings and 
subtract from it two standard deviations to determine the 
amount of one's borrower defense discharge relief. Now that is 
a lot of jargon. So I wanted to just try to put it into an 
example just so it made sense to me.
    So a young woman, and we will name her Betsy, gets her 
diploma in business and administration and management from 
Corinthian. And it says here on this chart that the median 
comparison earnings for that degree is about $18,000. And two 
standard deviations is about $20,500.
    Any, I mean, not to put you on the spot but do you know 
what 18,000 minus 20,500 equals? I hate public math. It equals 
negative $2500.2,500 dollars.
    So using the new formula, you are basically telling us that 
in order for someone like Betsy to get full relief for the debt 
that she unknowingly incurred from a fraudulent institution she 
would have to earn negative $2,500. Does that sound right to 
you using your formula?
    Secretary DeVos. No, it does not.
    Ms. Trahan. Because that is what the numbers bear out. The 
Department of Education calculates the median earnings of 
Betsy's peers in her program at roughly $11,700 to determine 
the percentage of relief that she will receive.
    Any idea what the federal minimum wage is right now? We are 
trying hard in this committee to raise the minimum wage but 
today it stands at $7.25.
    So look. I just want to--if Betsy earns $11,700 on an 
annual basis, that means her hourly wage is $5.63. That's $2 
below the federal minimum wage.
    So I guess are you, I--it is astounding to me but I think 
what you are telling me is that student borrowers like Betsy 
who graduate from a fraudulent program and earn $2 less than 
the Federal minimum wage can only get 25 percent of their loans 
forgiven because they didn't have negative earnings.
    Secretary DeVos. No, Congresswoman, I don't think the story 
you're using here is an accurate one.
    Ms. Trahan. I trust my math. I look at, I poured over 
several examples and I used your two standard deviations. I 
have, I don't have confidence in much, but I have a lot of 
confidence in the formula and how I used it for Betsy's use 
case.
    Look, the new partial relief formula that you came out with 
two days ago, it doesn't benefit students who have been 
fleeced. It doesn't take into account individualized earnings, 
debt load, whether Betsy is back in a full-time or a part-time 
accredited college program which is why my friend from 
Pennsylvania, Representative Wild and economists alike call it 
nonsensical.
    These are students who wanted nothing more than to get 
ahead, who took out loans in good faith and they were taken 
advantage of instead. And your response to them is to cheat 
them again. So, I know right now, you have the authority to 
provide full fair and immediate debt relief to student 
borrowers who were defrauded by these predatory colleges. And 
every day that goes by is a violation of students' rights and, 
frankly, it's criminal.
    There are hundreds of thousands of innocent students with 
pending claims. That includes almost 3,000 in my home State of 
Massachusetts. On this Committee, our focus is creating 
opportunity and value for students with high quality affordable 
education.
    The formula that you have developed, it is too little by 
far and it is too late and it does not demonstrate your 
commitment to our students. I yield back.
    Secretary DeVos. Mr. Chairman, if I could respond to that a 
moment.
    Chairman Scott. You can respond, please.
    Secretary DeVos. Congresswoman, I am committed to treating 
each of the students who have filed borrower defense claims 
fairly and we believe that this methodology that has been 
developed is one that will treat each of them as an individual 
and will look at their program of study. If you are advocating 
for 100 percent loan forgiveness for all students who claim 
borrower defense claims, you have the power to get a law passed 
in this body and I encourage you to do so. If you pass that 
law, I will enforce that law.
    Ms. Trahan. The formula, the way it is designed right now, 
it takes in median program earnings from other people who have 
been defrauded. Therein lies the problem. That is not a formula 
that makes sense when you're taking into account kids who have 
taken out loans, who have to go back to college, go back to 
school, with accredited program. Their debt load is already 
sinking them and now they are taking on more. Your formula is 
flawed.
    Secretary DeVos. I guess we will have to agree to disagree.
    Chairman Scott. Gentleladies, time has expired. Gentlelady 
from Minnesota, Ms. Omar.
    Ms. Omar. Thank you, Chairman. Secretary DeVos, thank you 
so much for being here and giving us the opportunity to have 
this conversation with you. I am curious if you are familiar 
with the Minnesota School of BusinessBusiness and Global 
University?
    Secretary DeVos. I'm not familiar with that specific 
school.
    Ms. Omar. Okay. Do you know that they were found to be 
engaged in consumer fraud?
    Secretary DeVos. If they were, I am assuming there are some 
borrower defense claims pending for them.
    Ms. Omar. Okay. So, let me just enlighten you. We have sent 
you many letters from our delegation. In my district, in 2016, 
the Courts found that Minnesota School of Business and Global 
University engaged in consumer fraud and purposefully deceived 
their students by misrepresenting the job opportunities that 
would be available to their criminal justice graduates.
    Madam Secretary, that same year, your department 
independently reviewed the evidence and came to the same 
conclusion as the Courts. The students were blatantly misled 
and taken advantage of. 1,336 Minnesota students were 
systematically misled to believe that they will obtain a degree 
and credits that were essentially meaningless, losing not only 
$33.8 million but their time and countless opportunities.
    Let's take a minute to just imagine if these students, if 
these were not just students, let us imagine that they were 
corporations. The administration and our colleagues on the 
other side of the aisle and probably you would be up in arms. 
Corporate executives would not only get their debt forgiven by 
our government, they would also get compensation for their lost 
time, lost opportunities, and psychological distress.
    But Madam Secretary, you don't seem to be up in arms. 
Nobody seems to be concerned with what is happening with these 
students, students who do not have access to corporate 
attorneys to make their case. Instead, they are struggling to 
make ends meet as they continue to face incurring interest, 
negative credit reporting, and the inability to restart their 
education. All the while hoping the government will do the 
right thing.
    I would like to request unanimous consent to enter into the 
record 2 affidavits.
    Chairman Scott. WithoutNoobjection.
    Ms. Omar. These are from my constituents Whitney and Cheryl 
Slattern whose borrower defense application have been on hold 
since January of this year. Between the two of them, they have 
approximately 78,000 in crippling student debt. To make matters 
worse, once a borrower defaults, the consequences are severe 
and results in a snowball effect where a borrower might lose 
their eligibility to receive additional federal student aid and 
see devastating effects to their credit.
    Memo after memo, the Education Department career staff sent 
you memos that indicate that these students deserve nothing 
less than full relief. I know that you have said you have not 
read these memos yet, but reports have come out and I would 
have expected that you would take the time to read them before 
appearing before us today. I ask for unanimous consent to enter 
these 3 memos into the record.
    Chairman Scott. WithoutNoobjection.
    Ms. Omar. I feel like you should be ashamed of the fact 
that you do not have answers to these memos, that you have not 
looked at these memos, that you have not taken the 
responsibility that you have as a leader to be prepared to give 
us a response. And I think the public should be ashamed that 
they have a Secretary of Education that is not putting the 
interests of students before the interests of the wealthy that 
are benefiting from defrauding these students. I yield back.
    Secretary DeVos. Mr. Chairman, if I may respond.
    Chairman Scott. Thank you. The gentlelady's time has 
expired. The Secretary can respond.
    Secretary DeVos. Congresswoman, with all due respect, I am 
very much focused on doing what is right for these students. 
And the memos to which you are referring, preceded me and they 
may have been relevant to--they were relevant to conversation 
about how we proceeded with policy, but administrations changed 
and policies change.
    Ms. Omar. They are precisely relevant to the conversation 
you were preparing to come to talk to us today. And in your 
preparation, you should have read those memos. I yield back.
    Chairman Scott. Gentleladies, time has expired and I 
recognize myself for 5 minutes. First, a lot has been said 
about whether or not these are for-profits, private, 
nonprofits, or public. The fact is we have several hundred 
thousand complaints to fraud of borrowers defense for the 
public colleges. How many public, nonprofit, and public 
institutions have been subject to allegations of fraud?
    Secretary DeVos. How many. I do not have the specific 
breakdown here. I would be happy to get back with you on the 
question for the record.
    Chairman Scott. Do you have very many complaints, public 
complaints?
    Secretary DeVos. There are quite a few. I mean, it is 
frankly surprising the number of--
    Chairman Scott. If you can get that to us.
    Secretary DeVos.--claims that have been filed, like 
surprising institutions, so.
    Chairman Scott. You have also indicated that you have 
remediated the credit report problem?
    Secretary DeVos. Yes. We have remediated the problems that 
it occurred.
    Chairman Scott. Does remediate mean you have corrected the 
credit reports or that you have reimbursed people for loss of 
job or higher interest rates they might pay, or did you just 
correct the reports?
    Secretary DeVos. Whatever the issue was, we have remediated 
for with the--
    Chairman Scott. Does that mean you--
    Secretary DeVos.--small exception of those whose addresses 
we can't track down.
    Chairman Scott. Does that mean you have corrected the 
reports or compensated people for lost jobs or higher interest 
rates they may have paid for a diminished credit report?
    Secretary DeVos. We have corrected or remediated their 
credit reports.
    Chairman Scott. Just credit reports.
    Secretary DeVos. Just specific credit report question.
    Chairman Scott. Are you aware that the University of 
Phoenix recently agreed to $191 million settlement?
    Secretary DeVos. I understand that and I also understand 
that the leadership there are formerly lead employees, 
political appointees of the Obama Administration.
    Chairman Scott. That's fine. How many has the--did that 
settlement involve federal student loans?
    Secretary DeVos. I imagine that there are some Federal 
student loans involved there.
    Chairman Scott. Were any Federal student loans involved in 
the settlement?
    Chairman Scott. Excuse me, General Brown
    General Brown. Not that I am aware of or that we would--
    Chairman Scott. There are requests for borrowers defense 
from the University of Phoenix. About 8,000, is that right?
    General Brown. Right now, today, we have 14,000 of those 
borrower defense claims are from the University of Phoenix.
    Chairman Scott. Okay. What is the status of those?
    General Brown. Those applications are in various stages 
depending on when they were received.
    Chairman Scott. Has any relief been granted?
    General Brown. I do not believe that--I can get that for 
the record and provide it for you, sir.
    Chairman Scott. Okay. Now, as I understand it, if you have 
been defrauded, you should get relief if you have suffered 
financial harm and we have had back and forth about how you 
establish financial harm. If you have two similar schools and 
you have your comparison group where they did not lie and cheat 
and defraud the students, they just acknowledge that the 
credits were not transferable and you were not going to get a 
job, but people went anyway. And you have another school that, 
in fact, defrauded the students, lied to them about 
accreditation, lied to them about transferability, and lied to 
them about job placements, is it true under your formula you 
would get no relief because you don't show financial harm?
    Secretary DeVos. Mr. Chairman, the methodology looks at all 
programs across the country that are like programs to the one 
that the borrower is making the claim against.
    Chairman Scott. Right. And if the one you are making a 
claim against in fact defrauded the students where the 
comparison group did not lie about the placement rate, did not 
lie about accreditation, did not lie about transferability or 
credits and ended up with the same income as the one that, in 
fact, defrauded the students, is it true that under your 
formula the students that were defrauded get no relief?
    Secretary DeVos. If there is no financial harm to the 
student making the claim, that would be correct.
    Chairman Scott. Okay. And is it--I think we established 
that there is no individualized consideration that it is 
considered by class. You went to that college, if you make a 
lot of money or you did not make any money, you would get 
exactly the same relief?
    Secretary DeVos. The claim is against the student, not 
against that school and program.
    Chairman Scott. Okay. Can you briefly describe what the 
Department admitted to when it admitted to gross negligence in 
the lawsuit that provoked the contempt of court?
    Secretary DeVos. I think those are attorney's words. What 
we have acknowledged--
    Chairman Scott. The Department admitted gross--
    Secretary DeVos. What we acknowledged is that there were 
human errors made at Federal Student Aid and with our student 
loan servicers and that we acknowledge them. We take 
responsibility for them and we have corrected them.
    Chairman Scott. Defendants respectfully submit that the 
Department's compliance report the undersigned counsel's 
representation in the October 7 hearing and the further 
information contained in this brief establish that compliance 
errors at issue here were not the result of any willful or 
intentional conduct but as the Court has recognized gross 
negligence, including negligent oversight of the department 
servicers. My time has expired and I yield to the Gentlelady 
from North Carolina for a closing statement.
    Ms. Foxx. Thank you, Mr. Chairman. And I want to say 
publicly thank you for your response to what I considered 
inappropriate comments made earlier. I very much appreciate 
your response to that.
    As we agree, oversight, and I said earlier, oversight is 
important and I stand ready. The Secretary has said she stands 
ready to work with the Chairman to conduct good oversight of 
not just the Education Department, but every venue we have any 
jurisdiction over. But we need to work in a bipartisan manner 
with the Secretary and solve the problems efficiently and focus 
as the Secretary does on helping students and not playing 
gotcha games with the Secretary.
    And I ask you, Madam Secretary, to commit again today to 
working faster and harder to get to the information requested 
and respond as quickly as possible so we can all be clear and 
more direct about the concerns we have and whatever information 
we need.
    And, Mr. Chairman, I would say when requests go to the 
Department, they be as specific as possible and, again, not 
trying to play gotcha games. Say did you get this memo on 
January 10th written before you came into office. Those are the 
kinds of things that should be said instead of going on fishing 
expeditions. The Higher Ed Act does not prohibit the Secretary 
from providing partial relief for successful borrower defense 
claims.
    And I want to make an analogy here. I will bet you there is 
not a member of this committee who has not had a car accident 
or a problem in homeowners insurance. And I'll guarantee you 
that the insurance companies don't write you a check for what 
you think is your damage. They assess that damage. They look at 
your car. They came to your home. What these members are saying 
is you just write a check from the taxpayers and say it's okay 
if you tell us you have been defrauded or you have been 
damaged. That is not the way it works.
    We have set the federal government up as the biggest loan 
institution in the country. Now, we want it to be the biggest 
insurance company in the world and that is just not right. What 
has been going on is nothing new. Regulations under President 
Clinton, President Obama and, now, President Trump have all 
allowed for partial relief for successful borrower defense 
claims.
    The grandstanding today but unfairness could all be 
resolved if Congress had amended the borrower defense 
provisions in any of the HEA reauthorizations over the last two 
decades. If Members of Congress do not like how much authority 
the statute has given the Secretary, then we should work 
together to amend the statute. No one has asserted that the 
Secretary has not followed the law. That is what oversight 
should be asserting if that is what it is we are doing.
    And Mr. Chairman, we disagree on policy a lot of times, but 
we do not disagree that students represent not only our current 
situation in the nation but our nation's future deserve all the 
opportunities to succeed. And frankly, I am saddened that I 
need to remind my colleagues of this. I think we need to 
respect this institution and honor it with the decorum that it 
deserves and show the students how we should behave and be 
examples for them. Thank you, Mr. Chairman, for your indulgence 
today.
    Chairman Scott. Thank you. I want to thank the Secretary 
for your participation today. We have heard very valuable 
information. Members may have additional questions for you and 
we will submit them to you in writing. Remind the Members that 
questions for the record must be submitted within 7 days and 
the hearing record will be open for 14 days.
    I just want to say and, finally, no question of whether 
partial relief is available or not. But in some of these cases, 
the fraud was so widespread and the findings of the previous 
administration was at some of these degrees were absolutely 
worthless.
    The University of Phoenix had a $191 million settlement for 
fraud. Nothing has been done so far on federal loans to provide 
that relief. We would think that if the fraud has been well-
established, that each person would not have to come up 
individually to prove individual fraud. If there is such 
widespread fraud, I think the burden ought to shift to the 
business.
    And finally, a lot has been said about the Obama process. 
The memos that we have presented show that there was a process. 
They discharged loans for 28,000 borrowers and had a process 
that would have eliminated the backlog in a couple of months. 
As indicated we had not seen it. Obviously, we had seen it. We 
had not seen them in the submissions. But we got those memos 
showing the process from the media, not from submissions. So, 
we would expect if we had gotten those earlier we could have 
discussed them not as gotcha but as part of the process.
    If there is no further business to come before the 
Committee, without objection, the Committee stands adjourned.
    [Additional submission by Mr. Courtney follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    [Whereupon, at 1:14 p.m., the committee was adjourned.]

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