[Congressional Record Volume 166, Number 9 (Wednesday, January 15, 2020)]
[Senate]
[Pages S203-S205]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FOR-PROFIT COLLEGES AND UNIVERSITIES
Mr. DURBIN. Mr. President, this week the House of Representatives
will have the opportunity to stand up for student borrowers who have
been defrauded by the schools they attended. The House of
Representatives will be voting on a resolution introduced by
Representative Susie Lee of Nevada which will allow defrauded student
loan borrowers relief from their student debt.
Under the Higher Education Act, currently the law of the land, when a
student borrower is defrauded by their school, they are entitled to
have their Federal student loans to attend that school discharged. That
is what Congress intended. Why? The logic behind it is very
straightforward.
Consider the following: The Federal Government recognizes the
accreditation of these schools, colleges, and universities. That
accreditation authorizes these schools to offer loans from the Federal
Government to pay for the cost of attending. It is a very
straightforward process. The schools are accredited. The U.S.
Government recognizes the accreditation which authorizes the school to
offer courses to students, and then it goes on to say that students
attending those colleges and universities will qualify for Federal
student loans. Now, that is where this particular statement I am about
to make becomes particularly relevant.
The school makes promises about the education they are going to offer
to the students to entice them to attend and to borrow money to attend.
For example, the school may tell the students that the credits they
earn at this school can be transferred to other schools, but sometimes
that turns out to be untrue and false. These schools may tell the
students there are jobs waiting for them in the fields that they want
them to study at the schools. They tell them that, after graduation,
there are plenty of employment opportunities, and oftentimes that turns
out to be untrue. In fact, in the case of some of these schools, they
have deliberately misrepresented the job placement of graduates to
create the impression of success if you complete a course. The schools
are lying to the students.
The school may also promise that, if you complete a course at the
school, you will automatically be qualified for certain certifications
under State law. Sometimes that turns out to be a lie. They may also
tell the students there are certain teachers and courses available to
them if they pay their tuition, and that may turn out to be untrue as
well.
The law I referred to earlier is intended, when these types of lies
and misrepresentations occur and the student is misled into borrowing
Federal student loans based on these misrepresentations, to give the
defrauded student the right to be relieved of the student loan
responsibility under the law.
[[Page S204]]
It makes sense. If the student is lied to, takes out a Federal loan,
and it turns out the school lied to them and defrauded them, we don't
want the students saddled with a loan from that school that could
literally change their lives.
Now we have a new Secretary of Education under President Trump, Betsy
DeVos. She has decided to rewrite the rules when it comes to these
students receiving relief from the fraud I have just described. She
places burdens on these students that we have not seen before.
Basically, she is saying to the students: Lawyer up. You just can't
make your plea to the Department of Education that you, along with a
group of other students, were defrauded by representations in the
materials they distributed or the statements they made--not good enough
under the new rule written by Secretary DeVos. What she has basically
said is that each one of these students now has an individual
responsibility to prove that that student was defrauded, that there was
a representation to that student as opposed to it being made by the
school to all of the students or in its publications and the like.
The burdens which Secretary DeVos now places on defrauded students
have led to estimates that only 3 percent of the students who have been
defrauded can possibly expect to receive relief from their student
debt--3 percent. You might say: Well, these things happen. It is a
``buyer beware'' market. Students ought to know better. Really?
When the Federal Government recognizes an accredited school and says
to that school: You can offer Federal student loans, do we not bear
some responsibility to the student and the family if that school lies
and misrepresents facts to the students? Well, 78 percent of Americans
happen to think, yes, we don't want to have students in a predicament
where their own futures are going to be somehow compromised because of
the fraud by the school.
How many students are affected by this? A handful? No. It turns out,
a dramatically large number. Over the last decade, tens of thousands of
college students in America have been defrauded in ways I just
described, lured into enrolling in classes with false promises and
aggressive tactics, only to be left with massive student debt and a
worthless education and no job. Sadly, it is a common occurrence in the
for-profit college industry. That industry, the for-profit college
industry, is an industry that can be best described by two numbers.
Nine percent of postsecondary students are enrolled in for-profit
colleges and universities in America. Think about the University of
Phoenix, DeVry, and others. Nine percent of students end up in schools
like that. Yet 33 percent of all the federal student loan defaults are
students from these for-profit colleges and universities--9 percent of
the students, 33 percent of the student loan defaults. Why? The tuition
is too high; the education is virtually worthless; and there are no
jobs at the end of the rainbow.
Some of these schools--for-profit colleges like Corinthian, ITT Tech,
Westwood, Dream Center--preyed on students, reaped huge profits, and
then conveniently went bankrupt. They may be gone, legally gone, but
the debts for the students still live. Others, such as Ashford,
University of Phoenix, Career Education Corporation, are still out
there doing business. Virtually, all of these notorious schools have
been the subject of multiple State and local investigations or lawsuits
for unfair, deceptive, and abusive practices. Unfortunately, they
continue to create more student victims due to the lack of enforcement
by our own U.S. Department of Education and loopholes in the laws,
which, sadly, Congress has been unable or unwilling to close.
Currently, there are more than 223,000 claims made by students of
being defrauded and seeking relief under the Higher Education Act--over
200,000 student borrowers whose lives have been collared by student
loan debt from these worthless, defrauding schools.
The claims--223,000 of them--come from every State in the Union, big
and small, red, blue, and purple. There are over 11,000 from my State
of Illinois; over 19,000 from the State of Florida; 7,800 from Ohio;
6,100 from North Carolina; 3,800 from Colorado; 1,000 from the State of
West Virginia; 385 in Maine; and more than 200 in Alaska.
The American people believe these defrauded student borrowers and
future defrauded borrowers deserve help. According to a poll by New
America, 78 percent of Americans believe students should have their
Federal student loans forgiven if their schools defrauded them. That
includes 87 percent of Democrats and 71 percent of Republicans who feel
that way.
This new rule by Secretary DeVos would not allow borrowers to receive
the Federal student loan discharge currently in the law. It is why more
than 60 organizations are supporting the resolution, which the House
will vote on this week, and the companion resolution I have introduced
in the Senate.
Among those supporting our effort are the American Federation of
Teachers, the National Education Association, the Student Veterans of
America--and one that I want to highlight.
I see there are others on the floor preparing to speak, so I am going
to abbreviate my remarks, but I want to make one last point.
Among the groups supporting our efforts to undo the borrower defense
rule, promulgated by Secretary of Education DeVos, is the American
Legion. The American Legion sent me a letter last month, and, in
support of our effort to undo the DeVos rule, they said, among other
things, that the rule is fundamentally unfair to veterans. Listen to
what they say about the plight of veterans having been defrauded by
schools, trying to get relief from their loans. This is from James
``Bill'' Oxford, national commander of the American Legion. He writes:
Thousands of student veterans have been defrauded over the
years--promised their credits would transfer when they
wouldn't, given false or misleading job placement rates in
marketing, promised one educational experience when they were
recruited, but given something completely different. This
type of deception against our veterans and servicemembers has
been a lucrative scam for unscrupulous actors.
As veterans are aggressively targeted due to their service
to our country, they must be afforded the right to group
relief. The Department of Education's ``Borrower Defense''
rule eliminates this right.
Mr. President, I ask unanimous consent to have printed in the Record
the letter dated December 18, 2019.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The American Legion,
Washington, DC, December 18, 2019.
Hon. Richard Durbin,
Senate Dirksen Office Building,
Washington, DC.
Dear Senator Durbin: On behalf of the nearly 2 million
members of The American Legion, I write to express our
support for Joint Resolution 56, providing for congressional
disapproval of the rule submitted by the Department of
Education relating to, ``Borrower Defense Institutional
Accountability.'' The rule, as currently written, is
fundamentally rigged against defrauded borrowers of student
loans, depriving them of the opportunity for debt relief that
Congress intended to afford them under the Higher Education
Act. Affirming this position is American Legion Resolution
No. 82: Preserve Veteran and Servicemember Rights to Gainful
Employment and Borrower Defense Protections, adopted in our
National Convention 2017.
Thousands of student veterans have been defrauded over the
years--promised their credits would transfer when they
wouldn't, given false or misleading job placement rates in
marketing, promised one educational experience when they were
recruited, but given something completely different. This
type of deception against our veterans and servicemembers has
been a lucrative scam for unscrupulous actors.
As veterans are aggressively targeted due to their service
to our country, they must be afforded the right to group
relief. The Department of Education's ``Borrower Defense''
rule eliminates this right, forcing veterans to individually
prove their claim, share the specific type of financial harm
they suffered, and prove the school knowingly made
substantial misrepresentations. The preponderance of evidence
required for this process is so onerous that the Department
of Education itself estimated that only 3 percent of
applicants would get relief.
Until every veteran's application for student loan
forgiveness has been processed, we will continue to demand
fair and timely decisions. The rule that the Department of
Education has promulgated flagrantly denies defrauded
veterans these dignities, and The American Legion calls on
Congress to overturn this regulatory action.
Senator Durbin, The American Legion applauds your
leadership in addressing this critical issue facing our
nation's veterans and their families.
For God & Country,
James W. ``Bill'' Oxford,
National Commander, The American Legion.
[[Page S205]]
Mr. DURBIN. Mr. President, I have an additional letter from 20 State
attorneys general led by the Commonwealth of Massachusetts Office of
the Attorney General. I ask unanimous consent to have printed in the
Record the letter dated January 14, 2020.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The Commonwealth of Massachusetts, Office of the Attorney
General,
Boston, MA, January 14, 2020.
Senator Dick Durbin,
Washington, DC.
Representative Susie Lee,
Washington, DC.
Dear Senator Durbin and Representative Lee: We, the
undersigned Attorneys General of Massachusetts, California,
Delaware, the District of Columbia, Hawai'i, Illinois, Iowa,
Maine, Maryland, Michigan, Minnesota, New Jersey, New Mexico,
New York, North Carolina, Oregon, Pennsylvania, Vermont,
Virginia, and Washington write to express our support for the
resolution of disapproval that you have introduced regarding
the U.S. Department of Education's (``Department'') 2019
Borrower Defense Rule (``2019 Rule'') pursuant to the
Congressional Review Act. In issuing the 2019 Rule, the
Department has abdicated its Congressionally-mandated
responsibility to protect students and taxpayers from the
misconduct of unscrupulous schools. The rule provides no
realistic prospect for borrowers to discharge their loans
when they have been defrauded by predatory for-profit
schools, and it eliminates financial responsibility
requirements for those same institutions. If this rule goes
into effect, the result will be disastrous for students while
providing a windfall to abusive schools.
The 2019 Rule squanders and reverses recent progress the
Department has made in protecting students from fraud and
abuse. Three years ago, the Department completed a thorough
rulemaking process addressing borrower defense and financial
responsibility, in which the views of numerous schools,
stakeholders, and public commenters were considered and
incorporated into a comprehensive set of regulations. The
regulations, promulgated by the Department in November 20l6
(``2016 Rule''), made substantial progress toward achieving
the Department's then-stated goal of providing defrauded
borrowers with a consistent, clear, fair, and transparent
process to seek debt relief. At the same time, the 2016 Rule
protected taxpayers by holding schools accountable that
engage in misconduct and ensuring that financially troubled
schools provide the government with protection against the
risks they create.
The Department's new rule would simply rescind and replace
its 2016 Rule, reversing all of its enhanced protections for
students and its accountability measures for for-profit
schools. The Department's 2019 Rule provides an entirely
unfair and unworkable process for defrauded students to
obtain loan relief and will do nothing to deter and hold
accountable schools that cheat their students. Among its
numerous flaws, the Department's new rule places
insurmountable evidentiary burdens on student borrowers with
meritorious claims. The rule requires student borrowers to
prove intentional or reckless misconduct on the part of their
schools, an extraordinarily demanding standard not consistent
with state laws governing liability for unfair and deceptive
conduct. Moreover, even where a school has intentionally or
recklessly harmed its students, it is difficult to imagine
how students would be able to obtain the evidence necessary
to prove intent or recklessness for an administrative
application to the Department. The rule also inappropriately
requires student borrowers to prove financial harm beyond the
intrinsic harm caused by incurring federal student loan debt
as a result of fraud, and establishes a three-year time bar
on borrower defense claims, even though students typicaJiy do
not learn until years later that they were defrauded by their
schools. Compounding these obstacles, the rule arbitrarily
eliminates the process by which relief can be sought on a
group level, permitting those schools that have committed the
most egregious and systemic misconduct to benefit from their
wrongdoing at the expense of borrowers with meritorious
claims who are unaware of or unable to access relief.
We are uniquely well-situated to understand the devastating
effects that the 2019 Rule would have on the lives of student
borrowers and their families. State attorneys general serve
an important role in the regulation of private, postsecondary
institutions. Our investigations and enforcement actions have
repeatedly revealed that numerous for-profit schools have
deceived and defrauded students, and employed other unlawful
tactics to line their coffers with federal student-loan
funds. We have witnessed firsthand the heartbreaking
devastation to borrowers and their families. Recently, for
example, state attorneys general played a critical role in
uncovering widespread misconduct at Career Education
Corporation, Education Management Corporation, the Art
Institute and Argosy schools operated by the Dream Center,
ITT Technical Institute, Corinthian Colleges, American Career
Institute and others, and then working with the Department to
secure borrower-defense relief for tens of thousands of
defrauded students. Though this work, we have spoken with
numerous students who, while seeking new opportunities for
themselves and their families, were lured into programs with
the promise of employment opportunities and higher earnings,
only to be left with little to show for their efforts aside
from unaffordable debt.
A robust and fair borrower defense rule is critical for
ensuring that student borrowers and taxpayers are not left
bearing the costs of institutional misconduct. The
Department's new rule instead empowers predatory for-profit
schools and cuts off relief to victimized students. During
the comment period on the 2019 Rule, we submitted these and
other objections to the Department. Rather than engaging with
our offices, the Department ignored our comments and left our
concerns unaddressed. We commend and support your efforts to
disapprove the 2019 Rule to protect students and taxpayers.
Congress must hold predatory institutions accountable for
their misconduct and provide relief to defrauded student
borrowers and, by enacting your resolution of disapproval,
ensure that the 2016 Rule remains the operative borrower
defense regulation.
Sincerely,
Maurn Healey, Massachusetts Attorney General; Kathleen
Jennings, Delaware Attorney General; Clare E. Connors,
Hawai'i Attorney General; Tom Miller, Iowa Attorney
General; Brian E. Frosh, Maryland Attorney General;
Keith Ellison, Minnesota Attorney General; Hector
Balderas, New Mexico Attorney General; Xavier Becerra,
California Attorney General; Karl A. Racine, District
of Columbia Attorney General; Kwame Raoul, Illinois
Attorney General; Aaron M. Frey, Maine Attorney
General; Dana Nessel, Michigan Attorney General; Gurbir
S. Grewal, New Jersey Attorney General; Letitia James,
New York Attorney General; Joshua H. Stein, North
Carolina Attorney General; Josh Shapiro, Pennsylvania
Attorney General; Mark R. Herring, Virginia Attorney
General; Ellen F. Rosenblum, Oregon Attorney General;
Thomas J. Donovan, Jr., Vermont Attorney General; Bob
Ferguson, Washington State Attorney General.
Mr. DURBIN. Mr. President, along with Attorney General Kwame Raoul of
Illinois and others, signers include the attorneys general of Maine,
Iowa, Pennsylvania, and North Carolina. In their letter, these chief
state law enforcement officers write:
In issuing the 2019 rule, the Department has abdicated its
Congressionally-mandated responsibility to protect students
and taxpayers from the misconduct of unscrupulous schools.
The rule provides no realistic prospect for borrowers to
discharge their loans when they have been defrauded by
predatory for-profit schools . . . if this rule goes into
effect, the result will be disastrous for students while
providing a windfall to abusive schools.
Senators are going to get a chance--Democrats and Republicans--to
undo the mess created by the Secretary of Education. Senators will get
a chance to stand up for the student loan borrowers who have been
defrauded and, equally important, a chance to stand up for our
veterans. How many speeches have been delivered on this floor about the
men and women in uniform and those who have served and how much we
honor them? Honor them by standing with the American Legion and vote to
undo the borrower defense rule of Secretary DeVos.
I yield the floor.
The PRESIDING OFFICER (Mr. Sasse). The majority whip.
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