[Congressional Record Volume 166, Number 117 (Thursday, June 25, 2020)]
[Senate]
[Pages S3304-S3306]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
BORROWER DEFENSE RULE
Mr. DURBIN. Mr. President, this week, the House of Representatives
will vote on the override of President Trump's veto of my resolution
overturning Education Secretary Betsy DeVos's borrower defense rule.
Congress passed the resolution on a bipartisan basis in both
Chambers. Ten Republicans joined Democrats to overturn the rule in the
Senate.
Unfortunately, in just the eighth veto of his Presidency, President
Trump rejected the measure.
Unless Congress overrides his veto--with a two-thirds vote in both
the House and the Senate--the DeVos borrower defense rule will take
effect.
It means that student borrowers who are defrauded by their schools
will have almost no chance of getting their Federal student loans
forgiven.
Estimates show that only 3 percent of all student loans associated
with school misconduct and fraud will be forgiven under the DeVos rule.
That is because it places unreasonable new burdens on defrauded
borrowers.
First, the DeVos rule eliminates all group relief.
It makes every individual borrower who is defrauded gather and submit
their own evidence instead of being able to apply as a group when they
have experienced similar misconduct.
To prove their claims, borrowers must provide evidence that the
school intended to deceive them, had knowledge of the deception, or
acted with reckless disregard for the truth.
How are defrauded borrowers supposed to prove that?
In addition, borrowers under the DeVos rule are required to show
financial harm above and beyond the fact that they now carry huge
amounts of debt as a result of their experience.
They have to prove that they have been trying to find a job, weren't
fired, or didn't fail to meet other employment standards. It is unfair
and excessive.
Who are these borrowers who are being defrauded? More than 318,000
student borrowers have applied for borrower defense relief from the
Department of Education.
They come from every State in the Union. Sadly, many of them are
veterans. That is why more than 30 veterans organizations, including
the American Legion, called on President Trump to sign our resolution
to overturn this terrible rule.
In his statement ``imploring'' Trump to sign, American Legion
National Commander James ``Bill'' Oxford said:
Student veterans are a tempting target for . . . for-profit
schools to mislead with deceptive promises while offering
degrees and certificates of little-to-no value. Under [the
DeVos rule], it is nearly impossible for veterans to
successfully use a borrower defense [to have their loans
forgiven when they've been defrauded].
Unfortunately, just days after Memorial Day, President Trump ignored
the pleas of veterans and vetoed the resolution.
This issue isn't going away anytime soon.
More students are going to be defrauded by for-profit colleges and
are going to be left high and dry by the DeVos rule--unless Congress
votes to override Trump's veto.
The Department of Education estimates that nearly 200,000 borrowers
will be subject to illegal practices by their schools next year alone.
Those estimates were before the current pandemic, which creates a new
opportunity for predatory for-profit schools to take advantage of
students.
Last week, a New York Times article entitled ``For-Profit Colleges,
Long Troubled, See Surge Amid Pandemic.''
The article notes how the industry saw a similar surge during the
2008 financial crisis when Americans were losing jobs and turning to
flexible, highly advertised, for-profit college programs to continue
their education in an attempt to make themselves more marketable to
employers.
Unfortunately, these programs are too often of dubious quality, the
promises they make are often false, and the cost leaves students buried
in debt.
For-profit college stocks are beginning to see increases as investors
smell the opportunity.
The CEO of for-profit American Public Education, Inc., which owns
American Public University and American Military University, put it
plainly when she said, ``The pandemic has created an unexpected
opportunity.''
Predatory for-profit Ashford University is hiring hundreds of new
recruiters to take advantage.
We are seeing these for-profit schools use the same tactics they
developed during the last recession.
Only this time, if the DeVos rule goes into effect, these defrauded
borrowers will be stuck with crippling student debt for a worthless
degree for the rest of their lives.
I ask unanimous consent that the New York Times article to which I
referred to be printed in the Record following my remarks.
My colleagues in the House will have the chance to hold schools
accountable and not leave students and veterans holding the bag for the
misconduct of their schools.
I urge Republicans and Democrats to come together, stand with
students and veterans, and vote to override the President's veto.
How many of us have given speeches about how much we support our
military and veterans?
Well, tomorrow is the time to prove it by voting to override the
President's veto and overturning the DeVos borrower defense rule.
[[Page S3305]]
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the New York Times, June 17, 2020]
For-Profit Colleges, Long Troubled, See Surge Amid Pandemic
(By Sarah Butrymowicz and Meredith Kolodner)
In March, as colleges and universities shuttered campuses
under a nationwide lockdown, Strayer University updated its
website with a simple message: ``Great things can happen at
home.''
Capella University, owned by the same company as Strayer,
has run ads promoting its flexibility in ``uncertain times''
and promising would-be transfer students that they can earn a
bachelor's degree in as little as a year.
Online for-profit colleges like these have seen an
opportunity to increase enrollment during the coronavirus
pandemic. Their flexible programs may be newly attractive to
the many workers who have lost their jobs, to college
students whose campuses are closed, and to those now seeking
to change careers. The colleges' parent companies often have
substantial cash reserves that they can pump into tuition
discounts and marketing at a time when public universities
and nonprofit colleges are seeing their budgets disintegrate.
Few of the largest for-profit colleges operating primarily
online have track records to justify the optimistic
advertising pitches. Some have put students deep in debt
while posting dismal graduation rates amid a history of
investigations by state and federal agencies, including many
that have led to substantial financial settlements.
Still, there is evidence that interest in the schools has
increased.
``I hate to call anybody a winner in this crisis,'' said
Jeffrey M. Silber, managing director at BMO Capital Markets,
a financial services company, ``but I think growth will
increase this fall and could continue thereafter.''
For-profit colleges have long devoted large sums to
advertising, spending almost $400 per student in 2017,
according to research from the Brookings Institution. For
nonprofit institutions, that figure was $48, and for public
colleges it was $14.
``Unfortunately, because of the financial distress a lot of
not-for-profits are facing, they may have to cut back on
marketing,'' Mr. Silber said. ``I think the for-profits may
be at a competitive advantage.''
Ashford University has received so many new inquiries in
recent months that it has announced plans to hire 200
additional ``enrollment advisers'' to field them. Another
school that operates largely online, Grand Canyon University,
says it has had a surge in enrollments. (Grand Canyon has
nonprofit status in Arizona and with the Internal Revenue
Service but is designated as a for-profit institution by the
U.S. Department of Education.) Capella and Strayer have
reported increases in requests for information.
The trend concerns many student-protection advocacy groups,
which point out that the colleges that stand to gain are
among those with the most troubling records. For the most
part, the largest online for-profit universities have poor
graduation rates--often no higher than 25 percent, and
sometimes as low as in the single digits. Several have been
accused of intentionally misleading students about potential
job prospects to persuade them to enroll and often to take on
tens of thousands of dollars in debt.
Eileen Connor, the legal director at the Project on
Predatory Student Lending at Harvard Law School, said she was
worried by the prospect of a resurgence for online, for-
profit schools.
``In times of economic downturn, that's when the for-profit
colleges start to thrive,'' she said. Online colleges ``have
a running start, especially now, when there's an economic
downturn keeping people in their homes,'' she added. ``That
is a perfect storm for the thing that they're trying to do.''
These schools often attract low-income, nontraditional
college students who tend to have lower completion rates than
those who enroll straight from high school and attend full
time. Many have family pressures that interfere with study.
In recent earnings calls, many companies emphasized the
quality of the education they provide. Karl McDonnell, the
chief executive of Strategic Education Inc., the parent
company of Capella and Strayer, told investors in March,
``We're going to continue to focus on maintaining the highest
possible academic quality figuring that that's really the
best way to sort of position yourself vis-a-vis any kinds of
regulatory or legislative initiatives.''
In the first quarter, Strategic Education took in $46.5
million in profit, up from $36.7 million over the same
quarter last year. Its executive chairman, Robert Silberman,
told investors that the company had a ``fortress balance
sheet with over $500 million in cash.''
Before the broad market decline last week, Strategic's
stock price had climbed steadily since early April, as had
those of other publicly traded companies that own
universities and college-related education services,
including Grand Canyon Education Inc., Perdoceo Education
Corporation and Zovio. But for many of their students, the
future is precarious.
At Capella, only 11 percent of undergraduates earn a degree
within eight years, according to the most recent federal
statistics. At Strayer, graduation rates range from 3 percent
at its Arkansas campus to a high of 27 percent in Virginia.
Fewer than a third of students at Perdoceo campuses
graduate within eight years. The company's schools were
recently barred from receiving G.I. Bill money from new
students after the Department of Veterans Affairs found that
they had used sales and enrollment practices that were
``erroneous, deceptive or misleading.''
Ashford University, owned by Zovio, had a 25 percent
graduation rate, according to the most recent federal data.
Those completing degrees had a median debt of $34,000 on
leaving. Zovio is being sued by the California attorney
general, accused of making false promises to students and
using illegal debt collection practices. The company denies
any wrongdoing.
For-profit schools made a similar play for students during
the 2008 recession, as people searching for work in a
shrinking job market sought new credentials at low cost.
Enrollment at for-profit colleges climbed 24 percent at the
height of the recession, according to an analysis by BMO
Capital Markets.
Along with that surge came increased scrutiny. Government
investigators concluded that two of the biggest for-profit
operators, Corinthian Colleges Inc. and ITT Technical
Institute, had mismanaged or failed to account for millions
of dollars in federal financial aid. They were subsequently
barred from receiving such aid, which led to their collapse.
The companies were also accused of pushing students to take
loans they could never expect to repay.
The Obama administration put rules in place to shut down
programs whose graduates didn't earn enough to pay back their
student debt and to make it easier for students who had been
defrauded to have their loans forgiven. Experts say
conditions are ripe for new growth in the for-profit sector
because the Trump administration has rolled back those
changes.
``A lot of the pieces are in place to be right back where
we were in 2008, and the regulations that had come out of
lessons learned are being whittled away,'' said Yan Cao, a
fellow at the liberal-leaning Century Foundation who studies
higher education.
The Trump administration's Department of Education has
disputed criticism of its oversight of forprofit colleges. It
notes that it has expanded information on its websites to
help students make informed choices.
Shawn Cooper, an Air Force veteran, said he was twice given
approval for his dissertation project at Capella and worked
on it for months, only to be told that he needed to start
over with a new topic. He said he was forced to leave,
despite a 4.0 grade-point average.
Mr. Cooper says he owes more than $100,000 in student loans
after his time at Capella. ``At the end of the day, I feel
like it's all just a facade on their end,'' he said. ``Get
people in, take their money and get them out, usually without
anything to show for it.''
A lawsuit was filed against Capella seeking class-action
status for students like Mr. Cooper who say the school
intentionally and needlessly prolonged their doctoral
programs, costing them tens of thousands of dollars. Last
year, a judge allowed three counts in the suit to continue,
all regarding the time it took a ``typical'' student to
complete programs, but dismissed most other counts, including
those about how long the programs were ``designed'' or
``structured'' to take.
Strategic Education officials did not reply to requests for
comment.
Angela Selden, the chief executive of American Public
Education Inc., which owns American Public University and
American Military University, told investors that the company
has started spending part of its marketing budget originally
earmarked for later this year. ``The pandemic has created an
unexpected opportunity,'' Ms. Selden said.
Wallace Boston, the president of American Public's two
universities, said both schools offered a highquality
education. ``People who are critical of the sector on a whole
tend to be looking at things on the surface, and marketing is
one of the things they pick on the most,'' Mr. Boston said.
``I don't think that those critics are justified unless they
do their homework.''
Relative to some other online-only institutions, the
American Public University System is cheaper, at $6,880 a
year in tuition and fees, and has higher graduation rates.
Still, 22 percent of American Public University's 36,000-plus
students graduate after eight years, according to the most
recent federal data.
Mr. Boston said the university allowed students to take up
to a decade to complete their programs. The most recent 10-
year graduation rate was 35 percent, he added.
Tyler Hutchinson, of Brigham City, Utah, enrolled at
American Public University in 2017. He had three children and
worked part time, so the flexibility of taking online classes
offered hope a degree in environmental science that would
lead to a well-paying job.
But Mr. Hutchinson, 31, dropped out after one semester
because, he said, the college did not disburse his federal
financial aid. The school also sent him a bill for more than
$1,000 for classes the next semester that he had never signed
up for, he said--a bill that has been sold to a collection
agency.
Mr. Boston said the university could not provide
information about a student without
[[Page S3306]]
the student's consent. Mr. Hutchinson gave his consent by
email, but a spokesman said the university needed a formal
consent filing and would have no further comment.
Having been laid off at a convenience store and with his
work as a United States Census worker suspended because of
the coronavirus pandemic, Mr. Hutchinson has no income.
``When they advertised, what got me was the work-life
balance. And with financial aid, it was really attractive,''
he said. ``Even though I really enjoyed it, the financials
were such a burden we just decided to discontinue.''
American Public Education Inc.'s net income of $2.4 million
in the first three months of 2020 was more than double that
of the same period last year, and on June 9 its stock price
hit its highest closing point in a year.
____
Relevant Section of the Inspector General Act
Inspector General Access Act Strikes b(3)
5a U.S. Code Sec. 8E. Special provisions concerning the Department of
Justice
(a)
(1) Notwithstanding the last two sentences of section 3(a),
the Inspector General shall be under the authority,
direction, and control of the Attorney General with respect
to audits or investigations, or the issuance of subpoenas,
which require access to sensitive information concerning--
(A) ongoing civil or criminal investigations or
proceedings;
(B) undercover operations;
(C) the identity of confidential sources, including
protected witnesses;
(D) intelligence or counterintelligence matters; or
(E) other matters the disclosure of which would constitute
a serious threat to national security.
(2) With respect to the information described under
paragraph (1), the Attorney General may prohibit the
Inspector General from carrying out or completing any audit
or investigation, from accessing information described in
paragraph (1), or from issuing any subpoena, after such
Inspector General has decided to initiate, carry out, or
complete such audit or investigation, access such
information, or to issue such subpoena, if the Attorney
General determines that such prohibition is necessary to
prevent the disclosure of any information described under
paragraph (1) or to prevent the significant impairment to the
national interests of the United States.
(3) If the Attorney General exercises any power under
paragraph (1) or (2), the Attorney General shall notify the
Inspector General in writing stating the reasons for such
exercise. Within 30 days after receipt of any such notice,
the Inspector General shall transmit a copy of such notice to
the Committees on Governmental Affairs and Judiciary of the
Senate and the Committees on Government Operations and
Judiciary of the House of Representatives, and to other
appropriate committees or subcommittees of the Congress.
(b) In carrying out the duties and responsibilities
specified in this Act, the Inspector General of the
Department of Justice--
(1) may initiate, conduct and supervise such audits and
investigations in the Department of Justice as the Inspector
General considers appropriate;
(2) except as specified in subsection (a) and paragraph
(3), may investigate allegations of criminal wrongdoing or
administrative misconduct by an employee of the Department of
Justice, or may, in the discretion of the Inspector General,
refer such allegations to the Office of Professional
Responsibility or the internal affairs office of the
appropriate component of the Department of Justice;
(3) shall refer to the Counsel, Office of Professional
Responsibility of the Department of Justice, allegations of
misconduct involving Department attorneys, investigators. or
law enforcement personnel, where the allegations relate to
the exercise of the authority of an attorney to investigate,
litigate, or provide legal advice, except that no such
referral shall be made if the attorney is employed in the
Office of Professional Responsibility;
(4) may investigate allegations of criminal wrongdoing or
administrative misconduct by a person who is the head of any
agency or component of the Department of Justice; and
(5) shall forward the results of any investigation
conducted under paragraph (4), along with any appropriate
recommendation for disciplinary action, to the Attorney
General.
(c) Any report required to be transmitted by the Attorney
General to the appropriate committees or subcommittees of the
Congress under section 5(d) shall also be transmitted, within
the seven-day period specified under such section, to the
Committees on the Judiciary and Governmental Affairs of the
Senate and the Committees on the Judiciary and Government
Operations of the House of Representatives.
(d) The Attorney General shall ensure by regulation that
any component of the Department of Justice receiving a
nonfrivolous allegation of criminal wrongdoing or
administrative misconduct by an employee of the Department of
Justice, except with respect to allegations described in
subsection (b)(3), shall report that information to the
Inspector General.
____________________