[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.

                          ____________________