For-profit colleges have been ripping off the federal government and defrauding students for years. The systematic fleecing of the Feds and the students was reported as far back as 2009
, but the government was slow to take action. In 2015 due to pressure from the Obama administration, the Corinthian College chain and ITT Tech Institute closed their doors and other colleges like the University of Phoenix saw their enrollments plummet when they were outed for illegal practices.
Last October, the Obama administration created a program known as borrower defense whose purpose was to compensate students burdened with loans from schools offering minimal education. It was scheduled to start July 1. A Hillary Clinton administration would almost certainly have followed through, but Betsy DeVos, Trump's Secretary of Education, has put on the brakes. The reason for the delay, she claims, is a suit filed by an association of for-profit colleges, but that appears to be a ruse. The Trump administration started looking for a way to delay the program
before the lawsuit was filed.
Eighteen states filed a lawsuit
against the Education Department for the delay.
“Since day one, Secretary DeVos has sided with for-profit school executives against students and families drowning in unaffordable student loans,” said Maura Healey, the Massachusetts attorney general, who led the multistate coalition. “Her decision to cancel vital protections for students and taxpayers is a betrayal of her office’s responsibility and a violation of federal law.”
The borrower defense program allowed the federal government to forgive student loans if the school had defrauded its students in some way. Taxpayers are picking up most of the tab, to the tune of $16.6 billion over the next ten years. Loan forgiveness has begun, but the Trump administration brought the processing of claims to a virtual standstill. Also, DeVos has frozen rules which would have required many for-profit schools to commit financial collateral to cover loan repayments, taking some of the financial burden off the federal government. The new policy would also have voided rules which said students had to go to arbitration over financial disputes instead of suing the school. That policy has been frozen as well.
Due the Trump administration's delay, students and taxpayers lose out, and the con artists and thieves who run for-profit colleges are off the hook.