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.
This article appears in Jul 6-12, 2017.
Bernie Sanders wife is ripping off the banks, students and tax payers also. It seems to be how colleges roll these days. Welcome to the big business of public funded education.
Bernie and his wife are liberals, so it doesn’t count.
Sorry, but didn’t you write that taxpayers would have been picking up most of the tab for loan forgiveness, to the tune of $16.6 billion? Then you write, “Due to the Trump administration’s delay [in implementing the loan forgiveness program], students and taxpayers lose out.”
No, David. Students who attended fraudulent for-profit colleges lost out because their government failed to protect them from those predatory enterprises, but taxpayers do NOT lose out when the loan forgiveness program is stalled, not unless the amount the for-profit colleges would have been forced to pony up of their assets equaled the full amount of the loan debt to be forgiven. Can you do simple math and do you see how that subtraction equation works? Our government cannot keep reaching into the pockets of middle class taxpayers — a source of funds they seem to think is limitless, a class of people they believe to be hard working, docile sheep-like laborers who can be forced to pony up billions for ANY disasters resulting from ludicrous federal failures of regulatory oversight — the housing market crash in 2008, billions of dollars of young, gullible citizens’ credit being sucked into worthless for-profit education ventures…what else? Where does it stop?
We’ve had 9 years since 2008 to recognize what’s going on in his country. Some of us are, so to speak, “woke.” Perhaps it’s time for you to wake up, too. (It’s hard, I know, when you are more insulated than most of us from the financial shocks of recent disruptions in the financial system. But you seem like a pretty bright guy. Perhaps, if you thought about it enough, you might start to “get it.”)
http://www.nybooks.com/articles/2014/01/09/financial-crisis-why-no-executive-prosecutions/
Here’s a quote from the above-linked article: RE the flawed mortgage-backed securities that caused the 2008 financial crisis: “warnings, many from within the financial community, were disregarded, not because they were viewed as inaccurate, but because, as one high-level banker put it, ‘A decision was made that Were going to have to hold our nose and start buying the stated product if we want to stay in business.’
Gosh, what does that language remind me of? Perhaps the language David used RE why the electorate should vote for Prop 123?
Safier’s blog through the years is a testament to and example of all kinds of compromises made in the area of delivering quality information to the public, compromises made in his particular case so that the public district system can “stay in business.” These kinds of moral compromises do not end well for the community at large or for individual citizens in a country where the soundness of governance depends on the electorate having ACCURATE information before they vote.
As for the loan forgiveness program and a few of Safier’s assertions about it: the problem was caused by deregulation, and deregulation in this country and others occurred as much during the Clinton (and Blair) years as during Republican administrations. Read the coverage of the regulatory peel-back behind the Grenfell Tower disaster in London. It was Britain’s equivalent of the Clinton Democrats, “New Labor” under Tony Blair, that was responsible. Like Blair, Hillary Rodham Clinton would not have been someone equipped by her associations with and indebtedness to the financial industry to accomplish effective reforms in the U.S. Reaching into taxpayers’ pockets to “solve” problems created by negligent politicians who routinely defend the best interests of their campaign funders in the financial industry rather than the best interests of citizens is not the right approach.
Where is a refund for students ripped off by state and non-profit colleges? Massive longitudinal studies have found that over 50% of students in college show no evidence of cognitive gains. Loaded up with debt and nothing to show for it.
How difficult is it to understand that banks that can’t (or won’t) recognize a bad loan risk when they see one should go out of business, not be bailed out with billions of dollars of taxpayer funds? The banks and their sick loan schemes (deployed in public and non-profit educational institutions as well as in for-profit ones) are the problem, and also politicians who take campaign donations from the financial industry. Together, they’ve sold the next generation into indentured servanthood, and now they keep proposing that taxpayers, in addition to taking on inadvisable amounts of debt to fund their own children’s outrageously overpriced college and professional education, should be asked to bail out banks that have given out billions in loans to borrowers who, if the banks knew their own business, could easily have been recognized as bad loan risks?
What kind of an “education” system do we have, that people don’t see through this scam?
It is absolutely astounding what kind of policy CRAP is served to the public as a supposedly palatable, nourishing meal by some of our so-called “defenders of labor” in the Democratic Party these days.
I can understand free market forces. They work when the people in charge are moral and lawful and do not use government (or the absence of government) as a blunt instrument to gouge gullible, well meaning students, often leaving them in deep, deep debt with no recourse. And once again, I read comments by a former “public” school superintendent complaining about providing decent opportunities in the public sector. Disgrace ran him out of office and disgrace lingers. It is easy to believe the Huppenthal still thinks any/all critics are “evil scum,” and people who receive any public assistance are “lazy pigs,” and let pure profit flow to large corporations and executives.
As noted above, the problem was not just with the banks seeking profit, but with the government’s deregulation that allowed for-profit companies to engage in shoddy practices. Do you see something wrong with this scenario: as elected representatives of taxpayers, destroy consumer protection regulation because doing so endears you to your campaign funders, and then when consumers get damaged because of the absence of regulatory oversight, reach into taxpayers’ pockets to pay for the damage. Repeat ad infinitum. Keep allowing abuses, keep solving the problems you create by getting taxpayers to pay for it. It happened in 2008, and it was proposed again in this scenario. At least in this scenario the debtors are getting relief as well, not just the banks, but it sounds like in the programs described in this blog, the banks will benefit when taxpayers pay the debt that the banks loaned inadvisably, often knowing the borrowers were bad loan risks:
“New details unsealed last month in the state lawsuits against Navient shed light on how Sallie Mae used private subprime loans some of which it expected to default at rates as high as 92 percent as a tool to build its business relationships with colleges and universities across the country. From the outset, the lender knew that many borrowers would be unable to repay, government lawyers say, but it still made the loans, ensnaring students in debt traps that have dogged them for more than a decade.”
https://www.nytimes.com/2017/04/09/business/dealbook/states-say-navient-preyed-on-students.html
Yes, the debtors need to be relieved of their debt. Is there a way to do that by taking the money out of the pockets of the banks and the for profit colleges, not out of the pockets of taxpayers who had no part in creating these problems? Many of the taxpayers whose taxes fund the government’s “relief” programs are carrying their own debt burdens to educate their own children in American “public” universities, the costs of which have risen to between $25K per year (in-state) to more than $60K per year (out-of-state).
American students are increasingly going to college in Canada to avoid the exploitive racket higher education has become in this country:
https://www.nytimes.com/2017/05/19/world/canada/canadian-colleges-see-surge-of-foreign-students-its-not-just-politics.html
That would be one form of just reward to the U.S. for the way it is treating the next generation: students electing to get their educations in other countries and, in all probability, become citizens and taxpayers in those countries, stepping out of the vicious cycle of exploitation that loads them up with loan debt to pay for inflated tuition rates as students and then milks them as taxpayers to pay for the problems their elected “representatives” have created in collusion with their campaign funders in the financial industry.