DeVos and the Department of Education don’t plan on forgiving the entire debt of students defrauded by now closed, for-profit colleges and technical programs. The Obama administration forgave the entire debt of all students who were found to be victims of fraud under the “borrower’s defense” rule.
Former President Obama canceled over $550 million in loans paid by tens of thousands of students to for-profit schools that are now defunct. If DeVos goes ahead with her plan, tens of thousands of students could be left on the hook to pay for loans to schools that never should have been operating in the first place.
“Anything other than full cancellation is not a valid outcome,” said Eileen Connor, a litigator at Harvard University’s Project on Predatory Student Lending, which has represented hundreds of defrauded students of the now-shuttered Corinthian Colleges. “The nature of the wrong that was done to them, the harm is even bigger than the loans that they have.”
It’s wrong to allow companies to swindle people who are trying to get an education. What makes it worse is that some of the people with student debt from fraudulent institutions are crippled by their debt.
A federal rule called “borrower’s defense” allows students to be forgiven their loans if the students are considered the victims of fraud. Obama expanded this regulation to add more protections for students, shift financial responsibility to the schools and prevent schools from having students sign away their right to sue the school.
DeVos, however, wants to rollback these regulations and give schools more freedom to prey on students. I guess that’s not surprising considering she was appointed by someone who has experience running a fraudulent “univeristy.”
Earlier this year, Trump had to pay $25 million in settlements for running his own fraudulent institutions that repeatedly broke the law by calling themselves universities. Ronald Schnackenberg, a former saleman for Trump University wrote in his affidavit that “Trump University was a fraudulent scheme, and that it preyed upon the elderly and uneducated to separate them from their money.”
In Georgia, as well as the rest of the U.S., predatory loans and exploitive regulations allow people seeking higher education to be repeatedly exploited. This exploitation is even worse for people coming from lower socio-economic background. While our former president took steps to try to increase regulations and crack down on companies and for-profit schools that profited by exploiting students, our current president has himself benefited from ripping people off.