January 15, 2020 - Issue: Vol. 166, No. 9 — Daily Edition116th Congress (2019 - 2020) - 2nd Session
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FOR-PROFIT COLLEGES AND UNIVERSITIES; Congressional Record Vol. 166, No. 9
(Senate - January 15, 2020)
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[Pages S203-S205] From the Congressional Record Online through the Government Publishing Office [www.gpo.gov] FOR-PROFIT COLLEGES AND UNIVERSITIES Mr. DURBIN. Mr. President, this week the House of Representatives will have the opportunity to stand up for student borrowers who have been defrauded by the schools they attended. The House of Representatives will be voting on a resolution introduced by Representative Susie Lee of Nevada which will allow defrauded student loan borrowers relief from their student debt. Under the Higher Education Act, currently the law of the land, when a student borrower is defrauded by their school, they are entitled to have their Federal student loans to attend that school discharged. That is what Congress intended. Why? The logic behind it is very straightforward. Consider the following: The Federal Government recognizes the accreditation of these schools, colleges, and universities. That accreditation authorizes these schools to offer loans from the Federal Government to pay for the cost of attending. It is a very straightforward process. The schools are accredited. The U.S. Government recognizes the accreditation which authorizes the school to offer courses to students, and then it goes on to say that students attending those colleges and universities will qualify for Federal student loans. Now, that is where this particular statement I am about to make becomes particularly relevant. The school makes promises about the education they are going to offer to the students to entice them to attend and to borrow money to attend. For example, the school may tell the students that the credits they earn at this school can be transferred to other schools, but sometimes that turns out to be untrue and false. These schools may tell the students there are jobs waiting for them in the fields that they want them to study at the schools. They tell them that, after graduation, there are plenty of employment opportunities, and oftentimes that turns out to be untrue. In fact, in the case of some of these schools, they have deliberately misrepresented the job placement of graduates to create the impression of success if you complete a course. The schools are lying to the students. The school may also promise that, if you complete a course at the school, you will automatically be qualified for certain certifications under State law. Sometimes that turns out to be a lie. They may also tell the students there are certain teachers and courses available to them if they pay their tuition, and that may turn out to be untrue as well. The law I referred to earlier is intended, when these types of lies and misrepresentations occur and the student is misled into borrowing Federal student loans based on these misrepresentations, to give the defrauded student the right to be relieved of the student loan responsibility under the law. [[Page S204]] It makes sense. If the student is lied to, takes out a Federal loan, and it turns out the school lied to them and defrauded them, we don't want the students saddled with a loan from that school that could literally change their lives. Now we have a new Secretary of Education under President Trump, Betsy DeVos. She has decided to rewrite the rules when it comes to these students receiving relief from the fraud I have just described. She places burdens on these students that we have not seen before. Basically, she is saying to the students: Lawyer up. You just can't make your plea to the Department of Education that you, along with a group of other students, were defrauded by representations in the materials they distributed or the statements they made--not good enough under the new rule written by Secretary DeVos. What she has basically said is that each one of these students now has an individual responsibility to prove that that student was defrauded, that there was a representation to that student as opposed to it being made by the school to all of the students or in its publications and the like. The burdens which Secretary DeVos now places on defrauded students have led to estimates that only 3 percent of the students who have been defrauded can possibly expect to receive relief from their student debt--3 percent. You might say: Well, these things happen. It is a ``buyer beware'' market. Students ought to know better. Really? When the Federal Government recognizes an accredited school and says to that school: You can offer Federal student loans, do we not bear some responsibility to the student and the family if that school lies and misrepresents facts to the students? Well, 78 percent of Americans happen to think, yes, we don't want to have students in a predicament where their own futures are going to be somehow compromised because of the fraud by the school. How many students are affected by this? A handful? No. It turns out, a dramatically large number. Over the last decade, tens of thousands of college students in America have been defrauded in ways I just described, lured into enrolling in classes with false promises and aggressive tactics, only to be left with massive student debt and a worthless education and no job. Sadly, it is a common occurrence in the for-profit college industry. That industry, the for-profit college industry, is an industry that can be best described by two numbers. Nine percent of postsecondary students are enrolled in for-profit colleges and universities in America. Think about the University of Phoenix, DeVry, and others. Nine percent of students end up in schools like that. Yet 33 percent of all the federal student loan defaults are students from these for-profit colleges and universities--9 percent of the students, 33 percent of the student loan defaults. Why? The tuition is too high; the education is virtually worthless; and there are no jobs at the end of the rainbow. Some of these schools--for-profit colleges like Corinthian, ITT Tech, Westwood, Dream Center--preyed on students, reaped huge profits, and then conveniently went bankrupt. They may be gone, legally gone, but the debts for the students still live. Others, such as Ashford, University of Phoenix, Career Education Corporation, are still out there doing business. Virtually, all of these notorious schools have been the subject of multiple State and local investigations or lawsuits for unfair, deceptive, and abusive practices. Unfortunately, they continue to create more student victims due to the lack of enforcement by our own U.S. Department of Education and loopholes in the laws, which, sadly, Congress has been unable or unwilling to close. Currently, there are more than 223,000 claims made by students of being defrauded and seeking relief under the Higher Education Act--over 200,000 student borrowers whose lives have been collared by student loan debt from these worthless, defrauding schools. The claims--223,000 of them--come from every State in the Union, big and small, red, blue, and purple. There are over 11,000 from my State of Illinois; over 19,000 from the State of Florida; 7,800 from Ohio; 6,100 from North Carolina; 3,800 from Colorado; 1,000 from the State of West Virginia; 385 in Maine; and more than 200 in Alaska. The American people believe these defrauded student borrowers and future defrauded borrowers deserve help. According to a poll by New America, 78 percent of Americans believe students should have their Federal student loans forgiven if their schools defrauded them. That includes 87 percent of Democrats and 71 percent of Republicans who feel that way. This new rule by Secretary DeVos would not allow borrowers to receive the Federal student loan discharge currently in the law. It is why more than 60 organizations are supporting the resolution, which the House will vote on this week, and the companion resolution I have introduced in the Senate. Among those supporting our effort are the American Federation of Teachers, the National Education Association, the Student Veterans of America--and one that I want to highlight. I see there are others on the floor preparing to speak, so I am going to abbreviate my remarks, but I want to make one last point. Among the groups supporting our efforts to undo the borrower defense rule, promulgated by Secretary of Education DeVos, is the American Legion. The American Legion sent me a letter last month, and, in support of our effort to undo the DeVos rule, they said, among other things, that the rule is fundamentally unfair to veterans. Listen to what they say about the plight of veterans having been defrauded by schools, trying to get relief from their loans. This is from James ``Bill'' Oxford, national commander of the American Legion. He writes: Thousands of student veterans have been defrauded over the years--promised their credits would transfer when they wouldn't, given false or misleading job placement rates in marketing, promised one educational experience when they were recruited, but given something completely different. This type of deception against our veterans and servicemembers has been a lucrative scam for unscrupulous actors. As veterans are aggressively targeted due to their service to our country, they must be afforded the right to group relief. The Department of Education's ``Borrower Defense'' rule eliminates this right. Mr. President, I ask unanimous consent to have printed in the Record the letter dated December 18, 2019. There being no objection, the material was ordered to be printed in the Record, as follows: The American Legion, Washington, DC, December 18, 2019. Hon. Richard Durbin, Senate Dirksen Office Building, Washington, DC. Dear Senator Durbin: On behalf of the nearly 2 million members of The American Legion, I write to express our support for Joint Resolution 56, providing for congressional disapproval of the rule submitted by the Department of Education relating to, ``Borrower Defense Institutional Accountability.'' The rule, as currently written, is fundamentally rigged against defrauded borrowers of student loans, depriving them of the opportunity for debt relief that Congress intended to afford them under the Higher Education Act. Affirming this position is American Legion Resolution No. 82: Preserve Veteran and Servicemember Rights to Gainful Employment and Borrower Defense Protections, adopted in our National Convention 2017. Thousands of student veterans have been defrauded over the years--promised their credits would transfer when they wouldn't, given false or misleading job placement rates in marketing, promised one educational experience when they were recruited, but given something completely different. This type of deception against our veterans and servicemembers has been a lucrative scam for unscrupulous actors. As veterans are aggressively targeted due to their service to our country, they must be afforded the right to group relief. The Department of Education's ``Borrower Defense'' rule eliminates this right, forcing veterans to individually prove their claim, share the specific type of financial harm they suffered, and prove the school knowingly made substantial misrepresentations. The preponderance of evidence required for this process is so onerous that the Department of Education itself estimated that only 3 percent of applicants would get relief. Until every veteran's application for student loan forgiveness has been processed, we will continue to demand fair and timely decisions. The rule that the Department of Education has promulgated flagrantly denies defrauded veterans these dignities, and The American Legion calls on Congress to overturn this regulatory action. Senator Durbin, The American Legion applauds your leadership in addressing this critical issue facing our nation's veterans and their families. For God & Country, James W. ``Bill'' Oxford, National Commander, The American Legion. [[Page S205]] Mr. DURBIN. Mr. President, I have an additional letter from 20 State attorneys general led by the Commonwealth of Massachusetts Office of the Attorney General. I ask unanimous consent to have printed in the Record the letter dated January 14, 2020. There being no objection, the material was ordered to be printed in the Record, as follows: The Commonwealth of Massachusetts, Office of the Attorney General, Boston, MA, January 14, 2020. Senator Dick Durbin, Washington, DC. Representative Susie Lee, Washington, DC. Dear Senator Durbin and Representative Lee: We, the undersigned Attorneys General of Massachusetts, California, Delaware, the District of Columbia, Hawai'i, Illinois, Iowa, Maine, Maryland, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Vermont, Virginia, and Washington write to express our support for the resolution of disapproval that you have introduced regarding the U.S. Department of Education's (``Department'') 2019 Borrower Defense Rule (``2019 Rule'') pursuant to the Congressional Review Act. In issuing the 2019 Rule, the Department has abdicated its Congressionally-mandated responsibility to protect students and taxpayers from the misconduct of unscrupulous schools. The rule provides no realistic prospect for borrowers to discharge their loans when they have been defrauded by predatory for-profit schools, and it eliminates financial responsibility requirements for those same institutions. If this rule goes into effect, the result will be disastrous for students while providing a windfall to abusive schools. The 2019 Rule squanders and reverses recent progress the Department has made in protecting students from fraud and abuse. Three years ago, the Department completed a thorough rulemaking process addressing borrower defense and financial responsibility, in which the views of numerous schools, stakeholders, and public commenters were considered and incorporated into a comprehensive set of regulations. The regulations, promulgated by the Department in November 20l6 (``2016 Rule''), made substantial progress toward achieving the Department's then-stated goal of providing defrauded borrowers with a consistent, clear, fair, and transparent process to seek debt relief. At the same time, the 2016 Rule protected taxpayers by holding schools accountable that engage in misconduct and ensuring that financially troubled schools provide the government with protection against the risks they create. The Department's new rule would simply rescind and replace its 2016 Rule, reversing all of its enhanced protections for students and its accountability measures for for-profit schools. The Department's 2019 Rule provides an entirely unfair and unworkable process for defrauded students to obtain loan relief and will do nothing to deter and hold accountable schools that cheat their students. Among its numerous flaws, the Department's new rule places insurmountable evidentiary burdens on student borrowers with meritorious claims. The rule requires student borrowers to prove intentional or reckless misconduct on the part of their schools, an extraordinarily demanding standard not consistent with state laws governing liability for unfair and deceptive conduct. Moreover, even where a school has intentionally or recklessly harmed its students, it is difficult to imagine how students would be able to obtain the evidence necessary to prove intent or recklessness for an administrative application to the Department. The rule also inappropriately requires student borrowers to prove financial harm beyond the intrinsic harm caused by incurring federal student loan debt as a result of fraud, and establishes a three-year time bar on borrower defense claims, even though students typicaJiy do not learn until years later that they were defrauded by their schools. Compounding these obstacles, the rule arbitrarily eliminates the process by which relief can be sought on a group level, permitting those schools that have committed the most egregious and systemic misconduct to benefit from their wrongdoing at the expense of borrowers with meritorious claims who are unaware of or unable to access relief. We are uniquely well-situated to understand the devastating effects that the 2019 Rule would have on the lives of student borrowers and their families. State attorneys general serve an important role in the regulation of private, postsecondary institutions. Our investigations and enforcement actions have repeatedly revealed that numerous for-profit schools have deceived and defrauded students, and employed other unlawful tactics to line their coffers with federal student-loan funds. We have witnessed firsthand the heartbreaking devastation to borrowers and their families. Recently, for example, state attorneys general played a critical role in uncovering widespread misconduct at Career Education Corporation, Education Management Corporation, the Art Institute and Argosy schools operated by the Dream Center, ITT Technical Institute, Corinthian Colleges, American Career Institute and others, and then working with the Department to secure borrower-defense relief for tens of thousands of defrauded students. Though this work, we have spoken with numerous students who, while seeking new opportunities for themselves and their families, were lured into programs with the promise of employment opportunities and higher earnings, only to be left with little to show for their efforts aside from unaffordable debt. A robust and fair borrower defense rule is critical for ensuring that student borrowers and taxpayers are not left bearing the costs of institutional misconduct. The Department's new rule instead empowers predatory for-profit schools and cuts off relief to victimized students. During the comment period on the 2019 Rule, we submitted these and other objections to the Department. Rather than engaging with our offices, the Department ignored our comments and left our concerns unaddressed. We commend and support your efforts to disapprove the 2019 Rule to protect students and taxpayers. Congress must hold predatory institutions accountable for their misconduct and provide relief to defrauded student borrowers and, by enacting your resolution of disapproval, ensure that the 2016 Rule remains the operative borrower defense regulation. Sincerely, Maurn Healey, Massachusetts Attorney General; Kathleen Jennings, Delaware Attorney General; Clare E. Connors, Hawai'i Attorney General; Tom Miller, Iowa Attorney General; Brian E. Frosh, Maryland Attorney General; Keith Ellison, Minnesota Attorney General; Hector Balderas, New Mexico Attorney General; Xavier Becerra, California Attorney General; Karl A. Racine, District of Columbia Attorney General; Kwame Raoul, Illinois Attorney General; Aaron M. Frey, Maine Attorney General; Dana Nessel, Michigan Attorney General; Gurbir S. Grewal, New Jersey Attorney General; Letitia James, New York Attorney General; Joshua H. Stein, North Carolina Attorney General; Josh Shapiro, Pennsylvania Attorney General; Mark R. Herring, Virginia Attorney General; Ellen F. Rosenblum, Oregon Attorney General; Thomas J. Donovan, Jr., Vermont Attorney General; Bob Ferguson, Washington State Attorney General. Mr. DURBIN. Mr. President, along with Attorney General Kwame Raoul of Illinois and others, signers include the attorneys general of Maine, Iowa, Pennsylvania, and North Carolina. In their letter, these chief state law enforcement officers write: In issuing the 2019 rule, the Department has abdicated its Congressionally-mandated responsibility to protect students and taxpayers from the misconduct of unscrupulous schools. The rule provides no realistic prospect for borrowers to discharge their loans when they have been defrauded by predatory for-profit schools . . . if this rule goes into effect, the result will be disastrous for students while providing a windfall to abusive schools. Senators are going to get a chance--Democrats and Republicans--to undo the mess created by the Secretary of Education. Senators will get a chance to stand up for the student loan borrowers who have been defrauded and, equally important, a chance to stand up for our veterans. How many speeches have been delivered on this floor about the men and women in uniform and those who have served and how much we honor them? Honor them by standing with the American Legion and vote to undo the borrower defense rule of Secretary DeVos. I yield the floor. The PRESIDING OFFICER (Mr. Sasse). The majority whip. ____________________
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