June 25, 2020 - Issue: Vol. 166, No. 117 — Daily Edition116th Congress (2019 - 2020) - 2nd Session
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BORROWER DEFENSE RULE; Congressional Record Vol. 166, No. 117
(Senate - June 25, 2020)
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[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. ____________________
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