Attorneys General Sue Over DeVos' Handling Of For-Profit Colleges

Attorneys General Sue Over DeVos' Handling Of For-Profit Colleges
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On July 6, attorneys general from 18 states and Washington, D.C. filed suit against Education Secretary Besty DeVos. This comes in the wake of DeVos delaying the implementation of an Obama-era rule that protected students from predatory for-profit colleges.

The specific set of policies that DeVos wants to repeal are called the “gainful employment” regulations. These policies allow the Education Department to compare the amount of loans that a typical student borrows with how much they would earn after graduation if the student graduates from a for-profit program or any nondegree employment certificate programs at public or nonprofit colleges. If any of these programs create a ratio that is too high, the program is deemed “failing,” and if the program fails in two out of three years it becomes ineligible for federal financial aid. For-profit colleges would have been hit the hardest by these rules, as many of those colleges get up to 90 percent of their revenue through the Department of Education.

Before DeVos delayed implementation of these policies, no for-profit college or program had reached the three-year point. But that doesn’t mean for-profit colleges didn’t get the hint. Of the 500 failing programs that didn’t appeal their status, roughly 300 programs already shuttered, even without being required to do so. The gainful employment test had actually helped many colleges identify programs that for-profit colleges thought were not worth saving.

Despite all evidence pointing toward the gainful employment program working, DeVos has determined that the regulations resulted in “a muddled process that’s unfair to students and schools” and would rather rewrite the regulations completely. In a statement, DeVos said that if the gainful employment rule was fully implemented, it would “unfairly and arbitrarily limit students’ ability to pursue certain types of higher education and career training programs.”

As noted during her confirmation hearing and after, DeVos had and continues to have connections to for-profit colleges, including being a key investor in a for-profit college and having various investments at firms that own for-profit colleges. Additionally, President Trump ran a program that labeled itself a university, but was later forced to remove that as Trump University was not actually a school. Trump later settled a class action lawsuit that said Trump and the program defrauded students.

The connections between DeVos, Trump, and for-profit colleges may be a reason that 19 attorneys general have filed suit against the Department of Education, but the leading cause is to protect students and taxpayers from the predatory practices of the for-profit college system. In the 2009-10 academic year alone, taxpayers invested $32 billion in for-profit colleges. This is more than the annual budgets of the U.S. Department of Justice and the U.S. Department of State during this same period. As the 19 attorneys general are Democrats, Liz Hill, a spokeswoman for the Department of Education, called the lawsuit “ideologically driven.”

Since this lawsuit has been filed, DeVos has taken more action on for-profit colleges. On Aug. 18, the Department of Education made changes to the gainful employment rule, allowing DeVos and the Education Department to circumvent the normal rule-making process. The Department of Education changed the appeals process for violations, and they “appear to tip the appeals process in the college’s favor.” These new rules eliminate certain guidelines that would specify what data would be considered representative of the student body, allowing colleges to appeal using any data it chooses. The only person deciding if this data is reliable would be DeVos.

We are fighting to protect another important program for borrowers, the Public Service Loan Forgiveness Program, from being cut or capped by the White House or Congress. If you want to help defend Public Service Loan Forgiveness, sign up here to stay up-to-date on important legislative updates and learn how you can take action to protect this program.

Equal Justice Works provides support to public interest attorneys, and helps law students learn more about all aspects of managing their student debt. We have a debt relief newsletter, free student debt webinars, an informative website, and a free student debt e-book, Take Control of Your Future.

Brandon Hanson is the Student Debt Specialist at Equal Justice Works, where he helps students, lawyers, and law school professionals manage their student debt through education, outreach, and policy analysis. Brandon is a graduate of the University of St. Thomas School of Law in Minneapolis and the University of Iowa, and has worked with political campaigns, non-profit organizations, and state government.

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