House Democrats are calling on Education Secretary Betsy DeVos to testify next month about the delay in canceling the debt of thousands of defrauded former for-profit college students.
The request comes days after a federal court judge found DeVos in civil contempt for failing to stop collecting on some of the loans and fined the Department of Education $100,000.
The judge ordered the department to stop collecting on some debts in May, but since then, about 16,000 borrowers were incorrectly informed that they owed a payment on their debt. About 1,800 had their wages garnished and more than 800 were mistakenly subject to adverse credit reporting.
At issue is an Obama-era rule meant to help students defrauded by for-profit colleges that DeVos has sought to rewrite. She’s referred to the previous administration’s policies as “social engineering” and a “staggering overreach.” But consumer advocates have argued that her new version, set to go into effect in 2020, would make it harder for students to seek debt relief.
But as her fight to dismantle the regulations on for-profit colleges has gone on, a backlog of more than 200,000 applications for loan forgiveness has built up. Some former students have waited years to hear whether they are due debt relief.
The Department of Education did not immediately respond to a request for comment.
Last week, after the judge found DeVos in contempt, the department blamed the loan servicers, which it contracts to manage federal student loans, and acknowledged they “made unacceptable mistakes.”
In a response to a sharp rebuke from Democratic presidential candidate and Massachusetts Sen. Elizabeth Warren earlier this month, DeVos posted to Twitter: “Loan servicers made an error on a small # of loans. We know & we’re fixing it.”
In his letter to DeVos asking her to testify, House Education and Labor Committee Chairman Bobby Scott, a Virginia Democrat, said her tweet was “downplaying the severity of this violation.”
“The characterization in your tweet is in stark contrast to the very real emotional and financial harm faced by 16,000 defrauded borrowers,” he wrote.
In her ruling last week, US Magistrate Judge Sallie Kim wrote that the Department of Education demonstrated “only minimal efforts to comply” with her order. In a previous court hearing, the said she was “astounded” by the department’s violation.
DeVos has already overturned one of two rules that were key to the previous administration’s efforts to hold for-profit colleges accountable. That rule, known as Gainful Employment, would have withheld federal funding from for-profit colleges and certificate programs if their graduates failed to meet certain debt-to-income ratios. It never fully came into effect.
The request to testify tops off a week of attacks on DeVos’ rollback agenda. Last week, House Democrats threatened to subpoena the secretary over documents related to payments made to a for-profit college chain that collapsed last year. On the same day, she was sued – again – by former students of a different for-profit college, along with the Massachusetts attorney general, over loan forgiveness applications.
DeVos is also facing lawsuits about the management of a loan forgiveness program for public sector workers. It was put in place under President George W. Bush, but the first time anyone would have made enough payments to qualify was the fall of 2017, under the Trump administration. Pointing to a high rejection rate, Democrats have argued that DeVos isn’t doing enough to help borrowers apply. She has blamed Congress for creating a complicated rule.
Democratic presidential candidates Warren and Vermont Sen. Bernie Sanders are running on policy proposals that would cancel outstanding student debt for everyone – or nearly everyone – regardless of whether they were defrauded by a college. DeVos, in an interview with Fox News last week, called the Democratic proposals “crazy.”
But even one of her own appointees admits there is a problem with the system. On Thursday, A. Wayne Johnson, who DeVos appointed as a top official in the federal student aid official, resigned, calling for the complete cancellation of outstanding student loans because “we need changes in the law to save Americans from going into severe debt just to get a college education.”
Unlike Warren or Sanders’ plans, Johnson also proposes tax credits worth up to $50,000 for those who have already paid off their debt. But, unlike the Democrats, he suggested the federal government get out of the student loan business all together.