The Department of Education, led by controversial figure Secretary Betsy DeVos, has been rolling back investigations into the practices of for-profit colleges, according to reporting from The New York Times (NYT).
The Education Department has slashed its investigative unit from around 12 members to three since last year, reported the NYT. The current supervisor of the team is former for-profit college dean Julian Schmoke.
“This is yet another blow to consumers and students,” said Adam Minsky, a student loan lawyer. “It signals that for-profit colleges, which were put on notice by the last administration over their predatory practices, won’t face consequences when they cheat students.”
Why was the team investigating for-profit colleges?
The Education Department’s team was designed to look into for-profit colleges, from their advertisements to claims made about job placement.
“The concern is that many students get into debt to attend these colleges, which are essentially funded by the government through student loans,” said Minsky. “However, when they’re done they can’t find good-paying jobs in their fields and they can’t repay their debt — in spite of advertising and promises made by these schools.”
The Obama administration established the gainful employment rule for schools receiving federal student loan money. However, the current administration is doing away with it. Under the rule, schools receiving federal money must show that their students are finding work after graduation and can afford to repay their debt.
For-profit school ITT Technical Institute was the most visible casualty of this rule. It failed because it was no longer approved to receive student loan money.
In late 2017, The Century Foundation, a nonpartisan progressive think tank, released an analysis of nearly 100,000 complaints filed with the Department of Education. More than 98% of the claims filed concerned for-profit colleges. The practices detailed in these complaints are primarily what the Education Department’s team was supposed to investigate for potential action.
Elizabeth Hill, an Education Department spokeswoman, told the NYT that the team’s reduction was more about attrition than anything else and insisted that the remaining members of the team are still part of a “broad effort to provide oversight.”
Allies of the Education Department under DeVos applaud efforts to roll back Obama-era rules, according to the NYT, citing a “regulatory stranglehold” that stifled innovation.
What is the fraud team working on now?
For now, according to the NYT, the team is mostly focused on processing loan forgiveness applications and smaller compliance cases. The team was originally created after Corinthian Colleges collapsed.
But Hill insisted that the move was “operational” and insisted that oversight of schools is not being curtailed by this reassignment.
Minsky and other consumer advocates, however, don’t see the shift in the same light.
“The people under DeVos are largely from the for-profit college industry, and they are doing what they can to protect it,” Minsky said, citing other efforts from the Department of Education to discourage student borrowers from looking for help. “I doubt defrauded borrowers will see much relief, considering the low priority DeVos and this administration place on consumer protection.”
A group of 10 senators also called out the high placement of for-profit college industry insiders at the Department of Education. In a letter to DeVos, they highlighted “conflicts of interest and appearances of impropriety” associated with one of the senior advisers overseeing enforcement actions and regulations.
How you can spot (and avoid) for-profit colleges
Minsky pointed out that many for-profit colleges don’t fulfill their promises, and that it’s difficult to find a well-paying job with a degree from these schools. He offered these tips for identifying for-profit colleges:
- Research who owns the school. “There are public universities, run by states, and private non-profits,” said Minsky. “What you have to watch out for are colleges owned by for-profit companies. That’s a red flag.”
- Find out how most students are funded. Does the school offer merit- or need-based aid? Or are student loans your only option? Consider that 66% of graduates from public universities have student loans, compared to 88% of graduates from for-profit colleges.
- Look at the faculty. “For-profit schools have a lot of adjunct faculty or so-called professors who don’t even have master’s degrees,” said Minsky. “Watch out for a lot of teachers who might only be part-time, rather than full-time educators.”
- Check for complaints. The Consumer Financial Protection Bureau (CFPB) keeps complaints, and you can also check with the appropriate state’s attorney general.
For the most part, graduates of for-profit colleges earn less than their counterparts at public schools, according to Department of Education data from 2016. In fact, almost one-third of for-profit graduates earn less annually than a full-time minimum wage worker.
Rather than attending a for-profit school, consider starting at a community college or public technical school. These institutions often come with a low barrier to entry, and they have aid options in addition to student loans and lower costs.
What to do if you’ve been defrauded by a for-profit school
The first thing you can do if you’ve been impacted by fraudulent for-profit practices is to file a borrower defense to repayment application with the Department of Education. However, the current department has been slow to process and approve these filings.
It’s also possible to file a complaint with the CFPB. In the past, the CFPB has been instrumental in acting on behalf of consumers. There are concerns by consumer advocates, though, that recent changes at the CFPB will make complaints less effective than in the past.
Minsky said that while complaining to federal agencies is a good start, it can also help to focus on state efforts that seek to protect consumers.
“Many states have been picking up the slack for the federal government when it comes to protecting consumers from for-profits that operate within their borders,” said Minsky.
Speak with your state lawmakers about passing legislation that protects consumers. For example, legislation recently passed in Maryland requires for-profit colleges to be more transparent. It also provides “enhanced financial protections for students in the unfortunate event that they are attending an institution that closes.”
In the long run, Minsky pointed out, it’s up to you to be educated and to do research before attending a school; you can’t rely on the federal government to protect you right now.
“Individual relief is hard to come by,” Minsky said. “We can put pressure on decision-makers to force greater transparency in the industry, but that might take some time.”
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However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
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Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
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