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NSLDN Releases Oversight Curriculum for 116th Congress

Washington, D.C. – Today, the National Student Legal Defense Network (NSLDN) published an outline of oversight activity that the new, Democratic-controlled House of Representatives can pursue to better protect student borrowers and root out corruption and dysfunction in the Department of Education. NSLDN’s Oversight Curriculum identifies key areas where the Department is failing in its mission. The failures reflect two consistent themes: they benefit predatory, for-profit institutions with close ties to the Administration, and they disproportionately harm students of color.

“For nearly two years, the Department of Education has been failing to protect millions of Americans who take out loans to finance their education and seek a better life,” said NSLDN President Aaron Ament. “Loan balances have ballooned, vulnerable students haven’t received the protections and benefits they deserve under the law, and loan servicers have seen fat profits even while they neglect and deceive students. We are publishing this Oversight Curriculum to help the next Congress hold the Department of Education accountable.”

Since the beginning of the Trump Administration, total outstanding student debt has risen by over $100 billion, and more than 42 million borrowers nationwide have outstanding student loans. During that same time, the Department of Education under Secretary Betsy DeVos has shown a shocking disregard for students’ well-being, and a troubling tendency to put industry profits ahead of educational success.

The incoming Chairs of the House Committee on Education and the Workforce, as well as the House Committee on Financial Services, can peel back the layers of secrecy around DeVos’s agenda through document requests, open hearings, and subpoena power. The key areas identified in NSLDN’s Oversight Curriculum are:

A Culture of Corruption Overseeing the Student Aid Enforcement Office: Secretary DeVos has effectively killed investigations into fraudulent activities at for-profit colleges, while simultaneously dismantling an investigative team designed to ferret out fraud.  All the while, Secretary DeVos has hired top advisors who are former executives of the very schools that were previously under investigation. DeVos and her advisors must explain to the American people, under oath, how they are protecting borrowers despite these glaring and disturbing conflicts of interest.

Denying Virtually All Public Service Loan Forgiveness:  Under a program created in 2007, student borrowers who work in public service are entitled to have their remaining loan balances forgiven after 10 years of payments. Military service members, teachers, firefighters, and others should be eligible for the program, but recent data show that an astonishing 99% of borrowers’ applications for this program were denied by the Department of Education. Student loan servicers under contract with the Department have allegedly deceived borrowers about their eligibility, lost vital paperwork, and continue to fail to help borrowers get the assistance they deserve.

Refusing to Process Claims by Defrauded Students: During the final years of the Obama Administration, over $550 million in loan relief was provided to more than 31,000 students who had been scammed by for-profit colleges. When Secretary DeVos took over, she froze the review of nearly 100,000 pending student claims and instead developed a “partial relief” scheme to vastly limit borrower recoveries.  Nearly two years into DeVos’s tenure, borrower defense relief has slowed to a trickle. As of April 2018, DeVos had granted less than $14 million in relief, with approvals amounting to an average discharge of less than 20% of a borrower’s loan balance. Congress can investigate why defrauded student borrowers are being kept in limbo, and push the Department to deliver the relief that borrowers are entitled to.

Failing to Address Racial and Ethnic Inequalities: The federal government should serve all Americans, but the limited data available from the Department of Education show that African American student borrowers see significantly worse outcomes on their loans compared to other borrowers. These disparities appear to be driven, in part, by attendance at predatory, for-profit schools. However, the Department is not even taking the first necessary steps toward addressing the problem, such as collecting further data on borrower race and ethnicity. The federal student aid programs should help Americans of all races and ethnicities in seeking a better life, and Congress should demand that the Department take action to understand and remedy these disturbing disparities.

Playing Defense for Student Loan Servicers: The Department of Education has declared that state consumer protection laws play no role in overseeing federal student loan servicing, while simultaneously failing to provide any real oversight itself. The Department claims that it “oversee[s] loan servicers to ensure that borrowers receive exemplary customer service and are protected from substandard practices” – but numerous lawsuits by state AGs and individual borrowers suggest otherwise. Congress should investigate the inadequate practices that the Department uses to oversee and select the servicers it retains.

Putting Taxpayer Funds at Risk: The Department of Education, through federal student assistance programs, provides over $120 billion in funds annually to institutions of higher education. The Department is required by law to determine whether schools maintain adequate financial resources and sound business practices, and will often require institutions to provide a surety or letter of credit to protect taxpayers from losses. Yet as recent litigation has highlighted, the Department is currently unable to account for or quantify the extent to which it obtains financial protections from schools. Congressional oversight can help ensure the Department takes appropriate action so that taxpayers aren’t left paying for corporate failures.

Founded in 2017, the National Student Legal Defense Network has been working to hold the Department of Education accountable through targeted litigation challenging the Department’s anti-student agenda. In January 2018, NSLDN obtained the first Temporary Restraining Order against Secretary DeVos based on her failure to allow the public a meaningful opportunity to comment on the Department’s review of ACICS, a controversial accreditor of for-profit colleges, and later sued to force the Department to release its damning staff report of that accreditor. NSLDN, working with partner organizations such as American Oversight, has similarly been on the front lines litigating against attempts by Secretary DeVos to undermine state consumer protection laws regarding the Title IV programs.