A Barack Obama-era update of the statute lowered hurdles for students and shifted more of the cost onto schools, but Education Secretary Betsy DeVos tried to scuttle the update and then rewrite the rule. The Trump administration finalized its rewrite in September, which limits the time borrowers have to apply for relief and requires them to prove they were harmed financially by the deception. The rule is scheduled to take effect July 1.
“This new rule is going to make it extremely difficult, if not impossible, for students to find relief,” Senate Minority Whip Richard J. Durbin (D-Ill.) said Wednesday on the Senate floor. “These students, these veterans, have been defrauded — give them a fighting chance to rebuild their lives.”
To sideline the policy, Democrats used the Congressional Review Act, which lets lawmakers overturn recent regulatory actions of federal agencies with a simple majority vote in both chambers.
Durbin and Rep. Susie Lee (D-Nev.) introduced resolutions in their chambers days after the Trump administration finalized the rule. But the campaign to overturn the Trump policy will probably end at the Capitol — because the White House has threatened to veto the resolution.
In a policy statement issued in January, the White House Office of Management and Budget said overturning the rule “would restore the partisan regulatory regime of the previous administration, which sacrificed the interests of taxpayers, students and schools in pursuit of narrow, ideological objectives.”
Asked about President Trump’s position on the resolution Wednesday, the White House referred to the January policy statement. If the president rejects the resolution, it will go back to the House, where lawmakers could attempt to override the veto.
At a news conference on the resolution Wednesday, Durbin said he will work hard to get the votes needed for a veto override if the president rejects the measure.
“I’m going to make a plea that we ask the president to show American taxpayers that we don’t have to foot the bill for these shady schools,” Lee said during the news conference.
The congresswoman said she is hopeful Trump will stand up for members of the military who are frequently preyed upon by unscrupulous schools eager to take advantage of their GI Bill benefits.
Dozens of veterans groups, including the American Legion, support the resolution, which congressional aides say was key to getting Republicans onboard. Some aides question whether Trump, who has enjoyed support from veterans, will also be swayed or choose to stand with the longest-serving member of his Cabinet.
DeVos has defended her overhaul as a sensible and fair way to account for the needs of students, colleges and taxpayers. She has derided the Obama-era update as a giveaway for students and a veiled attempt to go after for-profit colleges.
“It’s disappointing to see so many in Congress fooled by misinformation from the Left and the fake news narrative about our efforts to protect students from fraud,” Angela Morabito, a spokeswoman for the Education Department, said in a statement. “Students, including veterans, who are defrauded by their school and suffer financial harm as a result, deserve relief, and our rule provides them relief.”
The Trump administration estimates the rule will save the federal government $11 billion over 10 years — loan payments that would have gone uncollected under existing rules.
The closure of Corinthian Colleges and ITT Technical Institute, for-profit chains felled by charges of fraud and predatory lending, resulted in a deluge of claims at the Education Department. Claims continue to mount as other for-profit colleges, including Argosy University and the Art Institutes, have folded. The Education Department has received 300,000 claims for debt relief to date.
Some Republicans say the Trump rule brings much-need common sense to the regulation. Senate Education Committee Chairman Lamar Alexander (R-Tenn.) said the Obama-era update focused only on whether borrowers were deceived, not whether they suffered financial harm as the 1995 law intends.
“If you went to a school that had misled students, your loan could be forgiven — even if you had a job making $85,000 a year,” Alexander said Tuesday on the Senate floor. “Secretary DeVos’s new borrower defense rule restores the original intent of the law that a borrower must be misled and harmed.”
Consumer advocates reject those arguments. They say the 2016 rule explicitly requires the Education Department to consider the students’ circumstances, including the value of the education they received, in determining relief. The Trump administration, they say, has imposed arbitrary measures for calculating relief meant only to limit debt cancellation.
DeVos has been criticized for using a formula that grants relief on a sliding scale based on a borrower’s wages. The controversial method has been panned by economists and liberal lawmakers as deeply flawed. This week, House Education Committee Chairman Robert C. “Bobby” Scott (D-Va.) requested that the Education Department’s inspector general examine the creation and implementation of the policy.
Under its rewrite, the Trump administration is demanding that borrowers show their school engaged in actions or made statements “with knowledge of its false, misleading, or deceptive nature or with a reckless disregard for the truth.” Even if students convince the department they were defrauded, they must still prove financial harm before loans are canceled.