“DeVos and the Trump administration continue to pursue a deregulatory agenda of protections for student loan borrowers and victims of civil rights abuses. They’ve created a real need for nonprofit groups and state prosecutors to step up,” said Aaron Ament, a former special counsel at the Education Department under Obama and co-founder of the new alliance.
The group includes top brass from Obama’s Education Department, including former deputy secretary James Cole Jr. and Office for Civil Rights chief Catherine Lhamon, and said it plans to use legal action to fight on behalf of consumers. The network is an offshoot of the nonprofit New Leaders Council, which trains young progressive leaders.
The network’s formation comes as liberal lawmakers and student advocates accuse the Trump administration of watering down the enforcement of regulations to safeguard student loan borrowers.
The Education Department has withdrawn, delayed or announced plans to revamp more than a half-dozen Obama-era measures involving federal student aid this year. That includes halting the borrower defense to repayment rule, which erases federal loans for students whose colleges used illegal or deceptive tactics to get them to borrow money to attend. The regulation was revised last year to speed up and simplify the claims process and shift more of the cost of discharging loans onto schools, much to the chagrin of for-profit colleges.
When DeVos announced the suspension of those changes in June, 19 Democratic state attorneys general sued. Ament said many of those same state prosecutors will work with his network to bring other litigation against the department if the regulatory rollback continues. He declined to provide names of the attorneys general teaming with the network or discuss specific cases in the works.
The Education Department did not immediately respond to requests for comment.
In recent months, the department has taken steps to reshape its enforcement regime that have alarmed some student advocates. Many were dismayed by the selection of Julian Schmoke Jr., a former DeVry University dean with no legal or investigative expertise, to lead the Student-Aid Enforcement Unit at the Education Department.
The unit was created last year to root out fraud, waste and abuse within higher education. It was widely viewed as a response to the criticism that the department had been slow to act in the face of evidence schools, especially for-profit colleges, were engaging in misconduct.
“The Education Department has never put a high priority on enforcing many of these laws,” said Rohit Chopra, the former student loan ombudsman at the Consumer Financial Protection Bureau. “Most of this responsibility has been picked up by state attorneys general and other agencies.”
Still, the departure of the unit’s chief, Robert Kaye, and his deputy, Laura Kim, after DeVos took office rattled congressional Democrats, who pressed the secretary to appoint a qualified, independent leader to continue the work of the group. Those lawmakers have since raised concerns about Schmoke’s lack of experience and ties to DeVry, a for-profit college that paid $100 million last year to resolve allegations of lying about the employment and earnings of its graduates.
DeVos also reshuffled the structure of the enforcement unit by having its chief report to the head of program compliance instead of the head of the Office of Federal Student Aid, which critics say signals a shift in the objectives of the group.
Ament, who worked with the enforcement unit, said it “was established so that trained attorneys and investigators could use tools such as subpoenas, interviews and document requests to fight consumer-facing fraud. The new administration’s belief that this work is synonymous with compliance efforts, which focus almost solely on institutional accounting practices, is really beyond belief.”
Concerns about the direction of enforcement at the department have been compounded by DeVos’s decision this month to stop sharing information with the Consumer Financial Protection Bureau. The consumer bureau has used the student complaints and other data it receives from education officials to sue student loan companies it says are failing borrowers. The department accused the consumer bureau of overreaching and expanding its jurisdiction, a claim bureau director Richard Cordray disputed in a letter to DeVos asking her to reconsider working with his agency.
“Rather than collaborating to get more relief to students who’ve fallen prey to industry scams, and to prevent future abuses, DeVos has chosen to make oversight more difficult and accountability harder to come by,” said Alexis Goldstein, senior policy analyst at the progressive Americans for Financial Reform.
The consumer bureau has been aggressive in going after student debt collection agencies and loan servicers for what it considers abusive practices. It even sued one of the Education Department’s largest contractors, Navient, for steering people into costly loan repayment plans — a charge the company denies. Those moves created tension between the agencies, according to former bureau officials, but the shared goal of putting students first remained paramount.
In the wake of the shake-ups at the department, Ament said there is a void in enforcement his network can fill. He said the group hopes to “build the capacity to support cases brought by other organizations and state attorneys general, and directly represent students ourselves.”