Student Loan Watchdog Quits, Says Trump ‘Turned Its Back’ On Borrowers

From today’s NPR News:

The federal official in charge of protecting student borrowers from predatory lending practices has stepped down.

In a scathing resignation letter, Seth Frotman, who until now was the student loan ombudsman at the Consumer Financial Protection Bureau, says current leadership “has turned its back on young people and their financial futures.” The letter was addressed to Mick Mulvaney, the bureau’s acting director.

In the letter, obtained by NPR, Frotman accuses Mulvaney and the Trump administration of undermining the CFPB and its ability to protect student borrowers.

“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” it read. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”

The letter raises serious questions about the federal government’s willingness to oversee the $1.5 trillion student loan industry and to protect student borrowers.

Read the complete article here.

DeVos proposes another rollback on for-profit college rules, hurting consumers

From today’s Washington Post:

The Trump administration plans to roll back another major Obama-era rule that was created to police the for-profit college industry, according to a proposal issued by the Education Department on Friday.

Education Secretary Betsy DeVos said the gainful employment regulation should be scrapped entirely, arguing that it wasn’t backed up by research and created burdensome reporting requirements for schools. The rule sought to punish for-profit college programs that left graduates with heavy debt compared to their incomes

DeVos’ proposal represents the Education Department’s second planned rollback of a major Obama-era rule in a matter of weeks.

On July 25, DeVos proposed changes to the so-called borrower defense rule to toughen the process by which defrauded students can get their loans erased, saying it had become too easy for students to skip out on their debt.

The rules were part of the Obama administration’s crackdown on for-profit colleges, which was fueled by widespread complaints of fraud against chains including Corinthian Colleges and ITT Technical Institute. Both chains collapsed under pressure from Obama officials.

Under the 2014 gainful employment rule, college programs could be cut off from federal funding if the average debt ratio of their graduates stayed above a certain limit for two out of three straight years.

The rule also required schools to publicize debt and earnings data for their programs, which aimed to help students avoid programs with poor outcomes.

Read the complete article here.

Dept. of Education Proposes to Curtail Debt Relief for Defrauded Students

From today’s New York Times:

Education Secretary Betsy DeVos proposed on Wednesday to curtail Obama administration loan forgiveness rules for students defrauded by for-profit colleges, requiring that student borrowers show they have fallen into hopeless financial straits or prove that their colleges knowingly deceived them.

The DeVos proposal, set to go in force a year from now, would replace Obama-era policies that sought to ease access to loan forgiveness for students who were left saddled with debt after two for-profit college chains, Corinthian Colleges and ITT Technical Institute, imploded in 2015 and 2016. The schools were found to have misled their students with false advertisements and misleading claims for years.

Afterward, the Obama administration forgave hundreds of millions of dollars in student loans and began rewriting regulations to crack down on predatory institutions and bolster borrowers’ ability to seek debt relief from the federal government. But higher education institutions, including historically black colleges and universities and for-profit educators, maintained the new rules were far too broad and subjected them to frivolous claims that carried significant financial risks.

In June 2017, just one month before the Obama rules were to take effect, Ms. DeVos announced that she would block and rewrite them.

Read the complete article here.

White House proposes merging Labor and Education into one agency

From today’s Washington Post:

The White House on Thursday will propose merging the Education and Labor departments into one federal agency, the centerpiece of a plan to remake a bureaucracy that President Trump and his supporters consider too big and bloated, according to an administration official familiar with the plan.

The long-awaited proposal to reorganize federal agencies would shrink some and augment the missions of others. It is the result of a directive that Mick Mulvaney, head of the Office of Management and Budget, issued to federal leaders 14 months ago. He urged them to find ways to merge overlapping, duplicative offices and programs and eliminate those the administration views as unnecessary.

The plan also is expected to include major changes to the way the government provides benefits for low-income Americans, an area that conservatives have long targeted as excessive, by consolidating safety-net programs that are administered through multiple agencies.

The reorganization plan also is likely to revamp the Office of Personnel Management (OPM) to shrink its role as the department responsible for employee background checks, retirement claims, benefits and federal workforce policy, two sources with knowledge of the proposal said.

The plan to consolidate the Labor and Education departments, which first surfaced in Education Week and was later confirmed by other news outlets, would allow the Trump administration to focus its efforts to train students in vocational skills in one place.

Republicans have long expressed an interest in eliminating the Education Department since it was created by President Jimmy Carter in 1980. Trump and Education Secretary Betsy DeVos have shown similar leanings.

In 1995, the House introduced legislation to merge the agencies to put K-12 schools and job training together, but the measure failed.

The Education Department is the smallest Cabinet agency in number of employees, with just under 4,000, and a $68 billion budget. It oversees federal student loans, distributes K-12 education funding, and enforces federal civil rights laws at public schools and colleges.

The Labor Department, with about 15,000 employees and a $13 billion budget, has a broad portfolio that includes programs to train workers, enforcement of minimum-wage laws, the Bureau of Labor Statistics — which produces economic data — and the Occupational Safety and Health Administration. Under Republican presidents, the department has tended to have a lower profile than under Democratic administrations.

Read the complete article here.