U.S. Education Secretary Betsy DeVos is making it safe for the vultures that run for-profit career training schools to prey on students again.
During the Obama administration, these schools had been on the run, and for good reason. Many use aggressive marketing tactics to enroll students and push them into high-cost loans. Good-paying jobs are promised but never materialize, and students — mostly low-income people, minorities and veterans — walk away with nothing to show but a worthless degree and punishing debt.
A few of the schools were forced to close and pay cash settlements to students. Trump University, which is no longer in operation, was accused of scamming its students as well. Just days after his election as president, Donald Trump agreed to pay $25 million to settle three Trump University fraud lawsuits.
The election of Trump and the appointment of DeVos to lead the U.S. Education Department go a long way toward explaining why for-profit college companies have seen their stock soar since November. The Trump administration is poised to loosen or eliminate federal regulations established under Obama to rein in the worst abusers. DeVos has large investments in for-profit education companies and has taken on a special assistant, Robert S. Eitel, who took a leave from his job as counsel at Bridgepoint Education, an operator of for-profit colleges.
DeVos has already delayed implementation of the gainful employment rule Obama introduced, which tied federal funding to proof that a vocational school’s students could get good-paying jobs after graduation. (Just weeks before Trump took office, the Education Department had pinpointed 800 failing programs — 98 percent at for-profit colleges — by applying the rule.)
DeVos has rolled back another Obama directive limiting fees that student debt collectors can charge students on past-due loans. Now, even if you agree within 60 days to a repayment plan on your student loan, the guaranty agency can charge you up to 16 percent of the total balance. It’s legalized loan sharking.
One guaranty agency stands to make $15 million in additional revenue every year from that rollback: United Student Aid Funds, run by Bill Hansen. DeVos hired Taylor Hansen, his son and a former lobbyist for the for-profit college industry, as her adviser. Hansen quit suddenly on March 20, the day after DeVos rolled back the directive.
That’s the thing about vultures. Once they have feasted on their prey, they quickly move on.