The Impact of Betsy DeVos on the For-Profit Education Sector

We all know that we now have a for-profit friendly administration, led by Betsy DeVos.  She has hired staff and attorneys that come from inside the for-profit industry.  Now her focus seems to be on changing the borrower defense rule and the gainful employment rule.  Both of these were implemented to protect students.  So what impact does Betsy DeVos have on the for-profit education sector?

The borrower defense rule was established to protect student loan borrowers by allowing them a path to cancel student loan debt if they were defrauded.  Now team DeVos is looking at ways to change that rule.  One proposal is to change the language to shift the burden of proof to the students.  Those in favor of students want to keep the “preponderance of evidence” language.  Those in the for-profit industry want it changed to “clear and convincing,” making students show proof they were defrauded.

Another proposed change that could have an impact on students that were defrauded by the likes of Corinthian and ITT Tech and that was recently announced by team DeVos, is that they might not wipe out all debt that students incurred at these schools.  Instead, they would look at the income of the former student vs the degree earned.  From that and some sort of formula they’ve created, they would determine how much debt would be forgiven. What’s the reason for the change from the previous administration? Betsy is concerned that students will defraud the institutions that defrauded them.

“No fraud is acceptable, and students deserve relief if the school they attended acted dishonestly,” DeVos said in a statement. “This improved process will allow claims to be adjudicated quickly and harmed students to be treated fairly. It also protects taxpayers from being forced to shoulder massive costs that may be unjustified.”

The gainful employment rule, established by the previous administration, measured debt to income ratios of students and put in place checks and balances for institutions. They gave programs a “pass” or “fail” grade. DeVos is now proposing they change the rule to give an “acceptable” grade to those within a certain debt to income ratio. Those that were deemed as failing now would have a “low-performing” grade.  In addition, those that were “low-performing” would only have to disclose that rating to students.

It will certainly be interesting to sit back and watch what impact Betsy Devos will have on the for-profit education sector in the upcoming year.  The changes to the borrower defense rule and the gainful employment rule could be just the tip of the iceberg.  She is certainly putting the interest of institutions first over those of the students.

 

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