judy woodruff: since her nomination as u.s.secretary of education, betsy devos has become one of the more polarizing figures in thetrump cabinet, often over school choice. but her early tenure marks a big departurefrom her predecessors when it comes to higher education and student loans. and that's the focus of our making the gradeconversation tonight.
Dept Of Education Student Loans, jeffrey brown has more. jeffrey brown: late in the obama administration,new rules were established to allow student borrowers to have their debt erased if they'dbeen victims of fraud by for-profit schools. but as the new rules were set to take effectthis month, the new administration called
for a freeze, with secretary devos sayingthey were created in a -- quote -- "muddled process that's unfair to students and schools." days ago, 18 states and the district of columbiaresponded to that with a lawsuit challenging the education department. the freeze is just one in a series of movesby the new administration that take a different approach to student loans from its predecessor. anya kamenetz covers education for npr, andjoins us now. so, anya, first, remind us the extent of thisproblem, of students on the hook with loans to for-profit colleges and all the criticismsof predatory practices.
anya kamenetz, npr: so, for-profit collegesat their height enrolled about one in 10 students nationwide, and they're not just your oldcosmetology school. these are national and in many cases onlineprograms that targeted working families. now, without painting the entire sector withthe same brush, we did see over the last decade many, many different actions against for-profitcolleges, accusing them of predatory and fraudulent treatment. and there were two large colleges that shutdown in the last two years, corinthian and itt tech, with collectively tens of thousandsof students. jeffrey brown: all right, so i mentioned theobama administration, they put in rules to
address the problem, and they created a so-calledborrower defense. explain that. anya kamenetz: so, borrower defense to repaymenthad been a law on the books for a while. and it was sort of a case-by-case abilityor pathway for a borrower who had been defrauded by a college to be able to escape their loans. and what happened was, with tens of thousandsof students affected by the itt tech and corinthian shutdown, there was a real need to clarifyand to simplify that regulation. and so, after a very long negotiated publicprocess, borrower defense to repayment was put in place.
and basically what it said was that studentscould have their repayment automated, they wouldn't have to apply case by case. and it included a really important clausethat students wouldn't have to agree to waive their rights through arbitration, so thatwhen -- you know, many of these for-profit colleges had a rule on the books that whenyou applied, you said, we're not -- i'm not going to sue you and i agree to arbitration. and that's something that borrower defenseincluded as well, which is pretty important here. jeffrey brown: all right, so that was supposedto go into effect on july 1.
betsy devos put that on hold. what is her argument? and then, of course, the states jumped inwith a lawsuit. so what's the counterargument? anya kamenetz: so, we should mention that,in addition to pressing pause or hitting reset on borrowed defense to repayment, which islike the remedy, betsy devos also has rolled back something called gainful employment,which you might think of as the prevention. and gainful employment also regulates for-profitcolleges and other career programs based on the debt-to-income ratio of their students.
so, with those two in mind, the lawsuit essentiallysays that it's a violation of law for the education department to unilaterally strikedown this rule after this very, very long and public negotiation process. and with the reset button being hit, whatwe saw this week is consumer advocates and students once again taking to the podium totestify and talk about their experiences and why they believe that these two rules shouldstay in place. jeffrey brown: well, just in our last minutenow, i just want to expand to more generally look at the overall student loan problem. where do you see the major differences andthe major flash points now with the new administration?
anya kamenetz: well, i think we saw, withobama taking office right around the financial crisis, the creation of the consumer financialprotection bureau, which became a major watchdog on behalf of students, and many, many actionstaken against the for-profit sector, but really also against student lenders in general. there's been a real atmosphere of, i wouldsay, crackdown in regulation and consumer advocacy. and the tenor has certainly changed in termsof the announcements coming out of the devos administration. she has hired former for-profit college students-- sorry -- she has hired former for-profit
college executives to advise her, as wellas putting in charge of federal student aid the ceo of a private student loan company. she has made a lot of announcements on behalfof things that will save taxpayers money and lead to less burden on colleges and universities,including for-profit colleges. and so a lot of her statements really madeclear that she doesn't intend to impose onerous regulatory burdens on either for-profit collegesor other types of colleges, as well as the student loan industry as well. jeffrey brown: anya kamenetz of npr, thankyou very much. anya kamenetz: thank you, jeffrey.
judy woodruff: and thanks to jeff and to anya.
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