January 8, 2021

Betsy DeVos Dumps Trump, Leaving Controversial Student Loan Legacy Behind

Betsy DeVos Dumps Trump, Leaving Controversial Student Loan Legacy Behind


Education Secretary Betsy DeVos has resigned from President Trump’s cabinet in response to the violent January 6 mob attack on the United States Capitol, which was incited by President Trump.

In a letter to the president, DeVos wrote, “We should be highlighting and celebrating your administration’s many accomplishments on behalf of the American people… Instead, we are left to clean up the mess caused by violent protesters overrunning the U.S. Capitol in an attempt to undermine the people’s business…. That behavior was unconscionable for our country. There is no mistaking the impact your rhetoric had on the situation, and it is the inflection point for me.”

Betsy DeVos has been a controversial figure as President Trump’s Secretary of Education. Consumer rights advocates and student loan borrowers have been highly critical of Secretary DeVos during her four years leading the Department and managing its vast student loan portfolio. DeVos and her administration are currently embroiled in multiple lawsuits — some of which have been ongoing for years — involving the handling of numerous student loan programs.

One of DeVos’s biggest controversies has been her handling of the Borrower Defense to Repayment program. The Obama administration enacted regulations governing this loan forgiveness program in 2016 to provide student debt relief to students who were misled, defrauded, or otherwise harmed by predatory colleges and universities – often, for-profit schools. Under Secretary DeVos, however, the Department of Education rewrote the rules governing the program. These new regulations substantially weaken the Borrower Defense relief provided to student loan borrowers by increasing the burden of proof required to prevail, and imposing a strict statute of limitations.

Borrower advocates previously accused DeVos and the Department of Education of deliberately holding up the processing of nearly 170,000 Borrower Defense applications, in some cases for years; she was later found in contempt of court for continuing collections actions against borrowers while their applications were pending. A whistleblower later accused DeVos’s administration of intentionally making it harder for student loan borrowers to apply for relief. And after a tentative settlement agreement was reached that would force the Department to process the remaining Borrower Defense applications, her administration issued blanket denials to tens of thousands of student loan borrowers — in some cases, without any clear, logical reasoning. These matters continue to be litigated in federal court.

DeVos has also been criticized for her implementation of the CARES Act, which suspended all federal student loan payments and collections efforts in response to the ongoing pandemic. Student loan borrowers filed a class-action lawsuit against DeVos, accusing her of failing to comply with the CARES Act’s mandated collections suspension by continuing to garnish borrowers’ wages, in some cases for months after the CARES Act went into effect. In response to another class-action suit brought by student loan borrowers, the Department disclosed that it had intercepted and seized (but later refunded) over $2.2 billion in tax refunds owed to a million student loan borrowers, potentially in violation of the CARES Act.

DeVos has also come under fire for her handling of federal student loan servicing. Early in DeVos’s tenure, she rescinded Obama-era guidance that had been put in place to create greater accountability for student loan servicers that had poor outcomes. Since then, a recent report uncovered over 5 million student loan servicing errors that could cause lasting financial harm to student loan borrowers, particularly for borrowers seeking relief through the Public Service Loan Forgiveness (PSLF) program. Another report issued last year by the Department of Education’s own Office of Inspector General found ongoing and systemwide failures by federal student loan servicers. That report blamed both the servicers themselves and the U.S. Department of Education for its failure to hold them accountable.

During her final weeks in office, DeVos railed against proposals to forgive student loan debt and make college free for some students. “Across-the-board forgiveness of college debts is not only unfair to most Americans, it is also the most regressive of policy proposals – rewarding the wealthiest sector of our labor force at the expense of the poorest,” DeVos wrote in a recent letter.

Defenders of DeVos have pointed to changes and improvements she has made to certain federal loan programs, such as the creation of the Public Service Loan Forgiveness (PSLF) Help Tool and coordinated outreach efforts to borrowers regarding eligibility for that program. However, PSLF still has a denial rate hovering at around 98%.

“Betsy DeVos has never done her job to help America’s students,” said Senator Elizabeth Warren (D-MA) in response to DeVos’s resignation. “It doesn’t surprise me one bit that she’d rather quit than do her job… Good riddance, Betsy. You were the worst Secretary of Education ever.” Warren has been one of DeVos’s fiercest critics.

“Betsy DeVos’s resignation is shocking, but necessary after yesterday’s violent mob,” said Cody Hounanian, spokesperson for Student Debt Crisis, in a statement. “We welcome all Americans who are standing up to protect our Democracy during this difficult time – even those who have stood in opposition to our movement. [But] We will not forget the harm caused by the Betsy DeVos era at the Department of Education. DeVos was an obstacle to student loan reform, she helped student loan companies increase profits off the backs of everyday Americans, and she attempted to dismantle existing student loan forgiveness programs. The damage Betsy DeVos inflicted to students and student loan borrowers will likely be her most enduring legacy. However, today, we applaud her resignation and we call on other federal officials to condemn Donald Trump.”

Biden announced in December that he plans to nominate Dr. Miguel A. Cardona to replace DeVos as Secretary of Education. Cardona currently is the Connecticut Education Commissioner, and has three decades of experience as a public school teacher and administrator. DeVos had no such experience. Cardona would be the first Latino to lead the U.S. Department of Education.

“In Miguel Cardona, America will have an experienced and dedicated public school teacher leading the way at the Department of Education — ensuring that every student is equipped to thrive in the economy of the future, that every educator has the resources they need to do their jobs with dignity and success, and that every school is on track to reopen safely,” Biden said in a statement last month.

Further Reading

6 Student Loan Reforms That Are Possible With A Democratic Senate

Biden May Support Only $10,000 In Student Loan Forgiveness

Biden Names Replacement For Betsy DeVos — Student Loan Borrower Advocates Cautiously Optimistic

Final Stimulus Deal: What Student Loan Borrowers Need To Know About Relief Ending

Ayanna Pressley: Biden Should Cancel $50,000 In Student Loan Debt For Every Borrower

Would Your Student Loans Be Eligible To Be Cancelled By Biden? It’s Complicated

Could Biden Cancel Some Student Debt Through Executive Action?

What The Election Results Mean For Student Loan Borrowers



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