Rep. Bobby Scott Tom Williams/CQ Roll Call, Inc via Getty Images
Recent years have seen the closure of for-profit schools due to fraud allegations and mislead students.
Bobby Scott, House Education Chair, urged Education Sec. Bobby Scott, House Education Chair, urged the Education Sec.
He asks that the executives pay the closing costs students and taxpayers were incurred.
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In recent years, a number of for-profit colleges were shut down due to fraud, mismanagement and misleading students into accepting student loans they cannot pay. One top Democrat is calling for these school's executives to be paid.
Bobby Scott, the Chair of the House Education and Labor Committee, wrote Monday a letter to Education secretary Miguel Cardona requesting that he hold the owners, board members and executives of for-profit schools now closed "individually accountable" for the money owed to the federal government.
Scott wrote that Scott was aware of the significant burden students and taxpayers are currently bearing when for-profit or converted for-profit institutions fail. He stated that the Department must pursue all legal avenues to recover money allocated through financial aid programs.
Major for-profit schools, including Corinthian Colleges or ITT Technical Institutes, were shut down. Students and taxpayers had the responsibility of paying the closing costs, not the school's administrators.
Scott highlighted the actions taken by the Securities and Exchange Commission, such as bringing ITT before the court in 2015 to deceive investors about student loan defaults and high late payments. However, he pointed out that the SEC penalties have been limited and that the Education Department has the authority to do more under the Higher Education Act. This includes making students pay for their debt.
Student Defense, an advocacy group for student rights, published a report last year that detailed how executives could be held responsible under the Higher Education Act. Dan Zibel, Vice President of Student Defense and author of the report, tweeted on Thursday that "too few predatory colleges have profited by fleecing students and bilking taxpayers."
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More than 200,000 students who were defrauded filed claims for complete discharge of their loans. This process is known as the "borrower defence to repayment". Betsy DeVos, Education Secretary, approved this method. It compares the median earnings for graduates with debt relief claims to those of graduates from comparable programs. The applicant would be eligible for more relief if the difference is greater.
DeVos' approval rate for defrauded claims was 99.2% under President Barack Obama. DeVos also had a 99.4% denial ratio for borrowers. This led to a large backlog of claims by eligible defrauded students seeking student debt forgiveness. Cardona therefore reversed that policy and began giving relief to defrauded borrowers from for-profit schools.
Scott's second letter to the Education Department asking for accountability of for-profit education executives is the second. Massachusetts Senator Elizabeth Warren, along with five of her Democratic counterparts, pushed for the Education Department to use all legal tools to hold those in for-profit education "defrauded students financially" to account.
According to the lawmakers, the failure of the department to enforce accountability "has also encouraged future legislation by executives who feel secure they can enrich themselves at taxpayers' expense without consequence."
Business Insider has the original article.
