Those Trump Unversity and ITT Technical Institute attendees who took out huge student loans to enroll only to find that their classes weren’t what they promised or that the school would shut down mid-semester due to bankruptcy won’t be able to have their entire loans forgiven despite their being victims of fraudulent activity thanks to the latest move by Secretary of Education Betsy DeVos, according to an article on The Hill today.
DeVos is reversing the Obama-era policy of full loan forgiveness for students who had been defrauded by empty promises or undelivered educational services. Instead, DeVos is instituting an income-based yardstick for allowing refunds of the loans the victims unwittingly took out to pay for an education they were cheated out of.
Any student who is now earning at least half of the average income of their peer group will only be refunded a percentage of their loan. For instance, if someone with student loan debt now makes 70% of the average income of their peers, only 30% of their loan will be refunded. Presumably from this formula, anyone earning 100% of the average income will get no debt relief at all, despite the fact that someone’s current income may have absolutely nothing to do with their past victimization.
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DeVos claims her new policy:
“protects taxpayers from being forced to shoulder massive costs that may be unjustified.”
The Associated Press has reported that over $550 million in student loan debt from tens of thousands of defrauded students enrolled at now-closed for-profit schools was forgiven under the rules during the Obama administration.
Putting the burden of repaying a debt that was fraudulently incurred is a heavy weight to place on any individual, particularly the primarily young students who were the most impacted by the fraud. The only people who benefited from the loans were the for-profit colleges, like Trump University that took the tuition money and spent it before delivering the promised education to the suckers who mortgaged their future to try to build a better life for themselves.
While Trump eventually settled a $25 million suit against Trump University with a settlement that was estimated to refund 80%-90% of the tuition the gullible students paid for worthless real estate seminars taught by unqualified instructors, he only did so after the suit proved to be a political liability during the Presidential campaign.
Moreover, the Trump University students can wind up getting only half of the settlement money that they are entitled to after all the taxes on the settlement are paid. Students who attended other bankrupt schools won’t have the same recourse, and can be saddled with debt for years without the loan forgiveness program, leaving them like car-owners who have to pay a car loan off after their vehicle has been totaled, and the insurance company decides to pay them less than they owe on the loan.
DeVos’s plan, like everything the Trump administration does, benefits banks and financial companies to the detriment of ordinary citizens. No wonder Trump appointed her.