Transcripts For CSPAN3 Sec. Betsy DeVos Testifies At House Education Hearing 20240713

To Committee Rule 7c, Opening Statements are limited to chair and Ranking Members. This allows us to hear from witnesses sooner and provides all members time to ask questions. Id like to thank secretary betsy devos and thank her to hold enough time to allow all of the members present and have five minutes of questions pursuant to house rules. I am especially thankful pause in this chair i am exercising my prerogative to go last in the question order. So if she were to leave early, i wouldnt get to answer questions. I thank you for agreeing to stay with us the full time. I recognize the opening statement. We are here to examine the department of educations implementation of the baar defense rule. I want to thank you, madam secretary, to discuss this important issue. The bar defense rule is grounded in basic fairness. Students face severe financial and emotional consequences and it is, therefore, cruel and counterproductive for the federal government to compound their misfortune by collecting on the Student Loans. Accordingly, the Higher Education act, requires the secretary of education to provide debt relief. Until recently, that authority was rarely needed because institutional fraud was uncommon. But in 2015, crackdown think Corinthian Colleges closed abroad allegations of fraud. They were later substantiated with countless reports of schools luring students of false promises of guaranteed jobs upon graduation and inaccurate transformation about the availability of credits. A year later, another for profit change itt tech rose under similar circumstances. Response to a surge of claims, the Obama Administration issued a new borrowers defense rule to streamline the process of providing relief to defrauded students. By the time the Trump Administration took office, 28,000 corinthian students had already received relief and the department was on pace to process the remaining 54,000 pending claims by the spring of 2017. However, under the present leadership, the department has refused to implement the bar defense rule instead providing full and timely relief as the law allows. The department halted processing claims, so it can prevent a new formula and most would get a fraction of relief that they were eligible to receive. The departments initial partial relief formula would have deprived about 93 of defrauded students full relief. In 2018, a federal court blocked the initial partial relief formula because it misused students personal data. Even after the courts ruling, which specifically asserted the department could provide timely and full relief eligible borrow borrowers under the obama framework, the department refused to do so. In fact, 18 months between the june 18th ruling, june, 2018 ruling and todays announcement of a new revised partial relief formula, the department did not pros stacy single bar defense claim. Meanwhile, the victims of predtary schools are being left in limbo. The number of bars awaiting relief has grown from 54,000 to roughly 240,000. Madam secretary, your refusal to process claims is inflicting serious harm on students that you have the duty to serve while the department has been searching for a legal method to short change these defrauded borrowers. These defrauded borrowers have been left with mountless debt and worth less degrees and none of the things they were promised. In many case they were not able to go back to school, start a family or move on with their live itself. Not only has the department provided relief to defrauded students and illegally collected on 45,000 borrowers who are waiting you to take action on their claims. In some cases these individuals had wages and tax returns garnished by the very government that was supposed to be providing them relief. The court found you in court in contempt of court for collecting on roughly 16,000 of these borrowers. Now the department has conceded that it was illegally collecting on about 45,000 borrowers. Some of the defrauded borrowerers have been cheated twice and they refuse to make them whole. The court found the department admitted the gross negligence in handling the borrowers defense rule. Throughout the last year, this committee has sent multiple requests for information and documents in an attempt to understand the rational for changing the departments policy. The department has continually refused to comply with those requests. This lack of transparency was on full display yesterday when a media outlet published documents revealing the departments own staff conducted an extensive review of claims from former corinthian and itt tech students and found student borrowers who attended these schools, deserved full debt relief. Those memos should have been provided to the committee in response to our repeated requests. Their existence raises unfortunately two important questions. One, why was there a refusal to provide relief and immediate debt relief to defrauded borrowers despite the clear finding of the Department Staff and two, are there other relevant documents in the department that the department is withholding from the committee and the public that would shed light on policy decisions . Todays hearing is intended to get answers to these and other questions by the departments policy on behalf of roughly 240,000 borrowers awaiting relief. So thank you again for joining us today and i yield now to the Ranking Member, dr. Fox, for the purpose of making an opening statement. Thank you, mr. Chairman. Thank you, secretary devos, for being here today. Its my hope that todays hearing will provide members of the committee with a chance to understand how the department of education is working to address borrowers defense claims that have been filed with the department. Mr. Chairman, id like to make one thing abundantly clear. Above all else, Committee Republicans support smart focused and constructive oversight. Members of congress have an important responsibility to protect every single tax dollar. Everyone in this room knows how seriously we take that responsibility strong and effective oversight can strengthen our institution, including the department of education. Ensuring the federal government is efficient and accountable to be a top priority for all members of congress. Sadly, this committee is missing an opportunity to address serious oversight issues. We could investigate the widespread embrazened law making by the United Auto Worker Union leaders who betrayed hard working americans in favor of self enrichment. We know the uaw senior Union Leaders engaged in money laundering, tax fraud, bribery and embezzlement. But this committee has taken no action. We could investigate the potential fraud within headstart, a recent report from the Nonpartisan Government Accountability Office gao indicated there was income fabrics and doctored applications to impact an individuals eligibility. We could investigate how potentially tens of thousands of people may be committing student loan fraud as a gao report found borrowers may have understated their income or overstated their family size to reduce their student loan payments. There are real opportunities to Work Together to address the serious issues that require honest overtight. Instead, Committee Democrats will choose to use their time today attacking secretary devos for delays and responses to oversight requests shes responding to. Let me remind everyone here today that the process to produce the oversight documents requested by any member of congress, including the committee chairman, requires reviews across multiple offices within the agency. All of the takes time and is necessary to produce documents and answers that are actually responsive to members. Despite the limitations of the bureaucracy, the Education Department is trying to work with the Committee Democrats to respond to all their requests. So contrary to claims i expect to hear today from my colleagues across the aisle, secretary devos and the Education Department are committed to providing relief to students who have been harmed by fraudulent practices and are reforming the borrower defense to repayment rule vote to clarify standards and make the process more acceptable. Since taking officer, secretary devos spent more than two years on deliberations, public hearings, higher ed stake holders and considering incorporating and responding to Public Comments on this issue. They did so with a regulatory reset in mind, to hold colleges and universities accountable and provide relief to students who have been harmed by deceptive practices. Claims that secretary devos is unnecessarily or purposely delaying relief for these borrowers are false. Secretary devos is putting reforms in place that will help defrauded students navigate the process of getting the loan relief they deserve. And Committee Republicans are supportive of these efforts. Defrauding students who have been financially harmed should get relief. I think secretary devos again i thank secretary devos for being here today and look forward to how our Education Program is working to protect student borrowers by not only holding fraudulent institutions accountable but also working to prevent fraud from happening in the first place. Thank you, mr. Chairman. Thank you, and dr. Fox without objection, all other members wish to insert written recommendation, they may do so by submitting to the Committee Clerk electronically in microsoft word format by 5 00 by 14 days, within 14 days of today. Id like to welcome secretary devos and thank her again for appearing be every the committee. I now yield to mr. Walberg who has requested the honor of introducing the secretary. I thank you, mr. Chairman, for your deference to allow me this opportunity. We michiganians are proud people and i know there will be disagreements here in this hearing today about what the secretary is doing. But having had the privilege and honor of knowing her and her family going back in the early80s and knowing the impact that her family as well as the family she married into has had in not only michigan but all across this country. Not because they were pushed into it. But because they had a passion for seeing young people educated from k through college and to make sure it was done in appropriate ways and that people have had choices that wouldnt have had choices before. Theyve done it in a way that has made a difference. And it continues on into their children as well. Cultural areas, educational areas, manufacturing. Bringing up people that would not have had the opportunity that they had. So i understand this will be a challenging hearing today. I do know from personal experience that our secretary wants to do things right, wants to do it according to law. Wants to make sure that things are carried out on both sides of the leger. Especially that students and taxpayers are treated fairly and i know that because knowing how she and her family have carried on the life in michigan and touching lives who would not have been carried on in a way before that led to success. So, i just want my colleagues to know, that Background Information is well. Even though she is the secretary of education and is entirely capable of answering all the questions we have. I welcome you and thank you for being here. Thank you very much. Before you begin your testimony, madam secretary, id like to acknowledge the presence of retired air force major gem mark brown, chief operating officer of the office of federal student aid. Agreement with the committee. General brown is here to assist the secretary in our answers. He is not a witness at this hearing. In the course of answering the question directed to her. The secretary according to agreement may consult with general brown or direct him to assist her in the response and insofar as he is not a witness, members are reminded that questions, including followup questions, may not be directed to him personally but must be directed to the secretary. Let me remind you, madam secretary, that weve received your written statement. I know it will appear in full in the hearing record, pursuant to Committee Rules 7d, you are asked to limit your oral presentation to a fiveminute summary of your written statement. Pursuant to title 18, u. S. Code section 101, you are aware that code section prohibiting false statements to committee. So well forego the spectacle of the swearing in. Therefore, before you begin your testimony, please remember to press the button and the microphone in front of you so it will turn on and the members can hear you. As you begin to speak, the light in front of will you turn green. After four minutes the light will turn yellow. When the light turns red, your five minutes have expired. I would ask you to wrap up. During members questions and answering questions, please remember to once again turn on your microphone. I now recognize the secretary of education, secretary devos. Thank you so much, mr. Chairman, thank you congressman wahlberg for that very kind introduction. Chairman scott and Ranking Members of the committee, let me first thank the committee for its willingness to make this that productive hearing. We have provided the committee 18,000 pages of documents during the past month on borrower defense alone. We have briefed you several times and im hopeful we can use todays hearing to continue in that spirit of constructive dialogue. Let me also thank you for the opportunity to set the record straight. This administrations approach to borrower defense to repayment. I want to be very clear, students are my number one priority. They are why i come to work every day. So if students have been deceived by institutions and suffered financial harm as a result, they should be made whole. But if claims are false or do students did not suffer harm, then hard working taxpayers, including those who saved to pay their own Student Loans should not have to pay somebody elses Student Loans, too. It is a matter of fairness adjudication must treat all students and taxpayers fairly. Simply discharging all of these loans as some on this committee suggest be done is not fair to taxpayers nor to those who have paid or are paying their loans. This administrations commitment to fairness and the rule of law continues to guide our thinking with regard to borrower defense. When borrower defense arrives in 1995, it was a regulation in the Higher Education act that was little known and little used. In fact, in the 20 years from 1995 to 2015, fewer than 60 claims were filed. Then the Previous Administration weaponized the regulation against schools it simply didnt like. They applied the law in a discriminatory fashion. So since 2015, there has been a 5,000 percent increase in borrower defense claims. This administration is committed to pulling back the Previous Administrations overreach and will enforce a borrower defense rule that is consistent with congressintent that protects all borrowers and that treats taxpayers and schools fairly. Before i discuss the important distinction of our bow rohrer defense rule, let me begin by saying what it does not do. First it does not apply retroactively. When our rule goes into effect on july 1st next year, it will apply only to loans first dispersed after that date. This means that the department will continue to enforce in good faith the Previous Administrations 2016 rule for all loans dispursed between july 1st, 2017 and july 1, 2020. Second, our rule does not shield any school from accountability nor does it relax oversight of bad ones. All institutions no thats their tax status are held accountable under our rule. Finally, our rule does not demand that students prove that their school intentionally deceived them. Instead. The rule provides due process for all parties. Our process focuses on individual students and virus everyday from both the borrower and the school before deciding a claim. And unlike the priored a lynnadministrations rule, the school has the opportunity to respond to the schools case. Let me discuss to the basics of what our rule does do, first it puts into place a process that is clear, understandable and easily accessible for borrowers. It ensures claims are transparently and fairly. Second, students may file either affirmative or defensive claims, all of which will be judged using a preponderance of the evidence standard. Third, our rule provides a legally grounded reasoned and appropriate definition of misrepresentation. It enables both borrowers and institutions to present evidence, obtain relevant evidence worth considering in the case and respond to any evidence in the record. These constitute much needed course corrections to the 2016 rule currently in place. The Obama Administrations rule punishes for profit schools that gives nonprofit aspas for the very same conduct. Now let me turn to the ongoing adjudication of existing claims before the department. Yes, there is a backlog of borrower defense claims of federal student aid. To say i am frustrated by the that is an understatement. But rather than focus on why there is a backlog, too many have instead focused on creating more chaos and a circus like atmosphere. Here are the inconvenient facts our defense. First we inherited from the Obama Administration more than 64,000 borrower defense claims. So i asked the ig to investigate why they had made such little progress processing these claims. The ig found material weaknesses in the Previous Administrations procedures for approving and denying claims. In fact, the Prior Administration was encouraging claims to be filed knowing full well, it lacked the ability to even accurately track them. It had no process in place for reviewing any claims. And it knew that the department couldnt quickly and legally give blanket forgiveness of all loans. So when they left office, they left tense of thousands of claims behind. Greeted by this crushing number of applications and without effective guidance from congress, we took action to establish a process for reviewing the backlog using the Prior Administrations categories as our baseline. We quickly adjudicated 32,400 claims. Our relief methodology was based on the same data, Social Security Administration Data to be exact, that the Obama Administration used to measure rules under the gainful employment rule. Unfortunately in may 2018, a Federal District court in california determined that using that data violates the privacy act. We strongly disagree and have been waiting for a decision on appeal from the 9th circuit for well more than a year. The department stands ready to process these claims. I want to process these claims. We simply need a decision from the court. In the meantime, were doing everything we can to process claims in another manner. I recently approved a new scientifically robust methodology that relies on publicly available 2017 gainful Employment Earnings data, Social Security administration earnings. College scorecard data and irs information to determine harm and calculate the amount of relief. Ultimately, what the department wants, what i want, and what taxpayers deserve, is to provide fair relief to all those borrowers who actually have been harmed. That is what the law requires. That is what you intended by the borrower defense to repayment lou and thats what were doing. Thank you. I will be happy to answer your questions. Thank you, madam secretary. Under Committee Rule 8a, we will now question witnesses on the five minute rule as i mentioned earlier as chair ive decided to go to the end, so i will yield to the next senior member. The majority side will be followed by the Ranking Member or her designated committee and we will alternate between the parties and we will remind all questions will be directed to the secretary who can consult with general brown or i will also remind members the subject of the hearing is borrower defense and should yield to that issue. I yield to the lady, miss davis. Thank you, mr. Chairman and madam secretary. Welcome. We are glad that you are here. In the course of our discussion with you today, i hope we can determine your interest and your seeking on this issue. One of your roles, of course, is to protect the taxpayer. But we hope you will also want to protect students from the harm caused by predatory for profit programs. Today, you are here to get credit, i think, for the new partial relief formula. But it does deny full relief to the vast majority of defrauded students. Can you tell us how many partial relief funding formulas you discussed with your department before settling on this one . Well, thank you, congresswoman for that question. And for your continued concern about and focus on students. We share that concern and want to do whats right for all students. We considered a number of different methodologyies once the court shut us down in may of 2018. And we wanted to make sure we had a scientifically robust and defensible approach to being able to determine whether a student was, indeed, financially harmed. And we believe that this new methodology addresses those concerns and will, indeed, treat and consider each student and their individual circumstances very fairly and straight forwardly. But i think you must be aware that the new formula does rely on incomplete Earnings Data, which represents only about 20 of all programs. Would you agree that thats incomplete . Well, it relies on a number of different that that sets. Its all publicly available. It is all, it is actually more expansive than just the gain. Employment data and it is taking into consideration programs at schools at which the student has filed a claim versus programs like programs across the country. I certainly hope you will look at that again, because the 80 of all borrowers only includes borrowers who completed degrees and most students seeking relief under bar rule defense dont complete their degrees. So i want to read you a quote from a story which came from the recent npr story. Are you familiar with that story . I havent listened or looked at it in depth. And i believe that was one that really had to do with the work in your department. And i quote. I was also told by the recruiters from the school. And this is a student speaking about what happened i was alleged told by the recruiters from the school about wages i could make that i have yet to be able to earn due to the fact the school is and was not very credible. The itt tech recruiters assured me a students graduate making around 50,000 to 60,000 a year and a bs graduate would be around 80,000. So they misrepresented their product and name brand and education. Would you say that student has been harmed . Im not going to comment to hypotheticals. I am sympathetic to that students plight and if that student had filed a claim, they will, of course, be adjudicated and processed appropriately through what our efforts at the department and fsa. Well, you know, does a university not have a responsibility to provide what it claims it will . There is literally no other Consumer Protection that does not restore full repayment of a fraudulent product. Were all aware of that we have probably been through it. Npr reported yesterday internal memos in your own Department Show that career staff advocated for defrauded students to receive full relief from bar defense. Did you review the memos that came from your own department . Im not sure which memos to which you are referring. There are lots of memos generated within the department of education. There are hundreds and hundreds of lawyers and many of them have lots of opinions. So if youd like to share the specific documents, id be happy to review them. I believe there were thousands of them. Im wondering, according to report, the majority of career staff disagree we you. And so that was clear in the report and im sure will you have a chance to have a look at that. When i think there is also you know a concern, i mean if you werent listening to the career staff that were telling you that what they were seeing with students that were definitely harmed but, did you rely on that same staff for to the partial defense plan that you came up with . Well, congresswoman, what i know when i came into my job is there were tense of thousands of claims and there was no process and no structure for actually considering them. We worked on and developed a process and a structure implemented it and were well down the way of considering all of the claims that we had pending and then the courts shut us down. We had to develop another process. Were still waiting for court to opine on the ruling they made in may of 2018. Thank you. Mr. Chair my time is up. Ives going to go with the frad trade with the urruti of phoenix ruling. The interesting thing about that is if students had a federal loan, they will probably not be made whole. But if they got their loan through the school, they will. Which is an interesting dilemma that were going to have to face. Thank you. The ladys time has expired. Dr. Fox. Thank you, again, mr. Chairman. Secretary devos, its important to conduct good oversight and to do that, we need to have a good working relationship with the department. I know youre trying to cooperate with congressional oversight. So thank you for those efforts. Madam sergeant i know there are several letters that you have received from the chairman that his staff has also sent a significant number of emails with additional requests. Is that accurate . Yes, it is. My understanding is that youre diligently working to address those requests. Is that correct . Yes, it is, and we have been, for sure. Well generally speaking, how many letters have you received from Congress Since taking office and what is your overall Response Rate . Since i took office, on average, we received 1. 8 letters every day from members of congress to address specific issues. We have responded to 95 of those letters and i have placed a high priority on making sure we are responsive and timely in our responses. So 1. 8 letters per day. Per day. From members of congress . Yes. Moving on to borrower defense. These questions might require more technical information. So im fine with general brown sharing information with you to answer the question. Theres a report the department issued before you were there that claimed fsa was on target to clear all eligible borrower defense claims by spring of 2017. Are you familiar with this report . Yes, i am. Do you know how many claims the administration had processed at that point and how many remained then . I believe there were 16,000 16,000 that had been processed before i came in. And. 16,000 . 16,000 and there were 64,000 awaiting me when i came. Okay. So, could you tell us why you were not able to clear pending claims by spring of 2017 . Well, as i mentioned in my opening comments, there was no process in place to actually consider the claims. The ones that had been processed early on were clearly ones that there was 100 relief involved. But as more of those claims were considered, they continued to deteriorates to use the federal student aid terminology in terms of their validity of claim. And so without a process in place, we had no way of actually determining what the relief could or would be. It sound as though from the information that we have been given and things youve either said or alluded to, it was as though the Obama Administration just okayed every single claim if there was no process. Is that an accurate thing to say . So it wouldnt have mattered what the students said but they just said, i want my loan forgiven and it was forgiven . Yes. Yes, that is based on the data weve seen and the information that we have been able to find from that time period. So no proof was required of the students, that a student that he or she actually had been defrauded . No once again, there was no real process in place. So, it was a matter of looking at claims and then forgiving them and that had been done for a number of thousands of students before i arrived. All right. Much has been made about the quote career staff end quote who made some recommendations to you early on about how to happened him these claims. My assumption is those would have been the same career staff that had just been simply sending out forgiveness for loans to these people. What is your understanding of your role when you get a recommendation from a staff person . Well, i get many recommendations from staff, both career and politically appointed staff and take them all in consideration. I clearly understand and acknowledge the expertise of those who have been in the department for some time. But in this case, i, for one thing, im not sure to, you know, what documents are even being referred to, so i dont want to comment on specific documents when im not sure what they exactly say. And secondly, like i said, there are hundreds of lawyers in the department of education, many of whom generate lots of ideas and lots of recommendations and i take those, i dont review all of them. I get some come to me. But i take you know i take the recommendations. I take the input and ultimately i need to make sure im following the law and that im establishing policies and practices that are consistent with the law. Thank you, madam chairman. Thank you, mr. Chairman. I apologize for going over. Gentleman from arizona. Thank you, mr. Chairman. Theres no question the corinthian bars were defrauded and that fraud was so severe that they were entitled to full relief. In fact, the department of education found that corinthian education provided little or no value, madam secretary. Do you agree corinthian defrauded students . Congressman, i know that there are a number of students that attended corinthian programs that have claims for financial harm based on their experiences and their individual circumstances. And we are continuing to work to make sure that those claims are ultimately processed and those students are responded to. Again, unfortunately, the courts have stopped our processing of those. But there have been countless memos developed by your own attorneys in the department of education about the wholesale defrauding of students by corinthian and, in fact, the Court Findings by over 20 state attorneys general would disagree. This is a widespread issue. But, do you agree that corinthian misled students on the colleges graduation rates, falsely asserted a degree would result in the guaranteed employment. And that academic credits from corinthian would be accepted and transferrable to other colleges, do you agree that those students were misled . I think in some cases that was probably the case. But i also know that the Prior Administration basically forced schools like corinthian out of business. They put financial restrictions on corinthian that didnt allow the school to even continue operating anymore. What we need owe glow but the fundamental question with corinthian you can agree or disagree and ill ask corinthian provided no Educational Value to its students as a result of fraud and that was pervasive before any discussion by any administration regarding that program. I dont i dont agree with that narrative. I think there are many students that received valuable education from corinthian just like they do from many other institutions. The question is, what students among them were financially harmed and that is a part of the process. My colleague miss davis referenced from yesterday internal Communications Department of education from january 10th, 2017, conclude, given this extensive well documented pervasive and highly publicized misconduct, the department has determined that the value of the itt education like corinthian is likely either negligible or nonexisting. Accordingly, it is determined no give more borrowers full relief. Do you believe those loans july 2017 are subject to the bar and defense Fund Standard . They certainly are subject to the borrower defense rule, but they are not automatically subject to full and complete forgiveness of every single loan. Okay. That is there even the Prior Administration individuals acknowledged that there were up to 40 of the corinthian claims filed that werent even eligible for consideration. And so again, i go back to the fact that there was no process. I have limited time. There was no way to really consider these claims i inherited no process. We had to create a process. But the 1994 standards, i understand some of you here want to have blanket forgiveness for anyone that raises their hand and files a claim. But that simply is not right. No i think most of us want justice for these taxpayers that happen to be borrowers for them to receive the relief that they need to receive and in the 1994 standards established that these claims are subject to state law standard, mainly in those 20 states that found the college engaged in fraud, those students are entitled to borrowers defense. How many of these loans pending bowers defense. How many of these pending loans fall within that criteria of the loans that youre talking about that are seeking relief from the department . Is that a question . Yes. I dont have the specific number of corinthian claims that are still pending. I think judge kim in her decision said this is a problem that the government created, madam secretary. You have an obligation to provide relief to those borrowers, regardless of cost. Do you agree with that . We have an obligation to follow the rules and to follow the law, and we have implemented a process that will actually allow us to do that. We had implemented one. The court didnt agree with the data we were using. We have to agree that those seeking relief are taxpayers and the department should be doing something about protecting them as well. Thank you, mr. Chairman. Thank you. Im going to have to be a little stricter with the time because we may run over. So with that, dr. Rowe, youre recognized. Thank you, mr. Chairman, and thank you, madam secretary, for being here and general brown, thank you for your service sir. Today, madam secretary, id like to discuss your authority when it comes to rewarding relief from payment claim. I would like the record to be clear. If you believe general brown can provide a more technical answer, please feel free to call on him and the questions are yes or no. The number one, you have the authority under the law to provide borrowers full, partial or no relief . That is correct. I would love to refer everyone to exhibit 5 to demonstrates or that shows the portion of the law that clearly states this. I think this has been a question for a lot of people and i want to make sure its very clear that it is the secretarys prerogative to establish full or partial relief. Thank you. The statute is silent on full or partial relief but the regulation specifically discusses partial relief, is that correct . That is correct. The department defended partial relief in both the 2016 rule under president obama and your 2019 regulations, is that correct . That is correct. The lawsuit in the manriquez case is about the data used . That is correct, not the methodology. I know many of my colleagues believe you should provide full relief if you decide there is harm, but you decide as you authorized to do to grant partial relief in some circumstances, is that correct . That is correct. Simply following the statute on the the rules. Can you please explain why you believe partial relief is important and what are some examples of where partial relief is appropriate . Certainly. Well, the previous approach was either all or nothing. The new methodology that we have developed is a very scientifically defensible approach that looks at standard deviations from median earnings in a program. So if a claimant makes a claim against a school with regard to a specific program, we will take the median Earnings Data from that program from that school and compare it to like programs from other schools across the country. And if its more than two standard deviations below that median, the individual would get 100 relief. If its between the median and two standard deviations, it will be a tiered relief. If theyre earning more than the median for the rest of the schools, then they would not be entitled to relief. They cant demonstrate that they have been financially harmed. So that seems very fair to me to be able to do it that way. If you have a situation where your earnings are what they said they would be, then i agree you shouldnt have relief. Id like to yield, mr. Chairman, the rest of my time to the Ranking Member, dr. Fox. Thank you very much, dr. Roe. Madam secretary, the manriquez case is related to corinthian borrows, is that correct . Yes. And the plaintiffs are speak seeking relief because they claim the school misrepresented their job placement rate, is that correct . Yes. Theyre primarily job placement claims. Sure. And the plaintiffs specifically claim your methodology for determining partial relief, is that correct . Well, i believe they were taking issue with the entire methodology and the court held that the data we were using was the issue. Okay. And then the judge issued an injunction preventing you from using the methodology because it violated privacy protections, is that correct . That was that judges preven department from collecting on the loans of the correct. However, there was a problem and those loans were collected continuing to be collected on, is that correct . Well, no. Let me put that in context. So a couple of things i think are important to know. First of all, before that court case was ever that injunction was ever handed down, i had directed that all of the pending student loan or student borrower Defense Applications be put in forbearance and also not continue to accrue interest. So while this was going on for months and months and months, those students werent going to be sinking deeper and deeper into whatever problem. So that was done before the Court Injunction. When the court when the judge issued that injunction, that was already the directive. And that directive was the policy or the practice that i expected would be carried forward. After a year, there were some processing errors within federal student aid and with our servicers so human beings made mistakes. As soon as we became aware of it, we said we acknowledge it and we will correct the issues, which we did immediately. And id like to ask general brown to just talk briefly about the numbers and how quickly we have madam secretary, well come back to that when we have a chance. I dont want to go over. Okay. The gentleman from connecticut mr. Courtney thank you madam secretary from being here today i just want to go back to a response to doctoral about and, again you were very specific about the fact that your discretion was invested when you were 1993 for the reform act allows you to provide an full partial and full relief is that correct yes okay thank you okay i appreciate that answer mister chairman, i just want to turn now to the memo dated december 13s 2017 published intimately New York Times from Stephen Ministry who was a political appointing acting general counsel to the department of education to James Manning who had been delegated to the duties of undersecretary. Without objection. Thank you mister secretary. In that memo, madam secretary mr. , mnuchin whos now judgment and she wrote that quotes, it is now or jussies position that the borrower difference units analysis that Department Regulations and department of stuck statute allowed to the secretary to assess relief at her discretion. Do you believe that this memo provides the legal basis tos provides in some instances some relief to defrauded students based on your discretion . Im not referring to the memo, im referring to that section of the role that existed in both the 95 rule and the 2016 rule. Well, thank you, which again, basically said that you have to have full scope that the secretary has discretion, and again so again, we agree we are, there was no process to speak in place i just want to keep going here because on page six of the memo it goes on to say that in fact, the only limit to the secretarys ability to grant relief, is that no student may recover in excess of the amount that we have because, we can all agree on that. You cant overpay without restitution is that correct . Yes i, mean that would so, again, since you took office, i know you did process some of the pending claims from the Prior Administration, but after that cohort, have you provided any defrauded bar borrowers full relief since the first strike charged . Well, we couldnt, frankly, because the process was shut, down plus we could not let me talk about, that actually if you look at the court order, which again, shut down youre partial relief program, because of what the judge felt was improper use of Social Security data, the judge actually stated, and i quote nothing in this order prohibits the secretary from fully discharging the loans of any borough or successfully completed, or successfully completes an at the station form. So she actually still left the door open for the department to continue to process these borrower defense requests. Yes, but with our methodology that we could access the appropriate data, we couldnt, i couldnt go ahead and say we can just go ahead and forgive a whole bunch of loans 100 percent, because, number one each student, each students application, needs to be considered individually, the circumstances are different, and the facts are different. And so, without methodology to utilize, we could not continue to process, now we continued, lemon just clarify, we continue to adjudicate, and we have many claims that are awaiting, now being process, to be able to respond specifically to whether there was financial harm or not, and so now that we have another methodology up and running, were going to be able to, i think, move through these very quickly. If i could just follow up with a question because my time is about to run out. Warren i hear you say, is that these claims after the judges order stopped being processed because you through, your discretion, determined that they had to come up with another way of processing the claims. But again, thats not because the judge handcuffed you, in terms of providing full relief, her order specifically said, that she left that door open for you. It was really your decision, based on whatever priorities and policies you had, to not continue to process these pending applications. I would just say, congresswoman hayes and i have about 1100 borrower Defense Applications from the state of connecticut that have been stuck in this queue, during that time period, and thats based on june data. Im sure the numbers of grand, high tea tech is pretty much the driving institution, which is now defunct, so again, we at least made some progress here, in terms of at least verifying what the scope of your authority is. My time is run out, so thank you mister. Chairman thank you the gentleman from pennsylvania, mr. Thompson. Thank you secretary davos for being, here much appreciated. I will say, my friend, and we learned a lot together on a lot of different issues, brought to my attention, im appalled that this judge did what they did, and what they put forward, basically providing a license to not, you know, just allow the continued abuse, you know, i appreciate the fact that you came into this particular position, and, unfortunately what you inherited from the last administration, which was really no structure, quite frankly, just providing loan forgiveness, were harmed just i think thats important, but there is a duty and responsibility, to do this diligently in the right way, and so, i appreciate that lasts, my last colleague bringing that up to my attention, how abusive this judge was with the ruling. Madame secretary, there are a few myths out there about the 2019 borrower defense regulation, that id like to discuss today, with you and general brown might have some of the technical answers, these questions so ask him to answer if you believe that this is better pretty straightforward. The first myth is that the 2019 roll eliminates 11 dollar billion real new relief is that true . If not can you explain it . Tummy congressman that is indeed a myth, of the presumed saving assume and count on the fact that with much more clarity around the schools responsibility, and that students claim would and could mean that we will have an fit ultimately fewer borough or defends claims coming forward. Lets just recall from 1995 to 2000 4 15 there were a total of 59 claims filed, and then about of 5000 increase from 2015 to where we have almost 300,000 claims today. So Going Forward, you know, weve just released a ton of data on the College Scorecard that individuals, if an institution is making claims about a program, its going to be easy to check, you can go to that school, and that field of study, and see what the earning is for the first year act and we are going to continue to add the data for years after that. So a lot more transparency for students and for schools frankly, and still going, forward the savings are going to be around the fact that we are not going to have so many claims. A great tool for a financial literacy. Its a good to argument for financial literacy, yes. Another myth is that the role eliminates accountability for crop for profit schools. Is that true . Not at all indeed a, treats all schools equally, i think thats one of the major defenses seas of the 2016. Roll it was strictly focused on for profit institutions. In fact, i saw some internal stuff at the department saying, well, were not going to Pay Attention to any claims or any schools that are a liberal arts program because its presumed that there of the full value. Well, thats just wrong. If a student has a claim against the school, for being fraudulent and deceptive, that should apply across the board for every school. We know that uc berkeley fudged their numbers to get bumped up rankings, should those be subject to borrow or defense claims like the others were . Another myth is that the rule is cumbersome, or overly burdensome to comply with from a burrows perspective. Is that true . No, in fact weve made it very easy for students to find the information they need. Its prominently located on federal student aides website. We want to make sure that if unaware there are these claims that are legitimate, that students have a very clear path to understanding how they proceed. Thank you chairman. I yield what little bit of time i have to the republican leader, doctor fox. Thank you, rather than ask a question im, going to make a statement. Just tell me if im saying this correctly. It was asserted before that the judge gave you discretion to go ahead and discharge these loans. But my understanding it from you is, yes, you have processed all the applications, and once you understand you have a way to do this, thats not going to be challenged in court, but then you will, what you say, adjudicates, meeting given answer to the student. Is that correct . Close, ive actually look to exhibit i put for process. Because it shows, it shows where things are. And id like general brown to actually speak to im going to have to cut you off one more time but i promised less time will come to general. Brown were going to get there yet. Thank you the gentlelady from ohio, miss fudge. Thank you very much mister chairman thank, you madam secretary for being here today. Once again i find myself agreeing with a Ranking Member we could be investigating other things today, but they are so many in this and minister duration that dont know where to begin. Maybe i will start with the three usda rules that are getting ready to cut 4 Million People out of snap, 1 million of them children. Or maybe talk about the daily travesty on our borders. But thats not what were here today. It is unfortunate that my college are suffering from amnesia, on the other side of the aisle because i remember well how they treated the last administration so they can take this holier than thou attitude, lets all be nice and get along. I remember i was here. And the other thing i, just want to bring out our attention to how you talked about the two letters or less that youre getting every day. We get that every day to and we have a lot plus staff. Then you do i dont feel its something thats honduras and something that you can respond. To secretary davos, is a fair or lawful to the front . Students no its not. Very good should these people be defrauded be made . Whole they have been financially harmed, indeed there should be relief. For them thank you very much i. Yield the balance of my time to my colleague from connecticut, miss hayes. Thank you secretary devos really quickly miss chair id like to enter into the record of january ten 2017 memo, from the boroughs defense unit to that undersecretary ted. Mitchell without objection which this member was drafted by your office after the Previous Administration left i just, want to say something. As im sitting here and im listening, i remember last interaction where you, at some point had not read the memos and that came from your. Office i just find that a total lack of regard that after the npr story broke on friday, and you knew you were coming here for about a hearing about borrow burns defense, that you wouldnt even take time to acquaint yourself with the memo. That was talking about your staff recommended, that borrows be given full complete relief. I mean there is nothing as my colleague congresswoman said said incredibly onerous about 1. 8 letters a day from congress you have all over 3000 staff and a budget of 60 billion plus dollars, i get more than two letters a day. And i make it my business to respond to. Them so, i am going to follow up about the same memo, and i hope that, i mean as you said before you dont know what anyone is talking about, you fret you havent read the memo. But in this memo, your staff recommended that full relief for borrowers who enrolled a 90 colleges and campus in california be granted, can you explain why you ignore that memo, and why you did not included in the documents that were sent to the committee . In the congresswoman once again, without ever having the document in front of me, i am not going to continue to comment. Did you not know you are coming here today . Congresswoman, there are hundreds of documents written you are absolutely right. And i would accept that. But the fact that our friday, the story broke, and this document specifically was referenced. I do not think it is unreasonable. I know, i am a freshman congresswoman, if i were coming to a committee and i had taken the time to prepare and a document was revealed in an npr story that wet nationwide. Five or six days before the hearing. I would say to my staff, can you get this document for me so i can read it for myself because i am sure that this committee it will have questions in relation to this memo. That did not cross your mind at all . January 10th last friday. Last friday. January 10th, 2017, was the last administration. Did not cross your mind . I was not in office until february 7th, 2017. Did not cross your mind . There are hundreds of documents you are absolutely right but friday when the specific document was revealed, did not cross your mind that maybe i should read it . No. I do not need to read the document. I know what i went and pr ran a story. It did not cross your mind that maybe i should read this document . I do not need to read every document this one specifically. Not the thousands of others. Because a news outlet show oath to print it . Yes. Is that a no . I should Read Everything . Yes or no . They did not cross reminding you should read this document . Maam, i am focused on getting a process right for students and for taxpayers. So no . On getting a process right for students to taxpayers. So no . And that is what i am doing. Part of getting that process right requires reading. Thank you mister chair. Gentlewomans time is expired. Gentleman from michigan mr. Walberg. Thank you mister chairman. And thank you secretary for being here. General brown as well. Again, january 10th was before the eggnog ration and february 17th was when you were confirmed. I hope it does not concern my constituents too much that i do not reiterate every article that is written about me either. There are certain articles that would be a waste of time and take me away from doing the job i have been asked to do. Especially when you know what you are supposed to do and follow the law. Talk to us if you will about your exhibit number one. Giving you the opportunity this time. So, thank you congressman, so exhibit number one shows which every one of our Defense Applications. I would like to ask general brown to talk to us briefly about it so we can understand where we have brought the borrowers defends claim prior to having the methodology process. Thank you madam secretary. And thank you congressman for the question. I would just remind the committee that overall we have vastly approaching what will be almost 300,000 while Defense Applications by the end of this calendar year. Each case is a duplicated on its own merit. What that means is there is no blanket wave to do this all. Because they have very greatly and also the validity of each place, without the regard to each school the person has gone to. The student has went to. We do not look at them per se by school, we do it by individual cases. So the type of school is less of an issue than the validity of the case. For every one of those cases we bring them in at the top are you see and we have our administrative people as well as our attorneys who take them apart, they look for supporting documentation and check the validity of that documentation. This is the first part of the case, if it happens to be under the 2016 rule and the case is determined to in fact be a valid case, then the school would be notified under the 2016 rule and those Going Forward. At that point the case would be the due to case should process. All cases get to that point. That is a borrowers defends regulation that you have all supported across administrations. And we have looked at this across administrations because only those were the questions that we have gotten. The percent of those that were valid an invalid it has been about 62 to about 38 throughout both of those times and throughout 65,000 of those cases that have been completed and processed brought up down to the students. However, at that point if the case is in fact eligible or ineligible. If it is eligible that is a point in which, the secretary said earlier, to determine some our methodology that will determine some, none or all. When you talk about a backlog, when you use that term, those cases got to the final point had to be stopped as you have all already referenced by the ninth circuit. It is a decision in which upon the ninth circuit upon for a new methodology has to be determined. If you use the term backlog that is what we are taking each case based on its individual merit. Thank you for that explanation. Previously there were no official source a student can access to see the college outcomes. You recently unveiled that would allow families for the first time to compare programs within an institution or similar programs at different institutions. Could you please explain what Consumer Information is included in this tool and how providing this information up will help students make informed decisions before starting the school. Sure congressman, i would love to talk about it a little bit more. Previously, you could go to look at a school, the cost attending a school, the average cost of attending a school, and what the average earnings would be expected for a graduate of that school. That is nice information, but it is not particularly useful for students based on programs that they choose. Now, with this new data release and this new approach, you will be able to go look at a school and then go into the field of study within the school and see what your cost is for attending that program and then what youre earnings potential is. What the earnings have been filled with students who have graduated in that field of study in the first year. We are going to be able to add subsequent years as more data becomes available. This has been a gift for giving students a whole new tool to use in decisionmaking around what kind of education to pursue post high school. It is going to be useful for a twoyear program, certificate programs, we are also linked to apprenticeship opportunities to the department of labor. A very robust set of data and important tools to be used for students as they begin to think about their futures. I think importantly for institutions to maybe ask them hard questions about the programs they have been offering that may not be the value for cost that they should be. I yield back. Thank you, before i recognize the next member, i would like to ask the unanimous consent that the documents from january 10th from the boroughs defensive unit has been within the record. It is also january 9th october 24th, 2016. These memos describe an extensive review of claims in corinthians i tee tack and everest while tack where students, whether staff recommended for debt relief for boroughs in the school. These memos in 14 pages, 18 pages, reflect a clear process and evidentiary review conducted by the Obama Administration so we just want those on the record. General lady from florida, miss wilson. Thank you, mister chairman for holding this hearing. I am so happy that secretary devices schedule has finally allowed her to address this pressing issue today. Madam secretary, there are 200,000 students that are still waiting to have their borough defends claimed process by your department. Education department has not approved a single new claim for long relief in the past 18 months. If a student takes out a federal loan to study at an institution that behaved fraudulently or deceptively, that Student Loans should be forgiven. Mister chairman, tens and thousands of borrowers have acted in good faith at that and took out loans looking to better their lives. Because of at because of bad actors they were left with unfulfilled promises an unmounted lies and debt. I believe it is incumbent upon us to provide relief to those harm in schools that acted in a fraudulent matter. Secretary davos, euro with this extreme displeasure had already been through the process prior to your appointment. Why would you write that . Why would providing relief to defrauded borrowers whose claims have been reviewed by experience professionals displease you . Congresswoman, very good question. Very simply, there was no process. The claims were simply forgiven without consideration for the individual circumstances. I heard you say, i want to tell you a story about a borrower from florida named jessica medicine who gives me extreme displeasure. In january 20 17th, had been approved and that her 19,000 dollars and student debt would be forgiven in 60 to 120 days. It was not. Instead the government began garnishing her paycheck to recuperate the money. As a result she did not have electricity for weeks because her garnished checks could not cover the bills. How is it possible that the department of education could have continued to collect miss madisons loans after she had already been approved for a boring defenseless. After the washington postponed about her story in july 20 17th, the garnishment stopped. They did not refund her money. Just 2000 dollars were refunded of the 12,000 dollars that have been garnished from her wages. Do you believe it is appropriate to not fully refund wages that were garnished for Student Loans that were deemed fraudulent . Congresswoman, when a student blower defense claim is deemed, they have been financially harmed and we have a process to consider that. The level of that. The students are made whole. And the students, we address each Student Issue and situation individually. That is why it is important to have a process because every student situation is to they get all of their money back . That was taken from them . It depends on the various claims. Because of these wage garnish the businesses, madison cannot afford to see a doctor to address the intense pain she was experiencing. When she finally did go to the hospital she was diagnosed with cancer. In october of this year she passed away. Secretary can you commit to me today that you will personally ensure that jessicas wife will receive the remaining 10,000 dollars owed to her by the government . Congresswoman i can assure you that we can and will look into that specific situation it provided the details. Once again, i go back to the fact that all of these claims secretary device, i have worked in education my entire life. I have dedicated my life to this work. That work with democrats and republicans. To advance the goals of quantity and education for young people. I have had some honest disagreements in the republican party. About how to move education forward. But i have never not one time believe that they were out to destroy Public Education until i met you. Why has every decision you made harm students instead of empowering them . Are you the secretary of education you were supposed to be, youre supposed to be there champion. When you approach a public school, you were protesting. When you were entering you were booed. When you spoke at an in florida two months later the president was made to resign. You are the most unpopular person in our government. Millions were registered to vote in 2020, many will vote to remove you more than to remove the president. I yield back. Mister chairman, i just have to say one of those liesy comments is over the line. Absolutely over the line. To say that secretary devos is trying to destroy Public Education is going too far. I believe every one of my colleagues agree that we all set up, very quickly, when that comment was said. I like representative wilson, she and i have talked a lot, we are very concerned about education. But that kind of comment cannot stand in this committee. The secretary has come here to help us with out of order mrs. Chairman. The gentlelady is taking time that is not been the Ranking Member is making a court of order. Mister chairman mister chairman i believe if that had been set on the floor of the house what. It would have been. The commons those comments wouldve been taken down. Thank you. Will take those comments what have been taken down thank you. Next person will be recognized the gentleman from kentucky mr. Guthrie. I have a parliamentary inquiry . The gentleman from south dakota i dont know the rules from backwards and forwards is, there a mechanism that can strike this records from the record . Just a minute. inaudible inaudible the comments from the gentlelady from atlanta are on the record, both sides have agreed with my number. Mister chairman my point of parliamentary inquiry we should refrain from listing the moment motives of the members. Thank you mister chairman. And the witnesses. Thank you. The gentleman from kentucky, mr. Guthrie. , thank you mister chairman, i appreciate the opportunity to be recognized, and sorry that the tone is washington has reached the way its reached. The last year i apologize for, that i hate to see it deteriorated the way that it has, we need to Work Together to for this country unfortunately we are where we are, but im sure you agree that congress has a responsibility to do oversight of the administration, and i believe you said the 95 of all congressional requests have been met earlier. With regards to the letters, yeah let me just add that the 1. 8 letters are not constituents, kipnis, can you respond with a half page response. These are voluminous requires, that require a lot of research to respond to, and often hundreds if not thousands of pages to be responded in each of them. I was going to ask, included phone calls, emails in return responses. I think you answer that . Way these are luminous responses. Im sure you agree that it is important for all parties involved to communicate directly is what you. Said so i want to get this hearing i agree that borrowers that are harmed should be granted relief as quickly as possible. After driving into some of the nuances about this issue, i understand that you have decided to grant partial relief and some. Cases now its my understanding, that there was a report that estimated the borrowers defends claim would be cleared by the spring of 2017. But your decision to review those cases and grand partial relief meant that the estimate proposed would not be. Mets is that correct . Yes congressman, there was no process and short of simply deciding to forgive all of the and except all of the claims with 100 percent validity or not, we need to get a process in place to consider each. Claim thank you, so the memo that ive just mentioned, was that an official meant and memo that included promises are any guarantees to borrowers . Im not sure what memo youre referring. To the one that said in spring 2017, about your determination it was the best interest of taxpayers to review these grill aims and make sure the relief granted was. Correct so i guess my question is there, was is nothing legally requiring you by the spring of 2017 to make those, decisions and you made sure the decision that fraudulent claims are paid by need to make sure the claims are fraudulent and so you made those, so nothing illegal about where you are today about not getting that done by 2017 . No, it was a matter of building on a lack of policy in process from the Previous Administration. The policy of the Previous Administration was to simply forgive claims. However, there was some opinion expressed that up to 40 of some of the claims that had been submitted did not qualify. So again, without a process and a framework, we couldnt proceed in progress any of those claims forward, which is exactly what we did one coming into office in 2017. Thanks, i appreciate that and i want to yield to the ranking memory or the republican leader. I want to thank the gentleman from kentucky, i want to point out, i want to make several clarifications. Number one, some of our colleagues dont know evidently the calendar is 2017. Because the memorandum under consideration here, that has been brought up, was a memorandum to undersecretary met ted mitchell who worked in the Obama Administration. The Obama Administration was in office until january 20, when the President Trump took office, you again pointed out you did not come into office until february. So if they have an argument with anybody, it ought to be an argument with these folks, who got the memo in january ten, and that sounds a lot like other memos that came out around the. Time id also like to point out that contrary to what has been said, that for profit schools have no value, 1995 was when borrower defense rules went into effect. Corinthians colleges were formed in 1959. I tee tee was around six 1969. Between the time borrower defense as you said madam secretary, until 2015 59 claims were filed. So obviously, something happened. Yes, those School Closed, but theres been a culture change i believe in our country, in terms of what people believe they are owed. Thank you mister chairman i yield back. Thank you miss gentleladys time of expire the gentlelady from. Oregon thank you mister chairman thank you secretary devos for being. Here and thank you mister chairman for introducing into the record the january 9th in january 10th 2017 mommies. Secretary device when you made opening remarks who said that some on this committee suggested full relief for defrauded borrowers, not just some on this committee, it was the borrowers the fence until the Education Department as well until people who had been working on these cases thats the. Points secretary devos the mission of the department of it education to promote students activities i dont see that consistent with the message and the mission of the department with so many hundreds of thousands of students, including thousands in my home state of oregon, stuck with low ballot loan balances and a worthless degree, if they got a degree, im a former Consumer Protection lawyer for the federal trade commission, and i know fraud when i see it. These students were misled, and cheated the fact that some of them maybe making money doesnt mean that they werent defrauded. If somebody went into one of these programs hoping to become a nurse, for example, and now youre selling clothes at a department store, it doesnt mean that they werent defrauded. I hope you can put yourself in the shoes of some of these borrowers. I know its challenging, but they went to try to find a better path for themselves, and instead of getting a good education, they got collection notices in wage carnations. And in september the department admitted to violating a court order by illegally demanding long payments for more than 16,000 corinthians borrowers. And after that now increase to 45, 000, and the issue came to the publics attention only after you were held in contempt for violating court order. That was the williams case, so you when the department have known about this issue for, years so why did the department continue to bill more than 16,000 corinthians borrowers in definition in violation of the law . Congresswoman i sorry you werent here when we talked about this earlier on but what i said was very clear, that the borrowers have made claims for Corinthians College programs were in for barons a were not occurring interest, at my direction prior to the court order, injunction in may of 2018, since then a year later, there were errors made. Within federal student aid, and what some of our service ares, human errors that once we became aware of them, we mediately acknowledged and immediately want to work to correct and rectify the problems for those impacted students. Im going to reclaim my im going to reclaim my time and ask another question i was here im just didnt find my answer satisfactory. How many times has a court already founding that the department of what has illegal collected payments from borrowers or sees their wages or checks . Returns how many times . Have other courts found that. In relation to the Court Injunction from may 2018 general brown can commence on the specific numbers of impacted borrowers and frankly what we have done, what all those cases were addressed and taken care of which they have been. And you say, secretary device that you care about the responsible use of taxpayer dollars. So they use in the mine reaches case imposed sanctions, a 500,000 dollars for doing. That who pay that you personally or the taxpayers . Im not aware that its been, paid its an injunction and the judgment against the department of. Education so you are not aware if its even been paid. I dont believe, i dont. Now it and who do you expect to pay . That will be a pay that personally or the taxpayers . I think there is an appeal to suggest that its not appropriate to find a federal department. So in my remaining time it was the borrowers who discovered that the department was building them improperly this is not a result of the departments oversight so we know that there borrower de for the claimants who will not have relief and they have their wages garnished arctic tax returns taken in the future. . Im very hopeful that we will be able to continue to move ahead with our new methodology and the snow may no challenge through the courts of that methodology, will be able to process these claims that have been expanding for many. Years and thats the methodology that if someone is making money they werent defrauded, and that is not justice. And i yield back. Thank you before i recognize a lot next witness, id like to enter the record that an oig report and a response to this report, the president rip department of education fsa stated by the priest vice administrations process for adjudicating claims, they said, and i quote, despite these challenges, we are pleased to know that the oig did not identify any errors in adjudicated claims, that the review for each of the sample claims was properly documented, in addition oig founding that ice fsa created policies and procedures from the oig report dated december 8th 2017, so thats during the president. Ministration without objection, so ordered and the gentleman from alabama. Thank you mister chairman, secretary divorce, general, thank you for your service to our, country its not often said enough that people like you have given a lot to this country and continue to do so. We appreciate you being here today we appreciate you. Service im going to ask some sort questions about oversight and im going to direct them at the secretary, but general its something that you need to answer feel free to jump in. Lets just begin with the basics. Do you believe in the need to question congressional oversight . I do congressman. I think youre presence here proves us but id like the record to say that you believe in. It have you informed your staff to the need to be responsive to congress to help us or . Job indeed i have, i am very keen on making sure we are responsive and have repeatedly directed all of my team that we must be and do so untimely fashions. And how do you follow up with them to make sure that theyre doing . That i have irregular reporting relationships depending on the area of the department, and with respect to the issue that we just talked about, i get daily reports on how those claims have been restored back to their standing, that they should be in forbearance and that we should be continuing to have regular dialog and updates on those. General brown did you want to, yes sir i can provide you with one example of those daily reports an, exhibit seven but we are asked all four all those students that have elements of air that were involved in the mind reaches case, where they are were erroneously taken out of forbearance and perhaps built, since that time we have done daily reports on each one of those cases, this is not a report that we created for this committee. In fact its two days old. It talks about 0. 5 or so percent of those cases not having been remediated, errands today these are less than 30 of those that have not been remediated. We are responsible for giving those reports to the secretary each day, and even if its 99. 5 we wont be through doing that theyll report until its 100 percent meaning every particular person, specific person, that has had any element of harm done to them, has been corrected. So they had a treasury offset like i heard earlier in a statement, that the treasury would have to refined that money to put them in a remediated status. Thats one the provided oversight in this process and responsiveness to the secretaries. Request i know you get multiple requests from several members of congress how do you prioritize requests when you get multiple ones from the same number what kind of communication do you have in place to ensure your staff is still able to meet the standard that you . Set all our prioritization is based on responsiveness in general. We try to be we try to be able to respond within 30 days of receipt of those requests, sometimes it has to go longer than that, depending on the volume of material requested and required, but we are very focused on ensuring that we continue to work through these issues as promptly as we possibly can what is your response to congress . 95 . Pretty good. I wish we had that great with our constituents is, there a different standard for oversight . No we have High Expectations for ourselves across the board and this may be for you how does the same balance with information to get the job loan Running Program . Thank you congressman are desires to answer all low congress those that are very data centric that require step vessel polls from what is 11 loan serviceman from across the country often will require more time because that data simply doesnt exist, the systems that we are working to reform, but all for most Data Requests we try to do those within 30 days. Thank you for that. Thank you for your hard work, and trying to be responsive to congress and thank you for your professionalism and for understanding that the taxpayers money is precious. And we have responsibility all of us, including those of us in congress, to safeguard that money. With that, mister chairman i yield. Back thank you, and ill remind members to please direct the question to the secretary. The gentleman from california. Madam secretary youve twice testified today that all pending claims in the man reaches case you, had ordered into forbearance and not to collect interest prior to that Court Decision 2018. You refer to processing errors that were made a year later, are you aware in fact that your department submitted in a Compliance Report to the court on october 8th 2019 that the compliance hairs that were talking about at issue are not a result of will for or intentional conduct on part of the department but as the court as recognize goes close gross negligent including negligent oversight over the Department Services and argued a pair the aware of that . What i know is its a simple yes or no question . Im just asking if are you aware this is on your own Department Submission that there was no gross negligent for this long processing errors. There were areas mater and federal student aides and if things as well as on november 21st 2019 your department, by the way i want to answer this into the record, mister chairman the statement of the department their response to the court. Madam secretary on november 21st year here department held its first ever Quality Assurance and performance and the man reaches case why did it take your department 18 months for this to occur with your long Service Providers . Loan Service Providers we are continually dialog with the lone service it took 18 months to get your why did it take so long to do that are you interesting in learning its a simple question why did you take so long for you to meet with these lone services. I am pleased with the leadership of general brown who came federal student aid nine months ago assuming the chief operating officer role he has response for the operations ofs madam secretary he came on board much later in the. Process as well as relationship moving on, on may 25th 2018 federal court order you to stop collecting on current the in borrowers, 17 months later a federal judge sally kim, was highly critical of you and your departments attempts to comply with a preliminary injunction and, she stated consisted of an adequately communication with each of your nine student providers. Is it correct that youre departments only communication with one Services Provider sirs during this time was through email . No thats incorrect, mister chairman i would like to enter in the record the email sided in judge cams order. One email, one email was three sentences. Along the other, email to loan Service Providers didnt even side the fact that the department was under a court order. Without objection. The judge was a standout astounded, madam secretary that your department did only send emails and did not have in person meetings our phone calls with a loan service, providers the judge asserted that this wouldve been normal for any identity to have in person meetings with the contractors immediately following the preliminary injunction and not several months later on november 21st 1818 months later, i ask, i have already asked you to answer the emails, i want to point out that on may 29th there was only three, lines provided by the services and on july 5th the email that they sent the preliminary injunction crew did you assign responsibility to ensure that the law service complied with a preliminary injunction . I am very pleased with general browns leadership and federal student aid. When does mr. Brown come on board . Can i please finish answering my. Question who did you assign responsibility for compliance . Federal student aid as a chief operating officer of responsible for the operations of student aid, general brown is responsible at this chief operating officer. When did he come . Onboard for those operations, assume the seal will roll mine nine months ago, he was with the department for four months before. That so he was responsible prior to that there were you assigned to him responsibility to ensure that your department complied with a court order . Who did you put a charge . We have continued to be intentional about complying with a court order, we have acknowledged that madam secretary, youre not answering my question, who did you assign responsibility to comply with the court . Order for your department the chief department of student aid is responsible for the operations of federal student. Eight your for to mr. Brown but he did come into this role until nine months ago. There was an acting chief operating officer. Who was that . That preexisted him . It was James Manning, as acting. Prior to that there was within when i came into the department i inherited a chief operating officer who left is low role rather than common testify. Here i yield back mister. Chairman time has expired, the gentleman from indiana mr. Banks think secretary devos thank you for your service and leadership a lot of discussion has been about what happened in the past in this issue i want to take oh moment for steps Going Forward general brown might have more questions feel free to have an answer if you prefer first of, all for borrowers that are waiting for relief when can they expect to hear from the department to hear if theyre eligible for relief and if they are eligible for relief how wall long will it take for them to know how much theyre going to . Receive what will it take years or are you aware that they are going to be as soon as . Possible congressman, thanks for that question now theyre we have a new operable methodology we are going to be able to process the pending claims much more quickly, assuming we dont get stopped in some way by a court. Order general brown can comment to the specifics of how quickly those claims can be processed, but i know that he has continued to increase the staff in his area. To be able to reach, address them in a very timely manner, and has hired many additional attorneys, to be able to look at each claim individually, as it must and should be done. General, would you like to comment to the . Timing yes madam secretary, i would say that within the last 24, hours we are notifying students of their eligibility, aarian edge ability if they have given us if they provided a claim, we continue to do that those claimants they would, know now and they would go relief they would know so within the next, or actually get it done within the next 60 90 days, i would also say though, that the staff at his height was 14, in the last the last couple of years we have triple that, with and forces on hiring attorneys, frankly the more you have the quicker youre able to get to those cases, minus time in litigation, we expect to get to those cases fairly quickly, another part of this is the system which weve been rebuilding over the last 12 months and that System Platform is ready, to answer your question we expect to clear the majority of this backlog minus for the litigation over the next 12. Months do you have the staff that you need to do that currently . So im happy to say that with both the systems and the authority and resources to hire the personnel have been given to us, by the secretary and we have either hire them or they are in the process of onboarding them so and guess minnesota litigation we have what we need or will have very shortly. Are these permanent or temporary staff . People the majority of some are term employees. We did that out of consideration stewardship for the fact that we would do not expect to forever receive what we are receiving now, which is one event which is in the neighborhood of 1200 cases per week, these are temporary hires we, will see if we need to need to expand them further secretary who is involved in who and how a finalist an eight this season on relief is . Mate do all of the borough or defends claims come to the general brown or do you have any lower employees . I have approved the policies, the process for a which these claims will be determined, its general brown and federal student aids role to implement that policy, and see through the processing of the claims. Its really a mathematical, scientific formula, and approach, so the policy plays out that framework clearly. Let me change my line of questioning a little bit, borrower defend seems like an inefficient way to protect tax payers from fraud, given that government is losing money at the. And what reforms are you using to prevent them from using this prevention in the forest . Place thank you for asking about the College Scorecard weve made considerable changes and enhancement to the Data Available to students, and frankly a broadly to taxpayers and institutions, so now prospectively students can look at the cost of a college program, a few of study what the cost is going to be and what the earning potential is the first world year after. Well be adding that information to that. As subsequent years become available, but this is going to help clearly reveal whether the value for a program is. Theyre and frankly, i think its going to help a lot of schools make some decisions about whether to continue offering programs that theyve been offering as. Well thanks to both of you for being here thanks for always being willing to answer my questions and providing anything that our office needs along the way as well. Without a yield back. Thank the gentleman from new jersey mr. Nor cross. Thank you mister chairman and thank you for being here today, i want to start off by saying that i agree with my colleague on the other side, that we wish to amend that we would Work Together much more often, so lets see if we can start with you when i that we can get direct the sponsors to your question, and we respectful to each other which is something that im sure you want to do. Let me start out by asking you what partial really formula that uses the college sort card formula. Talk to me about that. How after 18 months i guess in support you rolled out where you think this was the best scorecard typically when you have only 20 of the programs involved in that now. How did not become the best . One scorecard . Yes as one. Do you agree that it only has 20 of the programs . Yes. Okay, so please continue. We were using several different data sets up depending on the arms field of study that the applicant is claiming was fraudulent in some way, the Median Income for that program is compared against the medium and comes for programs like programs. We understand, but what else are you using . Using . The other pieces are Social Security Administration Data and the 2017 gainful Employment Earnings data and irs information. But they dont reflect back to the individual programs that people are looking for. So if my son goes to look and says, let me go to the scorecard, thats the only piece of information that that program would reflect the reality . The programs that are included include about 80 to 85 of the students pursuing fields of study. The smaller programs that are not included in College Scorecard are because the cohorts are too small to be able to consider. It makes up 80 of the entire programs. Its the exact opposite and only has two years. If it took you 18 months to come up with this new one, it seems to me to use something that is such a small part of the solution of whats actually going on. You agree with me youre trying to get potential students that information, right . So that they can make an informed decision . Were trying to consider each students claim individually and the circumstances no, this is being used, the scorecard, to give potential students an idea of the cost involved and the outcomes. We understand that. But using only 20 , and general thank you for your service, but i guarantee you wouldnt want to send somebody into only a war zone with only 20 of the information. Its 20 of the programs, but it represents 80 of the students aattending at higher institutions. But 80 its a pretty significant number. Can we agree its less than you would and i would desire. Wed love to include additional programs but we need larger cohorts. When we looked at this, and lets be respectful of each others time here, 10 relief for the corinthian borrows, you made the decision to give them 10 whether your new formula was involved or not. I have a disabled vet in my district, itt tech, one of the horror stories. He went there for a digital degree. School told him he could use the gi bill. He used those to pay for this and then found out itt lied to him, and he is into a 50,000 student loan. Now hes got no job, no degree. I know that tugs your heart as it does me. Why is it that corinthians will get a 10 there, but this young man gets nothing until you go et to his application . How did you decide theyre worthy but this veteran wouldnt be because he was in a Different Program . Sir, the corinthian students have had their institution attacked mercilessly in the media for years. And so in consideration of that and in consideration of the length of time that has lapsed since we were first able to process a number of those claims before the court shut us down, the determination was made that all of them would receive at least some level of relief depending on because of media reports youre going to give them 10 but this veteran my time has expired. On behalf of all those students which i know we all care about, this is impacting their life. I cant suggest to you how important this is, exploit this in a fair and balanced way. I yield back. Gentleman from south dakota, mr. Johnson. Thank you, mr. Chairman. Thank you, madam secretary. I found myself most interested on the conversations weve been having about methodology. I want to learn a bit more about that. Youve talked a number of times about using the median rather than the i think the median salary for individuals in these groups. Why does the median make more sense than the mean . I am not a mathematician, but the median methodology and the standard deviation methodology is a scientifically proven approach to be able to consider these individually and yet fairly. And so the goal was to have an approach that would not only allow for full relief if the student is significantly financially impacted, but also partial relief if there is some Financial Impact but not as significant perhaps as others. So when we a lot of this the heart of this methodology comes down to comparison to peer groups and peer academic programs. How do you decide what that cohort of comparison programs looks like . Well, theres similar programs with codes that are considered for each of those programs. And they line up across the board. The previous questioners line around the percentage of programs included in the College Scorecard captures the data captures the bulk of the students and the programs that students have and are attending. And so there are always like comparisons to be able to use when using the new methodology. So weve had some discussion today about to what extent the new methodology is fair or unfair to people who have gone on to better themselves maybe through extraordinary efforts on their own. Talk to us a little bit about the methodology and whether or not you think it fairly has an impact on students, given their different economic salary outcomes in the years after their education. Well, it actually looks at program to program, versus their specific salary. So if an individual has done very well themselves financially, but they have a claim against a school and that particular program, thats what that is what the comparison thats the comparison that is made. So thats an important distinction. They get credit or dispensation for the average impact, negative impact, of their program. In that way their extraordinary efforts, that would accrue benefit to them . They wouldnt be punished . Am i saying that correct . Correct. I want to talk a little bit about the timeline for applying for relief. I think if memory serves, your new rules allow for threeyear filing timeline. Number one is, is my memory right . Number two, why is that the right timeframe . We decided on a threeyear timeframe because following a completion of study in a program, three years after seems to be a reasonable amount of time, particularly considering the fact that generally speaking, if there was a claim to be made, that presumably would have occurred at the beginning of the decision to take that program. So the length of time that a student has is really i think pretty substantial. It could be up to seven years, frankly. Do we have a sense you talked about how and i dont want to put words in your mouth, so push back if im categorizing your statement wrong. I think you all had a methodology you were pretty happy with. The courts told you you cant use that particular data set. When you spoke about that earlier it didnt seem as though you had any idea of a timing on a final decision, is that right . Thats correct. We have appealed that decision. We believe the data set was a viable use. And the court has not opined for over a year. Have all legal filings been made before the Appellate Court . Are were waiting on the courts decision. Very good. Thank you mister chairman i yield back the gentleman from new york mr. Morally. Thank you so much mister chairman for hosting this hearing i thank the madam secretary for being here this, morning i do find interesting the conversation about tax payers rights and interests versus students who have made claims, and i suppose one way to save taxpayers dollars would be to deny all the. Claims im not saying you should do. That but we should find balance because if we simply deny all the claims they would be lead and legal or morally defensive but certainly save taxpayer dollars. I want to just touch on a few things that i find interesting about the department rules one of them relates to the frivolous factors and i want to read one of the new rules that states institution that includes an isis storm on on campus can i guarantee that every student can sleep in that storm . How many students have submitted a borrowers defends claim that they didnt light know the dorm . Room i dont have the number for, that but i do have a case file of one that submitted a claim that is claim barr defends for the fact that he or she did not like the professor. Okay. As it relates to it, the role it actually sites the nicest storm rule. And im just curious whether or not you could follow up to determine since its in the. Roll i assume that they were concerns that claims have been made by students that they did get the nice dorm room that they saw gets. Were there have been a number of different quite unbelievable claims made. Eight can you give me a sense of how many frivolous claims in your view the 2016 regulations allowed to be forced the department to discharge . I dont have a specific number to side because not all of those claims have adjudicated but processed. But i do know that there have been a number of claims made that, you know your job will drop if you actually read the reason for theyre claiming of fraudulent activity. Im not sure my job was dropped, but perhaps other peoples would, a other the things that i was struck to. My background is in the new york state legislator, and we are obviously involved in Higher Education but not federal programs. The rule, than rural, states that it made the changes to the application process about, so quote, powers shop wisely take personal responsibility for seeking the best with information available, and accept the benefits of Student Loans through the general understanding that they are generally and legally obligated to pay these in fall. I was struck by some of the conversation because the institutions are qualified for this, and guarantee loan program, the requirement is that they be accredited, either by a national, or regional credit they shun organization. And given the nature of some of the students particular that it attended corinthians and some of the other schools that have been claims of significant fraud, it seems hard to me, as an average citizen, that you would put the burden on an individual who is looking to go to school, and these are often cases non traditional students, so their artwork, they may have families, their check and lunged but they want to pursue their careers, at the fact that they are credited, should mean something, and the sort of suggestion that i get is that not only the expectations take the accreditation buddy obligated to do Additional Research on the claims made by the college when they go. When the college says 100 percent of her students find jobs after taking this course in the field in which they study, its a created by the federal government but as a federal guaranteed loan program, and theyre credited by a National Regional organization. Why should that student be obligated to take that as a proxy . The accreditation, that is required by the federal government . Why shouldnt date im not sure im clear. On the cessna the suggestion is i, understand there is a responsibility of the respective student to do more research on the credit looked credibility of claims being bay made by people representing various colleges, i would just assume theyve been a credibly regionally or nationally, and there is a guarantee loan program, and that is an indication that the federal government has essentially put the Good Housekeeping seal of approval. Why would it require a student to do Additional Research on the validity of the claims to be made by an accredited college . I think its imperative that we provide as much information for all parties, clearly a creditors have a role, institutions im selves have a role, and the federal government as a lender has a role to play. Thats why weve continued to improve the information available, and to insist on an approach with a regulation that is balance and the treats all institutions equally. I apologize im art of my time im going to yield, back but i would just like to say that accreditations should shift the balance and they should be able to rely on that and thats not what the rule says thank you doctor murphy in North Carolina thank you secretary davos for coming today, i just want to say i appreciate the effort that your department is doing to try to be a good stewards of the taxpayer money this entire issue highlights some of the problems that our federal government actually has in education thats a diatribe all go on later, i appreciate youre trying to be a good steward because we are trying to strike a balance between individuals trying to pursue better education and one that doesnt just all out money because someone says that they deserve money. I can understand some of the comments, i would probably shake my head out some of the comments that some people claim that they should be reimbursed or whatever. Let me ask you a couple question, because accreditation to me just in the medical fear seems to be in my opinion a way to get a lot of money from institutions that a credit other institutions. By definition accreditation really means about as much as its worth. You can be accredited by different bodies, i dont even give a stamp necessarily to some institution its been a a credit it there is a for or phrase, cave buyer beware. But on the other hand, what strategies, what practices, does that the top argument used to conduct oversight for these Higher Education institutions to make sure they are not fraudulent institutions . Well the, department has a lot of responsibility to ensure that all institutions are treated equally, and fairly, and this rule, i want to get us back to the reason that were here today to talk about borrowed offense, and our approach to borrowing these clam claims. And that ensuring those students are treated fairly and taxpayers are paid fairly in the process. We are committed to following all the rules and the regulations are these, congress has provided for us and continue to do so regularly. What form penal is a shan if you were, is used by the department for institutions that are having practices that are causing students and to have to lose money in other words, what kind of deceptive practices are penalized and how, are they penalized by some of these institutions . Well the department has primarily fiduciary tools, and responsibilities, its balance between a creditors and states, and the department to ensure that institutions are holding up their end of the bargain and the fiduciary role is primarily through the department of. Education one final question of the students who have submitted claims, what percentage would you say our folks that are good doing this as a second, also working a second job, or working a job and doing primarily this as the main focus as far as a Higher Education . Thats a good question i dont have the granular data, on that, i dont know if general brown has a great breakdown on. I really dont collect the data at that level to see if theyre doing additional jobs are those kinds of things. We simply adjudicate aids case based on its own. Merit and just a followup with that i feel for individuals who are working in theyre trying to better their sums by all means, education is the key, to education and prosperity, i do think the federal government has led to some of the problems that we have in high origination because the money is so free, it comes to that many strings, and if you are nicole money and go are new to. And i think its led to a lot of book within higher adjudication and we have a lot of kids going to be higher institutions should be going to Community Colleges first and, we are part to blame for all this nonsense. Im nonsense and i thank you for doing the right thing. I yield back my time the gentle lady from pennsylvania miss wealth. Id like to address the new partial released by the department. An expert in the field doctor douglas web booker, who is a professor of economics at Temple University and was a bipartisan witness by this committee. Said that the borrower defense creek in his defensive reprehensible and harmful to students, the main troll used by the mid to Education Department is defined based on the mean and it has no direct relation to the medium in, short its analysis propose the formula that misunderstands and misunderstands techniques in a way that makes it materially harder for students to find relief i would like to enter this analysis to the. Without objection. Moving on to secretary davos in the past year the number has ballooned to 225th 7000. Many of these are part of group claims submitted by 20 separate state attorneys general including in my state pennsylvania, and sound borders have been waiting for more than four years for relief. These groups claims represents thousands of students who were defrauded bright predatory colleges. There is no questions that these colleges engaged in fraud. 24 members of this committee on both sides of the aisle represent students in those. States now, initially when these claims are brought, your department attempted to have them summarily dismissed, by arguing that the state attorney general could not assert a borrower defense on behalf of a group of borrowers. Is that still youre assertion . Let me just correct you. Let me just have an answer first is that still . Let me just correct we have almost 300,000 claims. Filed is it still youre saoirse let a state attorney general cannot assert a borrower defense on behalf of a group of . Borrowers it is the assertion that its the federal department of education that has through federal student aid the oversight responsibility and the claims continue to be filed by individuals are considered so i take it is that your answer to my question is yes. That you still maintain that a stain attorney general cannot say. I know that there are many attorneys general who are marketing the opportunity to file claims ive seen facebook ads and maybe others madam, secretary im sorry but you seem to be incapable of answering yes or no. Let me just remind you that in october of 2017 a federal court ruled and williams versus device that the actions were unlawful. And rule that the Education Department bust review applications submitted by states attorney general, and cease involuntary collection activities against those borrowers. Why are those claims still sitting at the department . The claims cannot be processed with art the dollars you to do so. We now have one, and they are being processed again. And how many of those claims have been processed that were brought by the collective claims by the states attorney general since that quarterly . General browned will have to answer the question about the specific. Claims why dont you im going to ask you to get that information that was currently that he was been process because we were just starter processing without with ended last week. No the question is directed a feud, like to turn to general brown and ask him for that information thats fine, but i want the answer to confirm you please. General brown would you inform the secretary please of your answer. How many of those claims . Buts we dont process by attorneys general claims. Notwithstanding the fact that the federal court directed you to do so . We are processing the pending claims that we have had and we will take them as the federal Student Aid Department decides they need to be, the ones that they are able to process and our processing first. All right, im going to reclaim my time. In june of 2000 1922 senators road to you asking you to smell mitts by the states attorney general and your department responded stating that the requests for group relief are in various stages of review by the, department correct . They are. Indeed all of the claims are going to be considered individually. On your time . Table did you not stayed at the very beginning of your testimony that students are number one priority . Because listening today, i have a hard time believing that a defrauded borrower would think that you are in their corner, with that i yield. Back i was very clear from the started that while this process i yield back was being set into place, that no student would assume more interested on on their Student Loan Debt. And that they would be held in forbearance. I dont like the fact that theyve been sitting there any longer, as long as they have any more than you do. I said that at the beginning, of say it again. Now our goal is to get these claims process, and to take age students claim individually, acknowledging that each student has unique in separate circumstances. Im sorry but secretary devos. The gentlemen ladies time is expired. Thank you mr. Chuck mister chairman. The gentleman from canvas. Thank you mister chairman, its good to see you again i noticed that you tweeted that students are my number one priority. Thats why i come to work every day, i know that to be the case, as with other educators one being by mother, who is an educator in kansas for many years. And reminded me of what she say when she came home, and students her her number one priority. And thats why she went to work. Everyday thats why you go to work every day. And i thank you for that. Obviously are trying to work and do the best you can, at the intersection between politics and education, where everybody is very emotional about the way ahead. Thanks for your best efforts that patriot, and doing your best under the situation. During your tenure, before her tenure, a lot of things happened. Im going to ask you a bit about the timeline, about, you can you can feel free to have general brown answer feud. Like november 2016, the Department Published new borrowers the fence regulations. That was the first and some 11 years i believe. In accordance with a Higher Education, act the final regulations were published in november 2016, were scheduled to go into effect july 1st 2017. You put a hold on them why was . That congressman thanks, for the question we were hopeful we were able to delay the implementation of the chaos 2016 role, in order to further refine the rule, which we have now done, with a rule that will go into effect next july. As it stands now, we have three different sort of buckets, of claims and, rules under which we will ultimately have to operate, the 95 roll, the 2016 role, and then prospectively the 2020 rule. Can you tell us when that process began, and how long it took, to issue the final ruling, and during that time did you consider and incorporate feedback from Higher Education stakeholders including the . Public oh yes, we went through the rulemaking process i received him pecan feedback during the Public Comment period, and responded to that appropriately. Yes thank you and again, i just want to thank you thank you for your hard work and thanks for that all of that you do and i urge the likely to be a reminder that the challenge here is henry provide and him and empower in the case of primary education, all of the decisionmaking power to teachers, and parents and make sure we understand what our limited role is an oversights ought to be. Because i think its best done by the parents and the teachers. Thank you again for being here madam secretary. And i yield the member of my time. I thank the gentleman, thank you madam secretary, if you couldnt lighten us further on how you communicate with Loan Services and, how they communicate the changes in borrower start us when the Court Intervenes or the borrower files a claim. Well, congressman the, communication where the services is an ongoing and irregular effort. And it continues to be a challenge frankly. Id love to have one of the exhibits that we have along here part up, exhibit two, to better understand the complexity, you know when, federal student aid was created i dont think congress ever envision the kind of complex organization that it would be today, and i think you will see with this chart how, many elements there are the lone services all operate on different platforms so there is not efficient and effective way to communicate it makes communication challenging, but one for which we have continued to take responsibility that is why we continue to move to the modernization of federal student aides platform and framework, what we call next jim, and we were going to be able to have a much better and smoother process and communications flow, when we are ultimately able to migrate completely to that nextgen framework and if youre interested and hearing more about it i know general brown has a lot more detail about that process well with eight seconds, seven i dont think we have that detail but we look forward to it, and im delighted to hear that while its converse and right now we are moving nextgen to do it better to do it better and to complete those 300. Thousand thank you the gentle lady from washington doctor share. Thank you mister chairman thank you madam secretary for joining us today. I come from washington states and, nearly 6500 students there are stuck. They took out Student Loans, and enrolled in bad actor for profit colleges that intentionally deceived them. Colleges close, credits were worthless they, got stuck with thousands of waters and data nothing to show for it. No degree, no credits they can transfer. One of my constituents from koala washington is a sitting goal mother, she was unable to get her degree, her socalled education prepared her for nothing. She werent very little and was stuck paying back those lotions even though she could not afford to leave or parents. Home she said, my son has asthma and, sometimes needs hospital visits, when he needs very sick i cant even take him. Anywhere it makes my life feel is being hell. She has had to take out loans because she has continued to pay on the stats, now air was a consensus in your department that all of these current the 90 loans should be given that uniformly, students got no benefit. And under the obama or ministration the policy was enacted to forgive that that because they were victims of fraud. But you have continued to collect on those loads so student ensued and judges held you in contempt for continue to take those payments. And to this day theyre still continuing to pay their Student Loans, this still sometime garnishing wages. So my question to you who considers students their number one priority, do you really believe youve done everything a possibly can to help the students and make them haul . Congresswoman, let me disagree with a narrative that you just advanced. I have continued to respect the fact that many students borrowed defensive applications have been pending, and all students whose applications are pending, are in forbearance and, are not having interested recruit. So the narrative that you advance is not accurate. And i am committed to continue wanting to implement this methodology to not process the pending applications, and very hopeful that we are going to be able to continue to do it without litigation, and that ultimately these borrowers will have their questions answered. Here is my concern. You say that there and forbearance but people are still paying on these. Loans they are still rocking. Up in the case that they were, they have been remediated, they have reeve become aware that they have been inaccurately taken outs we have remediated them and, will continue to be vigilant about. That id like to know about what kind of timeframe are looking at here because you have, you have mentioned mentored children precisely the kinds of kids who grow up, and go to institutions like this, and i wonder if you could put yourself in this shoes and feel how it would look like to go to these institutions, be defrauded, we deceived and that their credits will be transferred that they would have an income afterwards, and they not and then to have to wait for this long for forbearance is one thing but you are continuing to collect on the students, my understanding is that only 1500 cases have been truly processed through two dates, youre new process looking at one case at a, time anticipating another year of waiting, what seems along to me can you tell me when you anticipate there will have relief . I can, indeed full feel for the students that are going to any institution and have a hopes that far exceed what they realize and what they ultimately experience. And we are committed to ensuring that every student that summits a borrower defends claim is considered on its individual merits. And that we have a fair and robust way of considering each of those claims. We are moving as expeditiously as possible to address those claims, and we have a new methodology underway. So the new methodology as multiple flaws theres also nothing that prevents to you from simply stopping collecting payments while there was going through this process. But the students are still paying. Some of them going into debt, some of their Credit Ratings damage, i would like to know what youre going to do to fix this. Get their money back, to repair their Credit Ratings. There is a long chain of suffering that happens when youre first to continue to pay on fraudulent. Debt a long chain of suffer again, any student that ultimately has a claim that has merits and that for which they have experienced financial harm, we are committed to ensuring that they are arm are made. Whole corinthians student and i tea student 100 have valid claims because they got zero benefits . That is simply not true because they are convention and identity students who have your very own staff has determined that it was true. Thank you. Expired gentleman from North Carolina mister walker. Thank you have been watching some of the hearing and having some other meetings, i thought all the painful stuff the was happening in another committee. Obviously we are making some space on this one, even though we are not the feature prime time spot, doesnt mean you cant just say some crazy things in this committee as well. Ive got a couple of questions but im going to pause and to commend you on his strength, listen the reality is all of us when you transition into the public political environment, my background is up as a pasture, semi due caters youre, not going to get everything right at first. But youre taught to look at the heart. And i think with your career, before coming to this wonderful position, secretary of education, that you have, and other things that youve done, i think the hardest pretty clear here, on what youve tried to do. Its a little bit embarrassing to see the where it goes personal, like it has but i dont know how youve continued to go for turnout like you have, i think when people have disagreements its a shame that we make it personal, onlys god sees the heart, and i commend you for doing the right thing, and i guess alaska few questions if thats okay at this point. So after my commentary is completed. You have released a new methodology for determining relief for borrowers. Can you please walk me through the methodology and explain why this is a fair and appropriate measure . If general brown needs to provide some specific information, he can do that auto city you sir. Thanks, in thanks for the encouragement. The top line is the new methodology really treat students individually and fairly. And also respects the taxpayer. It has established a process, scientifically proven, demonstrable process, to consider students that have made claims against their whatever institution, by the program the attended, and it compares the earnings, the median earnings from that program at that institution, with median earnings from like programs from other institutions. All right, im sorry go, ahead finish. If it falls outside of two standard uva shuns from that, i mean or median, the borrower would receive 100 percent relief and, between the median and to standard evaluations, it would be a good tier of paul approach, we believe this is a good way of demonstrating. This royal which of the low the loans what thes methodology apply to . Well all of the pending claims with the exception of the Corinthians College students, that have been carved out by the previous lawsuits. And we are hopeful that the judge will review this process and permit it for the claims that were pending there is. Well my understanding is that the system used to process these claims and match borrower information is significantly out of date and lacks the capacity to a financially process the exponential growth and claims since 2015. If this requires a most technical answer, please elaborate as to why this deficient in handling these claims in how this can be contributed to the backlog of crime claims processed . First of all, student aida is a complex organization, Congress Never envisioned i, dont think when it was founded, what it would become today, and were in the process of updating that foundation and framework, so that it does more smoothly and easily talk with itself and with services, but i, think that the ponderous nurse around this whole thing, speaks to the complexity of federal student aid, and the federalization of suited lending. And it has continued to manifest itself, 1995 to 2015, only 59 borrower defense claims and that 20year period, since then nearly 300,000. And it was frankly an all out attack, in the last and missed administration on specific institution thats the rule Going Forward will treat all institutions equally, the last administration said they werent going to look at the materials or realities from you, know liberal arts programs, because they the value was assume there. Well thats not just a reasonable approach. I wanted to hear more from general brown but my time has expired. A miss underwood thank you mister chairman do you know how many corinthians students have negative information wrongly added to their carat credit . Reports how many students with a mistake that was made more recently . How many east had negative information wrongly added to their Credit Report . Im not asking about your, staff im asking about you. Do you know the exact . Number maam . Whats secretary devos . Do you know the exact number . Congress so woman i am consulting with the seat chief operating officer federal student age with who is charged with a running and implementing of this program. I appreciate that, but if you didnt know the answer could just be no, and thats okay. Im trying to find out if i can do give you an accurate answer. The reality is we dont distinguish within the loans that have been pending and processed, so the answer is we dont have that information is not corrected. So far your department has publicly released a number and, its 500 900 corinthians student whose Credit Reports were wrongly affected. You are aware that negative information on Credit Report, like information that says youre not playing your crew your Student Loans can lower your credit store scores is that . Correct all of the students that were impacted by the mistake that was made have been remediated. Were going to get to the remediation i was just asking. Reclaiming my time please secretary davos have, you been denied a home or car loan because of your credit score was ever too low . I have . Not. Eight okay but you do know how unfair can affect students wide some exist specific examples of those arms . In fact all of a students that had Credit Reports affected have been remediate. It thank you so much. Maam we will continue to Pay Attention to not have a and. Happens again thank you we know that students whose Credit Report get hams it impacts their ability to buy a home auto, loans it can lead to job loss. The consequences are real, and personal and they have really devastating impacts of students. I want to share a few of their stories. Look we should johnson from my home state of little illinois, or degree as a medical assistance from a current in school. But now we know that degree is almost worthless. But shes left with a Student Loans. She just had a job offer rescinded because her credit score shows delinquent loans. Julie decker from indiana lost her home and car while waiting for the death relief she is legally entitled to. Each her credit suffered so much she cant find a new apartment to rent. So lets go back to that 5900 number. You previously seven only 900 students Credit Scores were affected. But last week you disclosed any additional 5000 students. Are there more disclosures to calm, or can you commit right now that you have discovered and corrected every unfair report on the corinthians students credit . Congresswoman i too feel for the individuals that you cited in your examples, and again, once again i, am committed to ensuring that we do whats right for all students. Who have submitted borrower defends claims, we have continued to be diligent, correcting the errors that were made, we have acknowledge them, we have said we are sorry for, them and we are going to continue to be vigilant to make sure that we dont incur more of. Them we have put notices in the services files, which has significant implications for future contracts, we have continued to make sure that consequences for the mistakes that were made, are in our levied and that students are continuing to put can students first in this case, the ones that did have Credit Ratings impacted, again we have addressed those, we if there are instances in the future, we will do so, with them as well. My concern maam is that this group of student may just be the tip of the iceberg. Your Department Just disclose this large number the esthetician or 5000 students this week as the reserve result of a lawsuit. It doesnt include the in the instance that are involved in this class actions or the ones that included a different one. It doesnt include the hundreds of thousands that went to fraudulent schools that arent corinthians schools that also maybe eligible for borrower defense and worse youre own former deputy when johnson gave an interview where he said quote right now i know that millions of people have unfair information in there for credit files that is causing them to pay more in car loans and apartments. Secretary device, you have the responsibility and the existence authorities to do something about. It and what were trying to department is whats the right number . Is it 900 . Is it 5000 . Our war we into the millions . I yield back. General ladys time is expired, gentleman from georgia. Buts excuse me, gentleman from pennsylvania mr. Color. Thank you mister chairman and secretary device. General brown thank you for being here. Today thank you for your, service to americas students, and education, i appreciate it very much. I have a couple things that id like to get into. After i just make a couple observations, secretariat of office i know that we all agree all students were defrauded by the schools should be receiving relief. I also want to focus on fairness. Since joining the committeecommittee, we have marked up a onesided peter robs paul Higher Education reauthorization act. The Democrat Bill struck me as being unfair to the students we are trying to help and insulting to the intelligence of the students who made the educational decision in their best interest. As democrats continue to push theyre not only are not only harming our students. We do a disservice to the students when we focus on our schools tax returns instead of the education delivered. We can discuss how there are bad actors across the board, but what we should focus on is how you love students to fight this cooler Education Program that best fits their needs and help them achieve their goals. And ive heard about earlier today about not having a process, and many things in place for you to be able to do that from the previous, administration so i just want to however ask couple questions, can you tell us about what the department is doing to help students and Prospective Students better understand the options available, like does the College Scorecard cover just a gloria degrees . Thanks for that question, yes the colleges scorecard weaved recently enhance the data for now contains information out of field study level, for not only for your colleges but also to your institutions for some certificate programs, some graduate programs, and also has links to the apprenticeship programs for the department of labour. So we believe this is going to be a very good an important tool for students to access and use as they consider future fields of studies and future programs. So prior to the Previous Administration that they cover that broad range of programs available . Or they just focus on the back laureate degrees . They were focused on for years institutions and by institution level. Now are down to the program. Level . What that would do would be improving any students at any field of study depending on how long it takes . To acknowledge there are many pathways to a many successful adult life and we encourage students to look at all of their options, and look at them starting mid in middle school. Frankly your scorecard would actually predict more schools than the Previous Administrations it because youre including at the decree level not the institution level, and you are considering all programs not just baccalaureate. Right. So youve done more to help sue students. I would argue that. Yes because previously ive been going to have to your degree an apprenticeship i wouldnt have that information a group of crime . The thank you i appreciate it very. Much also has the informations shared on the scorecard its been expanded over your watch can you highlight what changes have been made what the additional education pathways of made, and you can talk about that, but when you look at that, how do you think thats helped some of the other people that arent going for the baccalaureate but maybe they me going to a twoyear Associates Degree or Training Program . This is relatively new, so it was just within the last several weeks that this data was made available, so i think, prospectively students are going to be able to make better comparisons and be able to compare between institutions, compare between programs, compare different kinds of fields of study. And again, just give students and Prospective Students, many more tools, to be able to get makeup decisions for their future. I appreciate that, and i just want to follow up, i know theres been some previous remarks about certain, you know students, and they havent, but the courts have really held europe on getting relief to all students. Is that correct . Correct we had a process well underway in 2018, and two the court stop this from continue it added in may in 2018, weve been waiting for the court to an appeal since then, have developed the second methodology now has been just been able to unveil that, and implement began implementing it last. Week so the courts have caused some peoples credit score to be harmed more so than the department . Indeed. Thank you madam secretary. Gentlemans time expire gentlelady from connecticut miss hayes. Thank you mister chair id like to return to that 2017 memo from the borrower difference union, undersecretary ted mitchell, was a top lieutenant of former law secretary of education john king. While this was memo was written before he took office, it for sermons as a fundamental transition memo, you have the benefit of sitting next to a former secretary that assured me that there are meetings and of mean griffin book and a letters, and i think it would be vital for your department to read what you inherited, since you said there was no plan, and there was a plan and fact, as this indicates. There was not a process. We operate in a country where we have peaceful transitions of power and its understood, the when we exchange from administration to administration, and then the last thing before i move on to my, questions is that its been suggested, by my questions on more than one occasion that i dont understand this i understand, everything about these hearings i understand. So secretary to for the vice you told senator murray and i quote, the department had sided to move forward with processing it denials while awaiting the courts decision for borrowers this fence methodology. It turns out in fact that the your department has been sitting at 15,000 denial claims. My question is, why would the department borrowers that whose claim were denied . First of all, the claims are ineligible and we decided not to release a bunch of them early before we were able to implement this new methodology because we dont want to concern students that had pending applications that, perhaps this was going to be the case for everyone, so while we could reach the conclusion and reached a decision for a number of them, we intentionally did not want to, i think, concerns students with pending applications because there are many pending, applications i got it but dont you think that a borrower who has no chance of getting forgiveness should be told their status is fair for a borrower to be waiting up to four years for a resolution, when some of them may have been denied, the institutions are closed, theyre losing access to critical documents, the interest is building up, is there any, i i dont know, political reason to doing this so that the numbers of denial would not be increased . If you have at the end from. Nation we were concerned about the message it would send to pending students with valid application, so that was the reason. But what an estimated want to know if theyre waiting for a decision, its been four years and a decision has already been made that their application was denied so that. Im sure all students want to know and thats what we really focused on trying to get this new methodology fully implemented and frankly, have been very disappointed up a court has not a and on your appeal to the previously methodology. But the court has not prevented you from informing students of denials. Is it not just true that in a sworn decker location signed in court that Principal Deputy under dianne jiang stated that the department did not want to notify borrowers about denials, because of concerns of the Public Perception of the process . Again just what i said, i didnt want students with pending applications to somehow think their application would not have any chance of approval, or of relief. And so, that we have the noon methodology, its kind of a moot point actually. We are well underway with processing again, and we will be able to fully inform borrowers, hopefully may area of them very quickly. Whether regard to the status of there. Application to me this looks like a political decision because you warrant approving any claims. It would look bad if you were ratcheting up the denial rates, the approvals are flat the denials were up, so youre sitting on everything to keep better optics at this cost of students who just won a resolution. Alaska again, if you know a borrower does not have a valid claim or that he has been denial for other reasons, what is the benefit of sitting on that information and not sharing it with a . Student i would like to refer to exhibit six which demonstrates the percentage of claims that had relief. Talking about the claims that you know were. Denial im talking about the history of claims that we were able to process before the court stop this, and compare that to the percentage of claims that the Previous Administration, and they were consistent with, youll see 62 and we were condition been condition to my time is expired i have to yield back him. Sorry gentleman from georgia mr. Allen. Good morning mr. Madam secretary, and thank you to for i know, that you when i share common faith, i think thats probably what sustains us and these things prosecution, is just part of it. It there is lots of disagreements on how to do things here, but i do remember and of course run it if an congress. But, in a lot of difference in new faces here, a lot of new ideas, but in the last congress we actually marked up the Higher Education authorization, and one of the most creative sized pieces of that, by my democratic colleagues, was a piece that we put in there, holding both public and private schools of Higher Education accountable hir to both students and federal government for federal debt. And fact, let the, we want to go back and pull the records, but id like to enter the record of exactly what language that went there, the vote on, it and the comments about it, making our schools of Higher Education more accountable, because, obviously young people have been misled, i ive come across young people all the time. And their requests is, first you please forgive my Student Loan Debt . Because they were ill advised, and frankly, this kind of ramped up in the last, you know, well ive been a member, this is my third term, i think ive begun hearing about this about ten years ago, of course the idea is that every young person should gets a college degree, were going to long people the money and not going to tell them in how in the world are going to pay it back, and thats. Wrong and the federal government, i put the blame right here on this. Body whoever came up with this idea in the beginning, and did not put into place and provide for, to keep young people from being misled, thats the tragedy here. I realize you inherited a lot of this, and so what im going to do right now, and general brown, youve got some charts over there, if you havent been able to share exactly what youre trying to do, to correct this situation, i will come that opportunity. You get to have that opportunity, we have two minutes and 22 seconds remaining, if theres something over there that you think would help my colleagues here organize what youre trying to do, and how quickly are trying to do it id be glad if you would share that. If the gentleman could direct well secretary divorce if you do whatever you need to do to defer to general brown or whatever, however you want to do that, please proceed. Congressman, thanks for that and you are right we inherited a difficult situation. We are trying to put in place a process, we have now a second time put in place a reasonable process, one that treats students fairly taxpayers fairly, institutions fairly, one that is balanced in its approach, i will just stop and see if there is anything that general brownfields we have been able to share with regard to that new process. Yes maam, very quickly ill show you on exhibit two, while hes getting that up, just to correct one aired here. 100 percent of those people who are impacted with the Credit Report rated rings have been corrected, and almost all with very few exceptions, those we have today weve had refunds given to them. We have a system of. I have to add one thing there was a mistake and mike read a report that i did know about, when i went to go by something, if so it happens so, go ahead. Yes sir ill, quickly tell the committee that we have 11 Loan Services and 13 collection agencies across the country, these are not systems that Work Together. These are individual silos of at least four different systems. To get information from the systems you actually have to go out to the individual long service slurs and, craft the questions to get it back. Which is not the way any of you do your consumer banking, its not the way most people do business in the century, what were trying to do is take ownership of Loan Servicing back into the federal student aid, so there is one system we own, and so there is a specific question we can get it from our systems without going out to the long service stars. And therefore reduce the area we call that the next generation of students aged, and we are almost there some of it we are implementing it, now and some will implement next. Year secretary hang in there im with you think. You gentlemans time is expired gentlelady from florida. Miss jill ella thank you very much, thank you secretary for joining us today, sarah accra terry devos you have repeatedly said that youre new partial formula is necessary for individualized review of claims from defrauded borrowers. Is that . Correct yes. Isnt it true not only for individual but from a framework and a process. Isnt. Its true that youre new partial release formula does not allow for and do individualized a few of . Claims no it does allow for individualized to review it claims. Youre sure of . That each claim is being reviewed individually by general plans robust so the partial review relief formula does allow for an individualized review of claims . Yes, i mean each of them are being reviewed individually. Thats why were here, three times a number of attorneys weve had previously. The gentlelady yields . Yes. Are you asking whether or not the individual cases are reviewed or whether or not the individual dynamics whether the persons income is individually reviewed . Love the latter. Not the well, no its a program to a program review. A borrower has submitted a claim with regard to a specific institution, the program they studied, the information, the medium earnings information from that program, from all who graduated at the program and that institution is reviewed against the median earnings of like programs from other institutions around the country. So thats not an individualized review the set up a formula. There its an individualized to program as someone said, you could have an individual whos done remarkably well financially, that has made a claim against a program that a upon review falls short, simply because that individual has earned more, they should not be penalized and that case let me ask a quick question follow up on with my colleague i believe thats been rolling out it continues to be rolled out its happening my maven as we. Speak and when well all of them be notified . By the first try much i expect there will be notified over the next couple of weeks. Some of which that have been notified when the 18,000 be notified as part of . That over the next couple of weeks, maam they will be, and that has already. Started let me ask a question how many staff people does the general half are these individual is . Reviews im going to ask him to comment how he has staffed up at my urging reviewing them. Maam, we will have off to 64 and we have most of those already hired now, thats more than three times as many as of weve ever had the peak of which if you go back over the last three or four years has been 14. We will have up to 60. For so, madam secretary, let me ask you a very specific question about this. So if he has around 60, and you have 227,000 claims, that have to be individually reviewed, and you have already indicated that you will tend to do that over 12 months, thats about 300 per person even the va and Social Security, with the equivalent of a brigade, cant review that many, so explain to me, how in 12 months, youre going to be able to with that limited number of people, to process individually over 200,000 claims . Well general brown has assured me that the the has the personnel in place to be able to do that and he has commitments to follow through on all of his commitments that is 300 today for an individual that is technically impossible social, security can do it, we have a lot of experience in government so, im questioning the credibility of being able to do that in 12 months. What youve assured us youre going to be able to do. All claims are not the same the complexity of some and the documentation is far greater than the other we have people that are looking at this theyve looked at the various complexities, the number that were out today for processing, were very early in the process. We hope to grow that to a number that exceeds the amount that are coming. 64 is the wrong number, then we will hire more. We will go back to the secretary and ask for more resources. Well see that on a weekly basis. I wont be fixated on 64, other than to say that its greater than the amount of pride in the past. Were looking at this each month. With all due respect madam secretary, im focused on 200, 000, not on the number much staff people. Im simply suggesting that technically given the number of stacked peep stuff people, you can actually not process that number, and you have to look at that. If i have more if i could just comment, maybe the of these claims have been adjudicated to the point of being able to be processed. So there are a lot of thought are already several steps into the process, now they have to be complete the process. I yield back. Could we have next mr. Smucker gentleman from pennsylvania. Thank you mister chairman thank you madam secretary for being here, appreciate your work. Appreciate your comments earlier in regards to congressional oversight, which you stated you understand the need for, you have done i, think an excellent job of outlining your response and the departments response to, the questions that i have been raised legitimately today, but i find it unfortunately that you continue to be asked about reading a specific memo, and i dont understand what that has to do with your Department Policy on these issues. Which is porter than we understand. And the foul the memo that youre really ask about was written in january 10th of seven 2017 prior to taking office. I just want to make sure that find affects of that your view of Public Education, and you want that looks like your body of work in size that you dont care about children doesnt care about Public Education thats untrue. Its false. And its offensive. I also find it offensive that the state statement was made about republicans. And everyone can look at my record, and others on the republican side of the aisle, and know that we have worked hard to ensure that every child gets the education that they deserve and that Public Education is working effectively in our states so the committee has reached a new level when we are throwing those low levels of accusations to the other side and its unfortunate should not be part of that hearing here today you do have there have been some questions in regards to your authority and to the idea of partial partial it whats the word . Partial relief im sorry, and i want to make this, clear i want you to ask you a question in this regard, partial relief for could be for someone who has already graduated from the institution. And who is in the workforce. Correct . Correct. Youre talking about someone who may have graduated years before the School Closed who has had a beneficial education and a job as a result of that education. What im hearing democrats say here today is they dont even want to look into that, they want to instead to make a blanket relief a, hundred percent of any additional Student Loans that that student has. Outstanding is that correct . Well there is a, no there is an eye to that many if not all of. No court of, law would look at a situation like this, no Insurance Company would look at a situation like, this and for us to expect that to taxpayers would support something along that line is not a grid precedent. I want to put a few things on the record im going to run down a series of questions. You agree that its a provision act . Correct. That statute and mill states notwithstanding any provision of state or federal law, the secretary shall specify and regulations which acts are real or missions of an institution of Higher Education a borrower may assert to, except in no event may borrow recover from the secretary and any action arising from relating to alone amounts in excess of such amount were paid, these are the only provisions that restricts the activities that you can take in riding a role. Am i correct about . That correct. My interpretation means that one, will issue regulations on this issue, and two thats the only limit, that you have, in providing relief. Turning to the rule making activity then there are three different regulations. President cant clintons in 1995 plays it into obamas in 2016 and yours this year is that correct. . Yes. The application was a under the 1995 clinton regulations that the regulation grand partial . Relief yes after the obama relief was the secretary allowed to ground partial relief . Yes do you believe that that authority is clear and not in dispute . Yes i do. If members of congress disagree with a policy decision, they defer to the department. Can they introduce and passive bill mandating that you, to provide full relief, and would you continue to follow the law that congress has written if that were the . Case congress could indeed prasad, law and if that lower price i would indeed follow. It thank you madam secretary. The gentleman yields back, the gentleman from michigan, mr. 11. Thank you good afternoon, madam secretary. Im going to lead you, just to let you know some yes or no questions. Just like mr. Smucker did so ably. Lets see if we can get and yes or no answer here as well. In a november 7th letter to chairman stuck cocked you, wrote the following in reference to claims from defrauded corinthians borrowers. And i quote. The clear intent of the prior demonstration was to eventually provide blanket relief, without a review of the facts, and evidence. Does that actually represent your views on the Obama Administrations process for reviewing current in . Claims yes. Okay thank you i have in my hands that were uncovered yesterday by in a story by National Public radio. These memos, were produced by education Department Staff in 2000 6 16 and early 2017, so a Detailed Analysis documenting pervasive and consistent fraud by corinthians schools. The committee has been requesting relevant documents from you for the last year. Did you provide these documents to the committee . We have been providing documents. Did you provide these documents, these two memos . I cannot i dont know what members youre holding up an eye there the memos that weve been talking about omar name i am. Yes the npr memos. Did you submit them are not to us . Im sure that they were part of whatever document dump of 18,000 pages i i can say well the gentleman . Yield yes i would. We havent seen those documents so, you have not submit those documents to us. So, did you halt and curtail loan relief for defrauded corinthians borrowers, without reading this detailed review of the fraud conducted by your own career staff by the schools . Congressman i, had many discussions early on in my term. Can i finish. . No you cant. Do you know whether you read these are . Not i had discussions about the Previous Administrations views and policies towards these pending applications. Lets move on to the substance of the memos, according to the memo dated october 24th 2016, the staff at corinthians school wrote repeatedly lied to Prospective Students, by telling them that the credits will transfer to other schools. The memo quotes one of the many similar claims from students. The student says, and its on the screen here, i was told my credits were transferred to university of south florida for maybe a in finance, and they did not. So i was stuck with all these loans, and no school will take. Them madam secretary, does that sound like fraud to you . Yes or . No sir there are we are considering each, okay let me go on. There is more. Thats aimed memo documents another form of fraud. In which corinthians schools repeatedly told stew cools students they were credited. When they in fact were not accredited. One student claim claim from one student quote, there was speculation that the school was not accredited, but they can continuously posted fake documents around the school, claiming they were accredited, and then he credits we received will transfer without any problem. Madam secretary does that sound like fraud to . You congressman, will go to the ends of the earth to defend a for Profit Company that post fake documents . On its. Walls i am not committed to commit it i am not committed to protecting any institutional matter what their organization. It madam secretary . I am committed to students, and the students that i have lets talk about no you may not. The computing the Consumer Financial protection berry found fraud after in the oncologist. The states attorney general of california, massachusetts, and wisconsin, found systematic fraud at Corinthians Colleges. The Career Education Department Staff, found fraud after Indian Colleges. Madam secretary, you seem to be the only person who didnt believe that there was fraud at current in colleges. Can you state to me here, whether or not you think current and colleges committed any significant amount of fraud against students . Congressman i know that there are student borrowers defends claims, for students at attendant Corinthians College do you think Corinthians Colleges, mister chairman we all know mister chairman if i cant answer question all inaudible so do you think, im asking you are yourself after all these many months, as surfing as secretary of education, document in college as committed fraud against these students . The time has expired the secretary land. Sir i know that a rock or Indian College students that have valid borrower defends claims and we are committed to ensuring that each of these is considered individually, and that the relief is properly attributed to each student that has filed a valid claims. Thank you mister chairman i yield back the gentleman from texas mr. Taylor. Thank you mister chairman, madam secretary, appreciate you taking the time to be here, mister chairman appreciate this hearing. Also say that in my own experience, my generally experience when talking to witnesses, letting them know ahead of time there is a particular memo i wanted to talk about, particular issue that might be off the beaten path, its generally helpful to getting a good response, because the sooner they get to it the more thoughtful they. Art and also i come i was in the texas legislator for a period of, time and served on the Education Committee im used to a more professional environment, i wanted witnesses to access the question if you dont cut them. Off i just wanted to talk about the operational challenge that lies in front of you, madam secretary. I believe her testimony is not there is been a 5000 increase in borrower defends claims, did i get that number . Correct yes thats correct congressman. And what over a period of time have you seen this 5000 . Increase thinks 2015, it was like a spigot was turned. On and i will say, i served on the Homeland Security committee and we saw a similar crisis on the mexican border, of 3000 increase of number foul malaise coming over the border. That of course creates an operational problem. How do process all those . People i think you have a very similar situation here. A Previous Administration, for whatever reason made of theories of policy choices, that caused the massive increase and, youre left unfortunately, in some sense, to clean up the mess. Can you speak to, how youve been ramped up your operation, to handle this kind of increase . Because clearly you didnt have the ability to handle the situation, as we find it now, didnt exist in the Previous Administration, so youve had to created, a whole cloth a, whole new process to handle this tremendous burden thats placed upon. You . Thanks congressman, in addition to developing the initial methodology to considering the claims, federal student aid itself i have hired general brown who has undertaken, a review of the structure internally, has made some organizations changes for operational efficiency, and has also, as youve heard stood up three times three full number of individuals that are committed to the specific area, and we will continue to adopt a just as necessary, based on the place that we have, with the comp that, frankly, we should be returning to the kind of level of borrower defense claims that were resident prior to 2015. From 95 to 2015 there were a total of 90 5 59 claims, i think thats what we should aspire to the. Future that students have the information they need, that institutions are very transparent about their programs are, and that they are accurate and what they represent, and i think that well all be in a better place if thats the case. Ill just make an observation, that in my time in working ex education over and over again articulation between Community College in a Public University which is what we are working with articulation, getting credits from getting from a to b is the real problem. And its not just for profit schools and its with Community Colleges, its with dual credit classes, its even with Public University to Public University. So its something that ive seen for many years, i was intrigued from that this was a claim of fraud, ive seen this all over the place in the public space for years. Is there anything you would like to add at this point . I know that youve been cut off many times in this airing and its not fair that youve had a question the. Id like to reiterate the fact that weve had all these claims spendings for as long as weve had. And im very hopeful, that with the implementation of this new method, we will be able to quickly address and process through, and i feel for the students involved, and im also very sympathetic broadly to students we want to make sure that students have good experiences and good. I just want to say that i appreciate you have been basically headed a mess youve had to create a solution and you have created a solution im grateful to you for your service to to the students of this country i yield back. General lady from North Carolina miss adams. Thank you mister chairman youre appealed the revelations at the obama regulations that based on Earnings Data just like your partial release formula and repealing these revelations the regulations the department go gainfully employed was quote fundamentally flawed, and unreliable proxy for Program Quality gainful employment was irregularproxy. Gainful employment was a prevention from obtaining federal funds. Youre now using its data to evaluate colleges. Exactly what you said it shouldnt be used for. Instead of using it against bad schools, youre using it to deprive students of loan relief. So, secretary devos, which is it, should we grade schools on earning data or not . If you can just give me a simple answer, yes or or should we not. Ultimately no. Unless youre going to do all the institutions. Equally thank you so you are, willing so we should not. Unless youre going to do all institutions equally. All right so youre willing to use our Earnings Data to tell defrauded students that fraudulent schools they attend is high quality . Will you commit to using this data to tell students which schools are low quality . By reissuing the gainful employment regulations . Nowhere moving ahead with the process to consider all the borrower defends claims that are pending, and we are very hopeful that with the Additional Information we have released to the College Scorecard i want to reclaim my time its a very important and useful tool i need to reclaim my time because i really want to get through my questions doesnt sound like shes interested in doing that. Secretary, device gate full Employment Data only seeks to speaks to the those who graduate. I was a College Professor for 40 years. Ive worked with students i know the struggles that they, had i often had Student Loans myself. We all know that many students who intend institutions like corinthians dont graduate, drop out with a significant amount of debt. So how is it possible that a metric that speaks to the outcomes of graduates only being used to determine the level of harm for those who dropped . Out just using that one metric. How is that . It so its a wide variety. What so how are you mitigating cases of baseless claims in border fence . Are you doing anything to mitigate . That well im very hopeful that as we implement the new rules and continue to work through the processing of these claims, that the conversation around this is going to be much more around ensuring that those students that actually have a claim of financial harm are the ones that are getting relief and we have fewer than 1200 plus applicants a week accruing in the federal Student Aid Department to one foot is committed to have to go after any of the colleges and Community Universities that have committed floored . Well i think that that is a very important question and unfortunately the bulk of a large volume of the pending applications are from institutions that have closed. And in that case, obviously, its a different situation, but for those the institutions that are found to have claim valid claims that are still operational, the schools would be the first place to go. The text players shouldnt have to be footing the bill in the case that they institutions still exist. It would be better if this institution did something in the future to make sure that those loans didnt get so high in the first place i guess i put it this way, if this institution would do more to in educate people at that not every student loan is a good student loan . There are many things that both congress and rick bradley we all can do to ensure that on education experiences in the future are entered into with more thought and more wisdom. Okay. You have new regulations coming out. Would you like to elaborate at all on how you are new regulations protect the students and the taxpayers and the institutions all at once . If you are speaking about our new defense regulation, it really does protect students, taxpayers, and gives institutions an equal footing. It treats all institutions equally. Its a much i think a much better and more balanced approach to this issue and one that will continue to let students file and claim valid claims and give schools the opportunity to review and respond to and students respond. Back there has to be a due process component for institutions and frankly we need to have a more tight definition of what constitutes fraud or misrepresentation, which is part of the 2000 doctoral. Fact i would like to apologize for some of my colleagues. You know weve got a big swamp here. Some for some of us are a little bit interpreted. Thank you for coming over. Teddy thank you. The gentle one for california. Mr. Harder. Thank you mister chairman. Secretary divorce, i want to start to tell your story about my constituent. Im isa, back in 2010 she became a student at college in modest out, just months after it was purchased backwards in conscious. Army so wanted to make a difference in her community. She was pursuing amanda gold assistant degree. She chose yelled because she saw the commercials it happen 85 job placement rate. It seemed like a good investment. But then she graduated and she couldnt find a job. And now she owes a whopping 40,000 dollars in Student Loan Debt four degrees that hasnt helped her get heart. That may not seem a lot of money to use secretary davos, but in the real world, that is devastating. It turns out army so wasnt alone. In not being able to find a job. Coming in college is across the country like about their job placements. They thought there it was an 85 job placement rate. It turns out the actual rate was zero. Not 85 , zero. Thats a big difference. Id be say intense of students of tens of thousands of students were defrauded decorating. We all know this. We all agree. In 2014 the department of education find them 30 Million Dollars for this fraud. Everyone agreed. But here, five to eight or, are to be service to have that 40,000 dollars of Student Loan Debt, she stopped found a drop in your field, and she hasnt gotten any help whatsoever. The reason for that is because you have put roadblock after right in front of helping these students. Your job is to fight for them. But instead, your actions suggest you would prefer to be the chief lobbyist fourth acquitted predatory schools that defrauded them. After being ordered by a federal court to stop collecting debts from cheated current instance, you ignored the order and kept stealing money from the students. You were even held in contempt of court before cut of it. You are not standing up for them, you are working for the store schools that defrauded them. If you have forgotten to reform the students, maybe i dummies those 40,000 dollars in Student Loan Debt doesnt sound a lot to you because its only one tenth of 1 of one of your families are to be sentenced thousands of others have been waiting for years for your help. You have deliberately violated a federal court order. And im confused why. So i guess i just have one question for you, secretary device. Are you deliberately violating this federal court order because you are too corrupt to uphold the law . Because you are too incompetent to do your job . The gentleman will address the facts and figures and not question the character of the witness. Secretary does, why have you been held in contempt of court . Well congressman, let me begin by saying i took great personal offense to everything you just said. I come to my job every day on behalf of students. I dont need to sit and listen to what you just spewed out of your mouth. I dont understand how you can take. I did not defy any court order. I instructed federal student aid to follow the court order. If you had been here earlier you would have known that mistakes were made on the part of federal student aid employees and on the part of learned services that when they were discovered were immediately in acknowledged and corrected. Senator advice i beg you my temperature. I understand that you have been held that you are taking offense. The reality is there are tens of thousands of students whose Financial Futures have been ruined by three years of inaction. And you are just making excuses. You are blaming this problem on somebody else. You have been for three years. And you are trying to define the facts of this matter. Yes or no, where you held in contempt of court and find . Congressman, i have not been able to address all of the convention college claims because a court stopped us in may of 2018. Thats simply not true. That is true. The courts said there was nothing stopping the department from processing these Border Defense claims. There was something stopping. There was a lack of process. The court said we could simply forget the ball but that was not the right answer. The right answer is to do whats right for students and to do whats right for taxpayers. And that is my goal and that is going to continue. Senator divorce, whats right for students is helping the tens of thousands of students who have been deflected. Students like im isa. And blaming this problem on somebody else taking three years to make absolutely no progress, its not helping these students. Its only helping this scam colleges that defrauded them. Thank you mister chairman. The students have financially harmed. They are going to have relief. We have a new methodology winds once again, if you had been earlier, you would have known. We have just implemented it last week. We are beginning to process them again. And students will be considered their claims considered individually and i am looking forward to addressing all of them. Nothing disturbs me more than all off the pending claims that have been there and that we have not been able to address appropriately. The gentlemans time has expired. The gentle lady from nevada, miss late. Thank you mister chairman. Thank you for being here. This is quite a mess. I wanted to ask you this is an important issue in my state in the past ten years to 34 profit schools have closed and a week ago today great word College Closed in las vegas. And that we saw with current in colleges i teed, each tee a, scores with shaky financials are often quit completely reliant on federal student loan dollars. And when they collapse, and declare bankruptcy, it is that the taxpayers as well as thousands of students who are left high and dry. So i really wanted to in my line of questioning death to how we are going to prevent this from happening. So i just want to ask you a simple yes or no question. Do you believe its important that the department have information about the financial conditions of call yes it is important. Thank you you know you spoke many times today about protecting taxpayer dollars. I could not agree with you more. Yet, im feeling there is a lot of tension in this room today is, because there is concern about protecting taxpayer dollars from frivolous b d claims, or like id like to focus on, and how do we protect taxpayer dollars, from these fraudulent, predatory schools, and prudent prevent this from happening before, we throw thousands of students into turmoil. So i, want to ask you a second question, isnt the point of financial responsibility, monitoring to protect School Closure before they happen . So that something can be done proactively to protect the taxpayer dollars from going to those institutions through Student Loans . Congresswoman, let me just say first, of all i dont, think levy a acclaim of predatory against any school, that is organized, im talking about schools, i want to define what fraud means, okay . Because its been used today a lot. The definition is the wrongful deception, intended to results and financial or personal gain, it is not anyone here, the preponderance of for profit schools and the education space, and for profit schools that are now publicly traded companies. So, there is a pro for profit motive, there has been fraud and, that students have been left on the hook. And so, my question was simply yes or no. Do you believe, that the point of the financial responsibility monitoring, is to predict . To the extent possible, i think thats probably desirable, yes. Okay, i agree with you, i think that that is the purpose. You want to predict that these schools are shaky operators, that they might be fraudulent, because theres so many kids that are going to the schools and are not able to come out and have a job. And therefore defaulting on their loans, because they didnt get the job that they were promised, and so thats the purpose of these triggers, and roles, is to predicted so that we are not sending taxpayer dollars to the schools, and then they go bankrupt and, the kids cant pay them, and then the taxpayers pay its so. I want to go to one there is lots of institutions that interpreter i understand that and i understand there are great institutions i am talking, this is really about ferreting out the bad actors in this space. And, you know, i think the lesson for all of us is, the regulations we enact here have consequences intended and unintended. Which has led us to the situation, where we have had thousands of for profit schools close. 80 of the School Closures are for profit schools. Maybe maybe of these are bad actors. And by the way, its minority and low income students who are being prayed upon in these cases. So, i really just want to get one of the question. And talk about some of the changes that have been made, to your borrower defense. Roll specifically, around these triggers are to identify, if the schools are eventually going to go under. And under the 2016yearold, publicly traded for profit schools were required to report any instance indents or occurrence of an sec filing, or warning letter, against that institution. Under, and can you clarify, this under the recent role, that was issued isnt it the case, that if an institution would only be required to report to that ands when the sec suspense trading of that stock, or if the stock is delisted from the exchange . There are changes in the reporting requirements for Financial Measures for an institution in the 2019 rule that there are a number that theyre number of different measures that are required and their triggers that will happen, to send a flags if in institution is in jeopardy. I think its also important to distinguish the gentle ladys time is expired. Okay the gentleman from mr. Pennsylvania mr. New son. I apologize for being a little abrupt expect a call of vote shortly, and we still have several members trying to ask question the chair. Thank you mister chairman thank you for your professionalism and decency, is always mass them secretary nice to see you very much again. I want to thank you for your service, clearly, you work very hard, and youve made a lot of progress, which i want to ask questions about an outline, and, if people had an idea of what your background really was, the level of work and philanthropy and good that youve done, maybe theyve added a little bit more civilly but perhaps lot not. You know, were trying these, trump hearings are supposed to be about ideas not insults. Solutions rather than salvos. Reality rather than ridge vision us history. Questions rather than accusations. Actual problem solving, rather than pointing out problems. But i guess its just a tradition around here lately. So, i would like to ask you, when you became secretary three years ago, my understanding is, back in 2015, the number of claims and problems and, escalated tremendously. And there were a number of reasons for. Its one of them, was at, this trio, where lo and behold, the former number two in the Obama Administration department, deputy secretary miller who left into south thousand 13 and, became a partner and chief operating officer activist ria who was on track to become the Parent Company of the sale went through, had a little, and that is just one of austria had its problems begin would you say that was a conceive contributing factor to that escalation and claims of problems . I think its possible that it was a contributing factor. Well, what were the number of claims . What was the number of claims under the borrower defense repayment rule, its increased exponentially in the last four years. You have any numbers front on that . Well, from 1995 to 2015 there were exactly 59 borrower defends claims made and since then, that number has increased 5000 , to now 300,000 claims. And when did those increases began. In 2015 2015 2016, that was the Obama Administration. You came in january 2017 . February, what close february dealing with a mess, a nightmare situation, and what did you do to work this the situation you in general . Brown well when i, he wasnt here. Yet when i took, office there were 64,000 unaddressed claims from the Previous Administration. It was clear that promises have been made to approximately half of those, and we follow through on the promises, immediately. I also ask the Inspector General to do an investigation into what the process was for considering these claims, and that yielded some significant all deficiencies, and other words there was no process. So we set forth to put a process in place, to be able to consider each claim for its merits and its validity. And we implemented that in early 2018, and we were well underway with processing the pending crank claims, and we were stopped by the court in may 2018. Based on the data we were using, not on the approach the relief methodology. Since then we have been waiting for the court, we have appealed, it we dont agree with a courts decision, its been appealed, were still waiting, in the meantime we implemented another methodology. Which we were able to implements, begin implementing last week, at will, we hope be, able to address the claims, the pending, claims very expeditiously. How many deserving claims were relieved have seen relief in the Previous Year versus 2015 or 2016 . How many more people were helped how many people received long relief under gorgeous diction and general browns, versus your predecessor . So the percentages of claims that received relief were the same between the Previous Administration and the ones that weve been able to process this far. There is a charge here that shows a 62 were approved during the Obama Administration, and weve continued that level of approval. 62 but many more claims many people were. Helped correct thank you. I yield. Thank, you the gentleman from maryland. Thank you madam secretary for your service. I know Public Service can be very hard. But it comes an accountability. To help these young students, who have been defrauded, and help them if we can, in a timely manner. Before coming to congress i, was a ceo where the business with over 7000 employees, i how important people are to a new organization. At the end of the day the buck always stops with me, to make sure we have the right stuff. To stir serve our customers so lets talk about staffing if, you dont mind under leadership. And will follow up on what secretary was talking about 1 million minute a lot. In the first year in office, youve actually cut the staff and the bar was defend unit. In that unit during the first year by 75 , from 29 people to seven people. While this might make great sense that we saw decrease in the number of claims, they office as the the opposite as youve clearly stated, is actually the opposite. We saw an increase in ink claims from 54,002 now as general brown said over 300,000 are out there. So if my business had more work, hard more people. So why would you have, in the past is dramatic increase in borrowers the fence claims, that you decide to cut jobs, instead of hiring more people to do that work . Good question. We had significant attrition when i first came into office, and since then i, have instructed and urged general brown to staff that segment of the federal student aid office, to the extent we need to be able to address these claims now that we have a process, to be able to unveil, and into implement. Thats great, i guess the question is still there, that now, three years later, you know we, are actually acts were actually at seven people at one point, according to the public documents of march 31st 2019. You had seven employees remaining on the barrs defense unit. While we, were processing the claims under the previously methodology, and that was moving along well when the courts stopped us. Ive heard about that, been there the entire time respect. That still 300,000 general brown said folks naturally who are paying the price because of the department, i think has slowed walked this, by not having enough staff, to process those claims, clearly over three years now. Three years. Do you believe that the insufficient number of staff in the past three years, has contributed to the apartments inability to process these barr barr defends claims . No sir i dont, its really has been the Court Decision that stopped us the Court Decision, i know weve talked about that. The Court Decision did not stop you from be continuing to process you couldve continue the process, you went to the appeal, lets talk about the facts. Only if i was going to say yes full forgiveness are, no you dont qualify. Im guessing theres a lot of full forgiveness out there given the horrible work that they do. We couldnt use the data that they were using. Lets look at the data a second. So, on march 31st, if you had 7 00 employees, how many claims does an employee process in a 40 hour work week . That is not a relevant question, because we have not been able to process how many, its a really really relevant because youve got to have people do the. Work since 2018 weve not been able to process you have to have the people to do the work right now you you are talking about ramping up to 64. So youre clearly ramping up the people, because now you say whoa, we missed the ball, we saw that in 2016, we went through the roof the, claims did you got hammered, but you only, while they were cutting back to seven people, now have done a hockey stick and wrapped it up to back to 74 its a convenient narrative about inaccurate the only way you are going to figure out staffing eye is how much work as i do how, much does it take to do that work and i can do much tougher model for that. And we have continued to step up and we will continue to add to that if necessary to process the claims now that we have been able to implement the new methodology. We implement that. Drawback has taught us the since you happened in the office stepped 50,000 people have had their claims to reduce. With these 300,000 out there at that current rate its going to be 15 years. For the first three years took you to do 50,000. These run people want to be educated but they were light to buy these institutions and i think the response has been a bit to run out the clock. A bit of talks like. So we just need informed decisions based on the data and keep focusing if you put on the customer. Thank you. The gentlemans time has expired. The gentlelady from michigan miss, stevens. Thank you mister chairman. Senator dust we are here today to provide the public with a full understanding of the departments failure to provide defrauded borrows with relief they are legally entitled to. I would like for you to know of fellow michigan under, erica, someone i have had the privilege of getting to know. When she was a child, she wanted to become a lawyer. And growing up, she faced multiple challenges as Many Americans do. She ended up dropping out of high school, but still managed to get her general ged at 21 world raising two children. And she saw commercial one day for every college, are currently in college, in 2011, and she was recruited into the schools paralegal program. The recruiter told her that in order to become a lawyer she had to be a paralegal first. Erica was ecstatic to go back to school. She earned a four point or while she was there and after her first year she took that next step. She contacted a law school to learn what she had to do next to become a lawyer. And thats when she learned that everest was not considered a legitimate gentleman program. And she felt cheated, she was saddled with chief Student Loan Debt, and realized that the best steps she could make herself and her family was to cut your losses and leave everest. Secretary to what, do you think erica made a mistake in attending everest . Congresswoman, i cant comment to her decision there. But i certainly can feel for her, if that story is accurate. And i look forward to, if she is among the bt claims pending, making sure that we can address it probably now that we have been able to start the process again. Would you have advised america to continue authentic everest . I cant comment on hypothetical like that. Erica is currently not working either as a paralegal or a lawyer but is instead living paycheck to paycheck with no way to pay for more school to prove you through the cure she wanted and dreamed of and shes now in her mid forties. Do you believe she received any value from this education she received at everest . Again, i cant comment specifically to her situation. The story as you tell it is something i certainly feel for. Erica applied forward difference in may 2015 and had her loans placed in forbearance. Three years later the department finally approved her application but then denied her a full discharge. And it said that they would only relief 50 off americas loans. Why did she deserve to only have 50 off her loans relieved . Well i have to assume from what youve told me about her story, that we were considering her under the first methodology that we had utilized and that the program she attended, the earnings information from the others that had graduated from that program work compared with lebron grams of other schools across the country and. That was again a formula and process that was put into place to consider each students claim individually and uniquely. Despite a court order, Americas Service or started illegally collecting on her debt in 2019 this year and she became extremely worried when she saw all of her loans were back in repayment because she knows theres no way she is really going to be able to repay them whats stopping. The department from taking action to protect hundreds of thousands of students like erica who were cheated in this predatory way by these institutions . Well again, i cant comment specifically to her experience right now. Im happy to have general brownstein look into it. That would be great. And i know erica i know she would left that. But she said to me when i last spoke with her she, said the one thing i want to do is to make a difference for future people and make sure this doesnt happen again. And i had a little bit of time to read through your testimony and kind of buried in there are thousands of stories like ericas and she did want me to share this story and i appreciate you put taking it to heart. And hopefully we can all continue to step up to address this for all americans, while michigan truth, so that they have the opportunity to pursue their dreams and provide for their families Going Forward and with that mister chairman, i will yield back. Thank you. The gentlelady from massachusetts, mr. On. Thank you mister chairman. Secretary devout, thank you for being here today, two days ago you announced the departments new formula for calculating relief for students who have been cheated by fraudulent predatory for profit colleges. This formula would make would take medium earnings and subtract from it to standard if nations to determine the amount of once aboard to defend discharge relief. No thats a lot of jargon. So i wanted to just put it into an example. Just that makes sense to me. So a young woman and we will name her betsy, get her diplomat in Business Administration and management from clinton. And it says here on this chart that the media in comparison earnings for that degree is about 18,000 dollars. Into standard deviations is about 20,000 5000 hundred dollars. I mean, not to put you on the spot, but you know what 80,000 minus 20,500 equals . I hate public matt. It equals negative 2500 dollars. So using the new formula, you are basically telling us that in order for someone like betty to get full relief for the debt that she unknowingly encourage from a fraudulent institution, she would have to earn negative 2500 dollars. Does that sound right to you . Using your formula . No it does not. Because thats what the numbers bear out. The department of education calculates the median earnings of bet shes appears in her program at roughly 11,700 dollars to determine the percentage of relief that she will receive. Any idea what the federal minimum wages right now . We are trying hard in this committee to raise the minimum wage but today it stands at seven dollars and 25 cents. So look i just want if thats the earns 11,700 dollars on an annual basis, that means her hourly wage is five dollars and 63 cents. Thats two dollars below the federal minimum wage. So i guess, its astounding to me but i think what you are telling me is that student borrowers like betsy will graduate from a fraudulent program really, want to dollars less of the federal minimum wage, can only get 25 off their loans forgiven because they didnt have negative earnings. Well congresswoman, i dont think the story you are using here is an accurate one. I trust my mouth. Look, i pulled several examples and i used your to standard it deviations. I dont have confidence in much but i have a lot of confidence in the formula and how i used it for betsys use case. Look, the new partial relief for formula that you came out with two days ago, it doesnt benefit students who have been fleeced. It doesnt take into account individualized earnings that, float, whether betsy is back in a fulltime or part time accredited college program. Which is why my friend from pennsylvania, what presented of wild, and economists alike, call it nonsensical. These are students who wanted nothing more than to get ahead. To cut loans in good faith, and they were taken advantage of instead. And your response to them is to cheat them again. So i know right now you have the authority to provide full, fair and immediate debt relief two student powers who worked you fronted by these predatory colleges and every day that goes by is a violation of student rights and frankly its criminal. There are hundreds of thousands of innocent students with pending claims. That includes almost 3000 immigrants hiccup massachusetts. On this committee our focus is creating opportunity and value for students with high quality affordable education. The formula that you have developed, is too little pay too far and its too late. And it doesnt demonstrate your commitment to student. I yield back. Mister chairman if i can respond to that amount . You will respond please. Congresswoman, i am committed to treating each of the students who have filed for the french claims fairly and we believe that this methodology that has been developed its one that will treat each of them as an individual and will look at their program or study. If you are advocating for 100 percent loan forgiveness for students who claim your defense claims, you have the power to get a law passed in this party. And i encourage you to do so. If you pass that law, i will enforce that law. The formula the way its defined right now, it takes in media Program Earnings from other people who have been defrauded. Different lies the problem. That is not a formula that makes sense when you are taking into account kids who have taken out loans, who have to go back to college, go back to school to an integrated program. There deployed is already sinking them and now they are taking on more. Your formula is flawed. I guess we will have to agree to disagree. The gentleman gentle ladys time has expired. The gentlelady from minnesota, miss omar. Thank you. Chairman secretary device, thank you so much for being here and giving us the opportunity to have this conversation with you. I am curious if you are familiar with the Minnesota School of business and Global University . Im not familiar with that specific school. Okay. Do you know that they were found to be engaged in consumers fraud . If they were im assuming there are some Border Defense claims plenty for them. Okay. So let me just in light a new. We have sent you many letters from our delegation in my district in 2016. The court found that Minnesota School of business and Global University engaged in Consumer Fraud and purposefully deceived their students by misrepresenting the Job Opportunities that would be available to the criminal graduates. Madam secretary, that same year your department independently reviewed the evidence and came to the same conclusion as the courts. The students were blatantly misled and taken advantage of. 1336 minnesota students were systematically misled to believe that they will obtain a degree and credits that were essentially meaningless. Theyre seeing not only 33. 8 Million Dollars but, their time and countless opportunities. Let us take a minute just imagine if these students if these were just students lets imagine that they were just corporations. The administration and our colleagues on the other side of the aisle and probably you would be up in arms. Corporate executives would not only get their debt forgiven by our government, they would also get compensation for their lost time, left opportunities, and psychological distress. But madam secretary, you dont seem to be up in arms. Nobody seems to be concerned with whats happening with these students. Students who do not have access to corporate attorney urged attorneys to make their case. Instead, they are struggling to make ends meet as they continue to face occurring interest, negative Credit Reporting, and the inability to restart their education. All the while hoping the government will do the right thing. I like to request unanimous consent to enter into the record to affidavit with. Objection. The far from my constituents, whitney and cheryl, whose borrower Defense Applications have been on hold since january of this year. Between the two of them, they have 78,000 in krypsing student debt. Once a br rower defaults, the consequences are severe and result in a Snowball Effect where a borrower might lose their eligibility to receive additional federal student aid and see devastating effects to their credit. Memo after memo, the Education Department career staff sent you memos that independeicate these student deserve nothing less than full relief. I know that youve said you havent read these memos yet, but reports have come out and i would have expected that you would take time to read them before appearing before us today. I ask for unanimous continsent enter these into the record. Objection. I feel you should be ashamed of the fact you dont have answers to these memos. That you havent lookeded at these memos, that you havent taken the responsibility that you have as a leader to be p prepared to give us a response. And i think the public should be ashame d that they have a secretary of education thats not putting the interests of students before the interests of the wealthy benefits before these students. I yield back. Mr. Chairman, if ik could respond. Congresswoman, with all due respect, im very much focused op doing whats right for these students and the memos to which youre referring proceeded me and they may have been relevant to, they were relevant to conversation about how we proceeded with policy, but administrations change and policies change. They are precisely relevant to the conversation you were preparing to come to talk to us today and in your preparation, you should have read those memos. I yield back. Gentle ladys time is expired and i recognize myself for five minutes. About whether or not this applies to forprofits, nonprofits or public, the fact is we have several hundred thousand complaints of fraud of defense for the public colleges. How many public Nonprofit Institutions have been subject to fraud . How many . I dont have the specific breakdown here. Id be happy to get back with you. Do you have very many complaints . There are quite a few. Its frankly surprising. If you can get that, please. Of claims that have been filed from like surprising institutions. Youve also indicated that youve remeetuated the Credit Report problem . Yes, weve remediated the problems that occurred. Does remediated mean that youve corrected the reports or that youve reimbursed people . Whatever the issue was, we have remediated for with the small exception of those addresses track down. Does that mean youve compensated people for lost jobs or higher Interest Rate they may have paid for a diminished Credit Report. We have correcteded or remediated their Credit Report. Are you aware that the university of phoenix recently agreed to a 191 million settlement . I understand that and i also understand that the leadership there are formerly lead political appointees of the Obama Administration. Thats fine. Did that settlement involve federal Student Loans . I imagine there are some involved there. Were any federal Student Loans involved in the settlement . There are requests for borrowers defense from the university of phoenix. B about 8,000. Is that right . Right now today, we have 14,000 of those defense claims are from the university of phoenix. What is the status of those . Those are in various stages. Has any relief been granted . I can get that for the record and provide that for you. Now as i understand it, if youve been defrauded, you should get relief if you have suffered financial harm. Weve had the back and forth about how you establish financial harm. If you have your Comparison Group where they did not lie, cheat and defraud the students, they just acknowledge d the credits werent transferrable and you werent going to get a job any way and you have another school that in fact defrauded the students, lied to them about accreditation, job placements. Is it true under your formula, youd get no relief because you show financial harm . Mr. Chairman, the methodology looks at all programs across the country. That are like programs to the one that the borrower is making the claim against. Right and if the one youre making a claim against in fact defrauded the students where the Comparison Group did not lie about the placement rate, didnt lie about accreditation, about transferrablety of o credits and ended up with the same income as the one that in fact defrauded the students, is it true that under your formula, the students that were defrauded get no relief . If there is no financial harm to the student making the claim, that would be correct. Okay. And is it, i think we established theres no individualized consideration thats considered by class. You went to that college. If youre making a lot of money or didnt make any money, youd get xhakt lexactly the same relief. The claim is against the student debt and that school and program. Z okay. Can you briefly describe the what the department admitted to when it admitted to gross negligence in the lawsuit that provoked the contempt of court . I think those are attorneys words. What we have acknowledged the department that there were errors made with our student loan servicers and that we acknowledge them, we take responsibility for them and we have corrected them. Submit the report undersigned counsels representation in the october 7 hearing and further information contained in this brief established that compliance errors issued here were not the result of any willful of intentional conduct, but gross negligence including negligent oversight of the department servicers. My time is expired and i yield to the gentle lady from North Carolina for closing statement. Thank you,mr. Chairman and i want to say publicly b thank you for your response to what i can considered inappropriate comments made earlier. I very much appreciate your your response to that. As oversight and i said earlier, oversight is important. And i stand ready, the secretary said she stands ready to work with the chairman to conduct good oversight of not just the Education Department, but every venue we have jurisdiction over. But we need to work in a bipartisan manner with the secretary and solve the problems efficiently and focus as the secretary does on helping students and not playing gotcha games with the secretary. And i you, madame secretary, to commit again today to work faster and harder to get to the information requested and respond as quickly as possible so we can all be clear and more direct about the concerns we have and what information we need. And mr. Chairman id say go to the request department and be specific as b possible and again, not trying to play gotcha games. Say did you get this memo on january 10th written before you came into office . Those are the kinds of things that should be said. Instead of going on fish iing expeditions. It does not prohibit from finding relief from defense claims and i want to make an analogy herement i bet you theres not a member of this committee whos not had a car accident or problem in home o Homeowners Insurance and ill guarantee you that the Insurance Companies dont write you a check for what you think is your damage. They assess that damage. They look at your car. Come to your home. What these members are saying is you just write a check from the taxpayers and say its okay if you tell us youve been defrauded or damaged. Thats not the way it works. Weve set the federal government up as the biggest Loan Institution in the country. Now we want it to be the biggest Insurance Company in the world. And thats just not right. What has been going on is nothing new. Regulations under president clinton, president obama and now President Trump have all allowed for partial relief. For successful borrow defense claims. It could have been resolved if congress amended the authorizations over the last two decades. If members of congress dont like how much the statute has given the secretary, then we should Work Together to amend the statute. And mr. Chairman, we disagree on policy. A lot of times. But we dont disagree that students who represent not only our Current Situation in the nation, but our nations future deserve all the opportunities to succeed. And frankly, i am saddened that i need to remind my colleagues of this. I think we need to respect this institution and honor it with the decorum that it decierres and show the students how we should behave and be examples for them. So thank you, mr. Chairman. For your indulgence today. I want to thank the secretary for your participation today. Weve heard very valuable information. Members may have additional questions for you and well submit them to you in writing. Remind members that questions must be submitt eted seven daysd the hearing record will be open for 14 days. I want to say finally, no question as to whether partial relief is available or not, but in some of these cases, the fraud is so widespread and the findings of the Previous Administration was that some of these degrees were absolutely worthless. University of phoenix had 191 million settlement for fraud. Nothing has been done so far. We would think that if the fraud has been well established that each person wouldnt have to come up individually to prove individual fraud if theres such widespread fraud, i think the burden a ought to shift to the business. And finally, a lot has been said about the obama process. The memos show there was a process. They discharged loans from 28,000 borrowers and had a process that would have eliminated the backlog in a couple of months. As i indicated, we hadnt seen them in the submissions. We got those memos from the media not from submission, so wed expect if we would have gotten those earlier, we could have discussed them as part of the process. No further business before the committee. Without objection, the committee stands adjourned. Good morning this is the councils beginning and since 1986 we see over and over time and again how technology has transformed our lives and the new opportunities as we think about a new future for the United States 2003 was a period of change 17 years after our founding we recognize the nation Inflection Point with significant change which led to the work of our National Innovation initiative and now another 17 years later here we