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Transcripts For CSPAN3 Sec. Betsy DeVos Testifies At House E
Transcripts For CSPAN3 Sec. Betsy DeVos Testifies At House E
CSPAN3 Sec. Betsy DeVos Testifies At House Education Hearing July 13, 2024
The hearing focused on the departments implementation of the
Student Loan Debt
for forgiveness program. Its aimed at helping highly indebted students with loans that misrepresented graduate outcomes and potential salaries. Meeting on education and labor will come to order. I want to welcome everyone and note decorum is present. The oversight hearing from the department of educations implementation of the barr defense rule pursuant to
Committee Rule
7c,
Opening Statements
are limited to chair and
Ranking Member
s. 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. It 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 thi cori 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 borr 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 responsibili 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 bow proce 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 efrs. 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. Wal berke 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 early 80s 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 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 v. 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 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 Rule
s 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 willal 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 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 Member
s 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 you understand ustudents did no 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. 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 Administration
s overreach and will enforce a borrower defense rule that is consistent with
Congress Intent
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 Administration
s 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 lyadmi rule, the school has the opportunity to respond to the schools case. Let me respond 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 course corrections to the 2016 rule currently in place. The
Obama Administration
s 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. 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 weak insides in the
Student Loan Debt<\/a> for forgiveness program. Its aimed at helping highly indebted students with loans that misrepresented graduate outcomes and potential salaries. Meeting on education and labor will come to order. I want to welcome everyone and note decorum is present. The oversight hearing from the department of educations implementation of the barr defense rule pursuant to
Committee Rule<\/a> 7c,
Opening Statements<\/a> are limited to chair and
Ranking Member<\/a>s. 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. It 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<\/a>. Accordingly, the
Higher Education<\/a> 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 thi cori 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<\/a> issued a new borrowers defense rule to streamline the process of providing relief to defrauded students. By the time the
Trump Administration<\/a> 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 borr 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<\/a> 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<\/a>, 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<\/a> 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 responsibili 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<\/a> leaders who betrayed hard working americans in favor of self enrichment. We know the uaw senior
Union Leaders<\/a> 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<\/a> 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<\/a> to address the serious issues that require honest overtight. Instead,
Committee Democrats<\/a> 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<\/a> is trying to work with the
Committee Democrats<\/a> 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<\/a> 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<\/a> 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 bow proce 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<\/a> are supportive of these efrs. 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<\/a> 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<\/a> 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. Wal berke 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 early 80s 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 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<\/a> is well. Even though she is the secretary of education and is entirely capable of answering all the questions we v. 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 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 Rule<\/a>s 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 willal 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 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 Member<\/a>s 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 you understand ustudents did no suffer harm, then hard working taxpayers, including those who saved to pay their own
Student Loans<\/a> should not have to pay somebody elses
Student Loans<\/a>, too. 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<\/a> 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<\/a> 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 Administration<\/a>s overreach and will enforce a borrower defense rule that is consistent with
Congress Intent<\/a> 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 Administration<\/a>s 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 lyadmi rule, the school has the opportunity to respond to the schools case. Let me respond 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 course corrections to the 2016 rule currently in place. The
Obama Administration<\/a>s 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. First we inherited from the
Obama Administration<\/a> 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 weak insides in the
Previous Administration<\/a>s procedures for approving and denying claims. In fact, the
Prior Administration<\/a> 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 Administration<\/a>s categories as our baseline. We quickly adjudicated 32,400 claims. Our relief methodology was based on the same data,
Social Security<\/a>
Administration Data<\/a> to be exact, that the
Obama Administration<\/a> used to measure rules under the gainful employment rule. Unfortunately in may 2018, a
Federal District<\/a> 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 ro butt methodology that relies on publicly available 2017 gainful
Employment Earnings<\/a> data,
Social Security<\/a> 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<\/a> 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 rather thaning member or her designated committee and we will alt nate 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 borou borough 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 flood 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 methodologies once the court shut us down in 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<\/a>, 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 we leaf 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<\/a> 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<\/a> 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 no 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 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 santa 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<\/a> taking office and what is your overall
Response Rate<\/a> . 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 in. 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, we 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<\/a> 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<\/a> 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<\/a> basically forced schools like corinthian out of business. They put financial restrictions on corinthian that a lot 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<\/a> 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 the a part of the process. My colleague miss davis referenced from yesterday internal
Communications Department<\/a> 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 rborrowers full relie. Do you believe those loans july 2017 are subject to the bar and defense
Fund Standard<\/a> . They certainly are subject to the borrower defense rule, but theyre not subject they are not automatically subject to full and complete forgiveness of every single loan. Okay. That is there even the
Prior Administration<\/a> 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 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. 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 talk to 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. 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 lagsz, 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 d 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<\/a> 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 that 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<\/a>, 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 spe seeking relief because they say 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 opinion, yes. We disagree with that and have appealed it. That injunction prevents the department from collecting on the loans of the covered borrowers while the case is pending, is that correct . 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<\/a> 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<\/a>. 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. Thank you. The gentleman from connecticut, mr. Courtney. Thank you, mr. Chairman. Thank you, madam secretary, for being here again. I just want to go back to your response to dr. Roe. And again, you were very, i think, specific about the fact that your discretion thats vested in you by the 1993 student loan reform act allows you to provide both partial and full relief. You just said that, is that correct . Yes, correct. And i appreciate that answer. Mr. Chairman, i just want to now enter into the record a memo dated december 14th, 2017, published in the
New York Times<\/a> from
Steven Menashe<\/a> who was a political appointingy acting general counsel to the department of education to
James Manning<\/a> who had been delegated the duties of undersecretary. Without objection. Thank you, mr. Chairman. In that memo, madam secretary, mr. Menashe wrote that quote, it is now ogcs position that the borrower defense units analysis, that
Department Regulations<\/a> in the borrower defense statute allow the secretary to assess relief at her discretion. Do you believe that this memo, again, provides you the legal basis to provide in some instances full relief to defraud its students based on your discretion . Im not referring to the memo, im referring to that section of the rule that existed in both the 95 rule and the 2016 rule. Well, thank you. Which again basically said that you have that full scope. The secretary has discretion right. And again so again, we agree we agree, im not there was no process in place. I just want to keep going here because on page 6 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 the becauorrower has repai the loan and i think we can all agree on that. You cant overpay with restitution, is that correct . Yes. I mean i think that would so, again, since you took office, i know you did process some of the pending claims from the
Prior Administration<\/a>. But after that cohort, have you provided any defrauded borrowers full relief since the first . 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 your partial
Relief Program<\/a> because of what the judge felt was improper use of
Social Security<\/a> data, the judge actually stated, and i quote, nothing in this order proikts the secretary from fully discharging the loans of any borrower who successfully completed or successfully completes an attestation form. So she actually still left the door open for the department to continue to process these borrower defense requests. Yes, but without a 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 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 a methodology to utilize, we could not continue to process. Now, we continued let me just clarify. Okay. We continued to adjudicate and we have many claims that are awaiting now being processed 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 those fairly quickly. If i can just follow up with a question because my time is about to run out. What i hear you saying is that these claims after the judges order stopped being processed because through your discretion you 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 says that she left that door open for you. It really was your decision based on whatever priorities and policies you had to not continue to process those pending applications. I would just say congresswoman hayes and i have about 1,100 borrower
Defense Applications<\/a> 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 have grown. Itt 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 has run out, so thank you, mr. Chairman. Thank you. The gentleman from pennsylvania, mr. Thompson. Thank you, chairman. Thank you, secretary devos, for being here. Much appreciate it. I will say my friend, and we worked a lot together on a lot of different issues, brought to my attention, im appalled that this judge did what they did in what they put forward, basically providing a license to not you know, just to allow the continued abuse. 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, where harmed, i think thats important, but there is a duty and a responsibility to do this diligently in the right way. And so i appreciate the last my colleague bringing that up and brought that to my attention how abusive that this judge was with the ruling. Madam secretary, there are a few myths out there about the 2019 borrower defense regulation that id like to discuss with you today and general brown might have some of the technical answers to these questions so ask him to answer if you believe that is better. Pretty straightforward. The first myth is that the 2019 rule eliminates 11 billion in relief. Is that true . If not, can you explain it for me . Congressman, that is indeed a myth. The presumed savings assume and count on the fact that with much more clarity around a schools responsibility and what a students claim would and could mean that we will have ultimately fewer borrower defense claims
Going Forward<\/a>. Lets just recall from 1995 to 2015 there were a total of 59 claims filed. And then about 5,000 increase from 2015 to where we have almost 300,000 claims today. So
Going Forward<\/a>, you know, weve just released a ton of data on the
College Scorecard<\/a> 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 acti year, and were going to continue to add the data for years after that. So a lot more transparency for students and for schools frankly. And so
Going Forward<\/a>, the savings are going to be around the fact that were not going to have so many claims. A great tool for financial literacy. Its a good argument for financial literacy, yes. Another myth is that the role eliminates accountability to forprofit schools. Is that true . Not at all. Indeed it really treats all schools equally. I think thats one of the major deficiencies of the 2016 rule. It was strictly focused on forprofit institutions. In fact i saw some internal stuff at the department saying, well, were not going to
Pay Attention<\/a> to any claims or any schools that are a liberal arts program because its presumed that theyre of the full value. Well, thats just wrong. If a student has a claim against a school for being fraudulent and deceptive, that should apply across the board for every school. Uc berkeley bumped their rankings. Should those be subject to borrower defense claims like the others were . Another myth is that the rule is cumbersome or overly burdensome to comply with from a borrowers 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 aids website. We want to make sure that if and where 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, dr. Foxx. 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 from you is, yes, you have processed all the applications and once you understand you have a way to do this, thats not going challenged in court, then you will what you say adjudicate, meaning give an answer to the student. Is that correct . Close. Id actually love to have exhibit 1 put up for the process. Okay. 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 promise you the next time well come to general brown. Were going to get there yet. Thank you. The gentle lady from ohio, miss fudge. Thank you very much, mr. Chairman. Thank you, madam secretary, for being here today. Once again i find myself agreeing with the
Ranking Member<\/a>. We could be investigating other things today but there are so many in this administration i dont know where to begin. Maybe i will start with the three usda rules that are getting ready to cut 4
Million People<\/a> off of snap, 1 million of them children. Or maybe talk about the daily travesty on our borders, but that is not what we are here to do today. It is unfortunate that my colleagues are suffering from am meezia on the other side of the aisle because i remember well how they treated the last administration so they cant 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 to our attention is you talked about the two letters or less that youre getting every day. We get that every day too and we have a lot less staff than you do so i dont feel its something thats onnerous and something you cant respond to. Secretary devos, is it fair or lawful to defraud students . No, its not. Very good. Should those people that are 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. Thanks, secretary devos. Just really quickly, mr. Chair, id like to enter into the record the january 10th, 2017, memo from the borrowers defense unit to then undersecretary ted mitchell. Without objection. Which this memo was drafted by your office after the
Previous Administration<\/a> left. I just want to say something. As im sitting here and im listening, i remember our last interaction where you at that point had also not read the memos that came from your office. I just find it just a total lack of regard that after the npr story broke on friday and you knew you were coming here for a hearing about borrowers defense, thank you wouldnt even take the time to acquaint yourself with the memo that was talking about that your staff recommended that borrowers be given full and complete relief. I mean theres nothing, as my colleague, congresswoman fudge, said incredibly onerrous about 1. 8 letters a day from congress. You have over 3,000 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 this same memo and i hope that i mean as you said before, you dont know what anyone is talking about, you havent read it. You heard of the story but dont know the memo. But in this memo, your staff recommended that full relief for borrowers who enrolled in itt colleges and campus in california be granted. Can you explain why you ignored that memo and then why you did not include it in the documents that were sent to this committee . Congresswoman, once again without having the document in front of me, im not going to continue to comment. Did you not know you were coming here today . Congresswoman, there are hundreds of documents written youre absolutely right and i would accept that but the fact that on friday the story broke and this document specifically was referenced, i dont think its unreasonable. I know im 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 went nationwide five or six days before the hearing, i would say to my staff, can you get this document for me so that i can read it for myself because i am sure that this committee will have questions in relation to this memo. That didnt cross your mind at all . January 10 no, friday, last friday. January 10, 2017, was the last administration. I was not in my office until february 7, 2017. Did it not cross your mind when this story broke there are hundreds of documents. Youre absolutely right. But on friday when this specific document was revealed, did it not cross your mind that maybe i should read it, on friday . No. I dont need to read the document. So in december 2019 when npr ran a story, it didnt cross your mind that maybe i should read this document . I dont need to read every document no, this one specifically, not the thousands of others. Just this one. Because a news outlet chose to print it. Yes. Is that a no . I should
Read Everything<\/a> that a news outlet chooses to print . Read this document. I am focused on getting a process right so no . For students and for taxpayers. So no . On getting a process right for students and taxpayers so no . And thats what im doing. Part of getting that process right requires reading. Thank you, mr. Chair. The gentlemans time is expired. Gentleman from michigan, mr. Walberg. Thank you, mr. Chairman. Thank you, secretary, for being here. General brown as well. Again, january 10th was before the inauguration and february 17th is when you were confirmed. I hope it doesnt concern my constituents too much that i dont read every article thats written about me either. There are certain articles that would be a waste of time and take me away from the job that ive been asked to do, especially when you know what youre supposed to do and follow the law. Talk to us, if you will, about your exhibit number 1. Ill give you the opportunity at this time. So exhibit number thank you, congressman. Exhibit number 1 shows the process through which we go with eve every borrower defense application and id like general brown to just talk briefly about it so we can understand where weve come where we have brought the borrower defense claims to prior to having the new methodology to process. Thank you, madam secretary, and thank you, congressman, for that question. I would just remind the committee that overall we are vastly approaching what will be almost 300,000 borrower
Defense Applications<\/a> by the end of this calendar year. And each case is adjudicated on its own merit. And what that means is there is no blanket way to do them all because they all vary greatly in what data is there and also the validity of each case, without regard to which school the person went to, the student went to. We do not look at them per se by school, we adjudicate the individual cases, so the type of school is less of issue than the valid deof the case. For every one of those cases, we bring them in and that top bar that you see, we have our administrative people as well as our attorneys take them apart, 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<\/a>. Not all are under the 2016 rule. At that point the case would start the adjudication process. All cases get to that point. At that point thats the borrowers defense regulations that you all have supported across administrations. And we looked at this across administrations only because those were the questions that we have gotten. The percent of those that were valid and invalid really has held true. Its been about 62 to about 38 throughout both of of those times and for the first 65,000 of those cases that have been completed, adjudicated and processed back down to the students. At that point if it is eligible that is the point at which the secretary said earlier they asked the discretion to determine some, none or all. When you talk about a backlog, when you use that term, those cases got to that final point, had to be stopped as you all have already referenced by the ninth circuit. And so thats the backlog. And it is the decision upon which the ninth circuit answers the appeal or a new methodology has to be determined. So when you use the term backlog, that is what were taking each case based on its individual merits through. Thank you for that explanation. Previously there was no process to determine the outcome at any level. You revealed information on the
College Scorecard<\/a> that would allow families to compare similar programs at different institutions. Could you please explain what
Consumer Information<\/a> is included in this tool and how providing this information up front will help students make informed decisions before starting their school . Sure, congressman. Id love to talk about it a little bit more. Previously you could go to look at the cost of attending a school, average cost of attending a school and what the average earnings would be expected for a graduate of that school. Thats nice information but 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 your earnings potential is, what the earnings have been for students who have graduated from that field of study their first year and were going to be able to add subsequent years as more data becomes available. But this is going to give students a whole new tool to use in decisionmaking around what kind of education to pursue post high school. Its going to be it is useful for twoyear programs, for certificate programs. We are also linked to apprenticeship opportunities through the department of labor. So a very robust set of data and important tools to be used for students as they begin to think about their futures. And i think importantly for institutions to maybe ask some hard questions about some of the programs they have been offering that may not be, you know, the value for cost that they should be. I yield back. Thank you. Before i recognize the next member, i would like to ask you the madams consent that the document from january 10th from the borrower defense unit has been entered in the record. Theres also a january 9th and an october january 9th, 2017, and october 24th, 2016. These memos describe an extensive review of claims for corinthian, itt tech and everest biotech where students where the staff recommended full debt relief for borrowers from these schools. These memos, 14 pages, 14 pages and 18 pages reflect a clear process. An evidentiary review conducted by the administration so we just want those in the record. Gentle lady from florida, ms. Wilson. Thank you, mr. Chairman. Im glad that secretary devos schedule has allowed her to address this pressing issue today. Madam secretary, there are 200,000 students that are still waiting to have their borrower defense claims processed by your department. The
Education Department<\/a> has not approved a single new claim for loan 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
Students Loan<\/a> should be forgiven. Mr. Chairman, tens of thousands of borrowers acted in good faith as they applied to school and took out loans looking to better their lives. Because of bad actors, they were left with unfulfilled promises, outright lies and mountains of debt. I believe that it is incumbent upon us to provide relief for those harmed by schools that acted in a fraudulent manner. Secretary devos, you wrote with extreme displeasure on the document that discharged loans that had already been through the bd process prior to your appointment. Why would you write that . Why would providing relief to defrauded borrowers whose claims have been reviewed by experienced professionals displease you . Congresswoman, very good question. Very simply, there was no process. The claims were simply forgiven without consideration for the individual circumstances. Secretary, i heard you say that. I want to tell you a story about a borrower from florida named
Jessica Madison<\/a> that gives me extreme displeasure. In january 2017 ms. Madison was told her because borrowers defense application was approved and her debt would be forgiven in 60 to 120 days. It was not. Instead the government began garnishing her paycheck to recoup the money. As a result, she did not of electricity for weeks because her garnished checks couldnt cover the bills. How is it possible that the department of education could continue to collect miss madisons loans after she had already been approved for the borrower defense fund. After the
Washington Post<\/a> wrote about her story, the garnishments stopped. They did not refunding her money. Only 2,000 of the 12,000 garnish fred her wages. Do you believe it is not fully appropriate to refund wages that were garnished from
Student Loans<\/a> that were deemed fraudulent . Congresswoman, when a students borrower defense claim is deemed to be 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 students issue and situation individually. Thats why its important to have a process, because every students situation is unique. Do they get all of their money back that was taken from them . It depends on the various claims. Because of these wage garnishments, miss madison could not 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 owed to her by the government . Congresswoman, i can assure you that we can and will look into that specific situation if provided the details. Once again, i go back to the fact that all of these claims secretary devos. All of these students claims need to be considered individually. Ive dedicated my life to this work. Ive worked with democrats and republicans to advance the goal of quality education for young people. Ive had some honest disagreements with my friends in the
Republican Party<\/a> about how to move education forward, but ive never, not one time, believed that they were out to destroy
Public Education<\/a> until i met you. Why has every decision youve made harmed students instead of empowering them . Are you the secretary of education, youre supposed to be their champion. When you approach a public school, you were protested. If you entered, you were booed. When you spoke at an hbcu in florida two months later, the president was made to resign. You are the most unpopular person in our government. Millions will register to vote in 2020. Many will vote to remove you more than to remove the president. I yield back. Mr. Chairman, i just have to say one of those last comments was over the line. Absolutely over the line. To say that secretary devos is trying to destroy
Public Education<\/a> is going too far. And i believe every one of my colleagues agrees. We all set up very quickly when that comment was said. Now i like representative wilson. She and i have talked a lot and 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 our point of order, mr. Chairman. The gentle lady is taking time that is not recorded. The
Ranking Member<\/a> is making a point of order. Mr. Chairman, point mr. Chairman. Mr. Chairman, i believe if that had been said on the floor of the house, it would have been those comments would have been taken down. Thank you. The gentle ladys comments are well taken. Next person to be recognized is the gentleman from kentucky, mr. Guthrie. Mr. Chairman, i have a point of parliamentary inquiry. The gentleman from south dakota. Im just a freshman sir, so i dont know the rules backwards and forwards. Is there a mechanism by which a vote of this committee could strike those comments from the record . Just a minute. The comments from the gentle lady from
North Carolina<\/a> have been part of the record so i think we have both sides and i have agreed with the
Ranking Member<\/a>. Mr. Chairman, my point of parliamentary inquiry is we should refrain from questioning the motives of the members. Thank you, mr. Chairman. And the witnesses. Thank you. The gentleman from kentucky, mr. Guthrie. Thank you. Thank you, mr. Chairman, appreciate the opportunity to be recognized and sorry that the tone in washington has reached the way its reached the last year. Apologize for that. Somebody has been here for a while, we hate to see how its deteriorated the way that it has. We need to be working together to get things done for this country and unfortunately we are where we are. I want to get to my questions. Im sure that you agree that congress has responsibility to do oversight of the administration and i believe you said that 95 of all congressional requests have been met. With regard to the letters. Yeah, let me just add the 1. 8 letters are not constituent, nice, can you respond with a page or half page response. These are voluminous responses required 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, it included phone calls, emails and written responses. I think you answered that way . No, these are voluminous responses in writing. Im sure you agree that is important for all parties involved to communicate directly is what you said. So i want to get to this hearing. I agree that borrowers that are harmed should be granted relief as quickly as possible. After diving into some of the nuances about this issue, i understand why you have decided to grant partial relief in some cases. Now, it is my understanding that there was a report that estimated the borrower defense claims would be cleared by the spring of 2017. But your decision to review those cases and grant partial e relief meant that the estimate proposed would not be met. Is that correct . Yes, congressman. There was no process and short of simply deciding to forgive all of the and accept all of the claims with 100 validity or not, we needed to get a process in place to consider each claim. So thank you. So the memo i just mentioned, was that an official memo that included promises or any guarantees to borrowers . Im not sure what memo youre referring to. The one that said spring of 17 so it wasnt official. So there wasnt anything illegal about your decision about your determination it was the best interests of taxpayers to review these claims and make sure the relief granted was correct. So i guess my question is there was nothing legally requiring you by the spring of 2017 to make those decisions, and you made the decision to put in a process and made sure that fraudulent claims were paid, but need to make sure the claims were 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 and process from the
Previous Administration<\/a>. The policy of the
Previous Administration<\/a> 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 and progress any of those claims forward, which is exactly what we did when coming into office in 2017. Thanks, i appreciate that and i want to yield to the
Ranking Member<\/a> 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 in 2017, because the memorandum under consideration here that has been brought up was a memorandum to undersecretary ted mitchell who worked in the
Obama Administration<\/a>. The
Obama Administration<\/a> was in office until january 20 when the president
President Trump<\/a> took office. You again pointed out you did not come into office until february. So if they have been argument with anybody, it ought to be an argument with these folks who got the memo on january 10. This sounds like a lot of other memos that came out around that time. Id also like to point out that contrary to what has been said, that forprofit schools have no value, 1995 was when borrower defense rules went into effect. Corinthian colleges were formed in 1959. Itt was around since 1969. Between the time borrower defense went into effect, as you said, madam secretary, until 2015, 59 claims were filed. So obviously something happened. Yes, those schools closed, but theres been a culture change, i believe, in our country in terms of what people believe theyre owed. Thank you, mr. Chairman, i yield back. Thank you. The gentle ladys time expired. The gentle lady from oregon. Thank you, secretary devos for being here and thank you, mr. Chairman, for introducing into the record the january 9th and january 10th, 2017, memos. Secretary devos when you made opening remarks, you said that some on this committee suggest full relief for defrauded borrowers. Its not just some on this committee, it was the borrower defense unit in the
Education Department<\/a> as well. People who had been working on these cases, thats the point. Secretary devos, the mission of the department of education to promote student achievement in preparation for
Global Competitiveness<\/a> by fostering occasional excellence and ensuring equal access. When i look at how the department and you have been handling the borrower defense cases, i just dont see that is 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 loan balances and a worthless degree, if they even got a degree. Im a former
Consumer Protection<\/a> 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 may be 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 theyre 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 and wage garnishments. And in september the department admitted to violating a court order by illegally demanding loan payment from more than 16,000 corinthian borrowers and that has now increased to 45,000. And the issue came to the publics attention only after you were held in contempt for violating a court order. So this is not a new problem. In fact, more than a year ago a
Court Ordered<\/a> the department to stop seizing tax returns of borrower defense complicates. That was the williams case. So you and the department have known about this issue for years. So why did the department continue to bill more than 16,000 corinthian borrowers in violation of the law . Congresswoman, im sorry you werent here when i talked about that earlier on, but what we said what i said was it was very clear that the borrowers that made claims for
Corinthian College<\/a> programs were in forbearan forbearance, were not accruing interest at my direction prior to the
Court Order Court<\/a> injunction in may of 2018. Since then, a year later, there were errors made within federal student aid and with some of our servicers. Human errors that once we became aware of them, we immediately acknowledged and immediately went to work to correct and rectify the problems for those impacted students. Im going to reclaim my question and ask another question. Secretary devos, im going to reclaim my time. And i was here, i just didnt find the answer satisfactory. How many times has the court already founding that the department has illegally collected payments from borrowers or seized their wages or tax returns . How many times . Have other courts found that. In relation to the
Court Injunction<\/a> from may 2018. General brown can comment to the specific numbers of impacted borrowers and, frankly, what we have done for the record, there were other cases what we have done to make sure those other cases were addressed and taken care of, which they have been. And you say, secretary devos, that you care about the responsible use of taxpayer dollars. So the judge in the manriquez case imposed sanctions of 500,000 for doing that. Who paid 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 youre not aware if its even been paid . I dont believe i dont know. And who who do you expect to pay that . Will you pay that personally or the taxpayers pay that . Well, i think there is an appeal to suggest that its not appropriate to fine a another federal department. So in my remaining time, it was the borrowers who discovered that the department was billing them improperly. This is not a result of the departments oversight. So we know there are many borrower defense claimants who are watching today. How are you going to assure them that youre doing everything in your power to help them get relief and that they wont have their wages garnished or their tax returns taken in the future . Well, im very hopeful that we will be able to continue to move ahead with our new methodology and assuming no challenge from through the courts of that methodology will be able to process these claims that have been pending for many years. And thats the methodology that if someone is making money they werent defrauded and that is not justice, madam secretary, and i yield back. Thank you. Before i recognize the next witness id like to enter in the record an oig report in response to this report. The present department of education fsa stated by the
Previous Administration<\/a>s process for adjudicating claims, they said, and i quote, despite these challenges, we are pleased to note 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 fsa created policies and procedures from borrower defense that have evolved over time as fsa has continued to redefine its processes. The oig report is dated december 8, 2017, so thats during the present administration. Without objection, so ordered. And the gentleman from alabama. Thank you, mr. Chairman. Secretary devos, 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 and we appreciate your service. Im going to ask some questions about oversight and im going to direct them to the secretary but, general, if its something that you need to be the one to answer, just feel free to jump in. Lets just begin with the basics. Do you believe in the need for congressional oversight . I do, congressman. Well, i think your presence here today proves that, but i wanted you to be on the record to say that you believe in it. Have you informed your staff of the need to be responsive to congress, to help us do our 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 we must do so in timely fashions. And how do you follow up with them to make sure that theyre doing that . Have a regular reporting relationships, depending on the area and the department of the 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 we are continuing to have regular dialogue and updates on those. General brown, did you want to yes, sir, i can provide you one example of those daily reports. On exhibit 7, we are asked for all of those students that had some element of error that were involved in the manriquez case when they were erroneously taken out of forbearance and perhaps billed. 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 and today thats actually less than 30 of those cases that have not been remediated. We are responsible for giving that report to the secretary each day. And even if its at 99. 9 we wont be through doing that daily report until its 100 , meaning every particular person, specific person that had any element of harm done to them has been corrected. So if they had a treasury offset, like i heard earlier in a statement, that the treasury would have had to refund that money for us to put them in a remediated status. Thats one way that we provide oversight of this process and responsiveness to the secretarys request. Thank you. That was very helpful. Thank you for providing that to us. Now, i know you get multiple requests from the same member or members of congress. How do you prioritize requests when you get multiple ones from the same member . What kind of communication do you have in place to ensure that your staff is still able to meet the standard for response as you said . Well, 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 one 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. And i think youve already said this, but remind me. What is your
Response Rate<\/a> to
Congress Since<\/a> youve taken office . 95 . Pretty good. Some of us would like to have that rate with our constituents, i would say. Is there a different standard for oversight in the federal
Student Aid Office<\/a> than other offices in the department . No. We have
High Expectations<\/a> for ourselves across the board. And, general, this may be for you. How does fsa balance the request with the desire to get the job done. We try to answer within 30 days but those that are data centric and require special pulls from what is 11 loan servicers across the country often will require more time because that data simply doesnt exist in the systems that we are working to reform. But for most data requests, we try to do those within 30 days. Thank you for that. Thank you for your hard work at trying to be responsive to congress and thank you for your professionalism and for understanding that the taxpayers money is precious and that we have a responsibility, all of us, including those of us in congress, to safeguard that money. With that, mr. Chairman, i yield back. Thank you. Ill remind members to please direct the questions to the secretary. The gentleman from california. Madam secretary, youve twice testified today that all pending claims in the manriquez case you had ordered into forbearance and not to collect interest prior to that
Court Decision<\/a> of 2018. You referred to processing errors were made a year later. Are you aware in fact that your department submitted in a
Compliance Report<\/a> to the court on october 8, 2019, that the compliance errors that were talking about at issue were not the result of willful or intentional conduct on the part of the department but as the court has recognized gross negligence, including negligent oversight over the department servicers. Are you aware thats your own departments words . Are you aware of that . Congressman its a simple yes or no question. Its not a simple yes or no answer. Im just asking are you aware thats what your own departments submission to the court, that your department conceded that it was gross negligence for this loan processing errors. There were errors made on federal student aids ends of things on november 21st, 2019 by the way, i want to enter this into the record, mr. Chairman. The statement of the department, their response to the court. Without objection. Madam secretary, on november 21st your department held its firstever
Quality Assurance<\/a> and performance meeting with kper tors to review the manriquez case. Why did it take 18 months for this meeting to happen . Why did it take 18 months to do that . The loan servicers we are continually in dialogue with the loan servicers it took you 18 months to have your first meeting. Why did it take so long to do that . Are you interested in learning or interested in its a simple question. Why did it take so long for you to meet with these loan servicers . I am very pleased with the leadership of general brown who came to federal student aid nine months ago assuming the chief operating officer role. He is responsible for the operations of federal student aid. Madam secretary, he came on board much later in the process. As well as relationships moving on, on may 25th, 2018, a federal
Court Ordered<\/a> you to stop collecting on corinthian 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 it consisted of inadequate communication with each of your nine
Loan Service Providers<\/a>. Is it correct that your departments only communication with
Loan Service Providers<\/a> during this time was through email . No, thats incorrect. Mr. Chairman, i would like to enter in the record the emails cited in judge kims order. One email one email was three sentences long. The other email to
Loan Service Providers<\/a> didnt even cite the fact that the department was under a court order. Without objection. The judge was astounded, madam secretary, that your department only sent emails and did not have inperson meetings or phone calls with the
Loan Service Providers<\/a> explaining the court order. Judge kim asserted that it would have been normal for any entity under such a mandated court order to have inperson meetings with the contractors immediately following the preliminary injunction and not several months later on november 21st, 2019, which is 18 months later. Mr. Chairman, i ask ive already asked you consenting to enter the emails. Mr. Chairman, i want to point out on may 29th, the email was only three lines providing instruction to loan servicers. On july 5th, the email they sent to an additional five servicers contained no mention of the preliminary injunction. Madam secretary, who did you task with the responsibility to ensure loan servicers complied with the injunction . I am very pleased with general browns leadership . When does mr. Brown come on board. Can i please finish my question . My question was who did you assign responsibility for compliance . Federal student aid has a chief operating officer responsible for the operations of federal student aid. General brown is responsibles athe chief operating officer. When did he come on board. For those operations. He assumed the coo role nine months ago. He was with the department for four months before that. So he was responsible prior to that there were you assigned him responsibility to ensure that your department complied with the court order . Who did you put in charge . We have continued to be intentional about complying with the court order. We have acknowledged that madam secretary, are you going to answer my question. Who did you assign responsibility comply with the court order for your department . The chief operating officer of federal student aid is responsible for the operations of federal student aid. Youre referring to mr. Brown, but he didnt 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<\/a>. As an acting. And prior to that there when i came into the department, i inherited operating officer who left his role rather than come and testify here before you. I yield back, mr. Chairman. Time has expired. The gentleman from indiana, mr. Banks. Thank you. Secretary devos, thank you for your service and leadership. A lot of discussion today has been about what happened in the past on this issue. But i want to take a moment and focus on steps moving forward. General brown might have more of the detailsel tailed answers to my questions. Feel free to have him answer if you prefer. First of all for the bar words that are waiting for relief, when can they expect to hear from the department whether theyre eligible for relief . And if a borer is eligible, how long approximately will it take for an individual to hear how much theyre going to receive . Years or are you working to make sure the borrowers are aware as soon as possible . Congressman, thanks for that question. Now that 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 is this area to be able to really 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 even within the last 24 hours we are notifying students of their eligibility or ineligibility, if theyve provided a claim. We continue to do that. Those claimants, they would know now. And if they got relief they would know so within the next or actually have it done within the next 60 to 90 days. I would also say though that the staff at its height was 14 and previous years we have more than tripled that with the emphasis on hiring attorneys. Frankly the more you have the quicker youre able to get to these cases. Minus any litigation we expect to get to those fairly quickly. Another part of this is the system which weve been rebuilding over the last 12 months, and that systems platform is ready. We expect to clear the majority of this backlog minus any further litigation over the next 12 months. Do you have the staff that you need to do that currently . So im happy to say that both the systems and the authority and resources to hire the personnel has been given to us by the secretary. And we have either hired them or they are in the process of onboarding them. So again minus any litigation, we have what we need or will have shortly. Permanent or temporary staff people . The majority. Some of them are term employees. We did that out of consideration and stewardship frankly forever the fact we would not expect to forever receive what we are receiving now which is somewhere in the neighborhood of 1,200 cases per week. These are temporary hires. We will see if we need to extend them further. Who is involved on how a final decision on relief is made . Do all of the borrower defense claims come to general brown or you or are lower employees able to make that decision . I have approved the policy, process, by 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 defense seems like an inefficient way to protect taxpayers from fraud. What reforms are you making . Thanks for asking about the
College Score<\/a> card. Weve made considerable changes and enhancements to the
Data Available<\/a> to students and frankly broadly to taxpayers and institutions. So now prospectively students can look at the cost of a
College Program<\/a>, a field of study, the cost, and the earning potential the first year after. Well be adding data and information to that, as subsequent years become available. But this is going to help clearly reveal whether the value for a program is there. And frankly i think its going to help a lot of schools make some decisions about whether to continue programs that theyve been offering as well. Thanks to both of you for being here and thanks for always be willing to answer my questions and provide anything that our office needs along the way as well. With that i yield back. Thank you. The gentleman from new jersey, mr. Nor kros. Thank you, and thank you for being here today. I want to start out by saying i agree with my colleague on the other side that we wish that we would
Work Together<\/a> much more often. So lets see if we can start with you and i, that we get direct response todays direct questions and be respectful of each other, which is something that im sure you want to do. Let me start out by asking you about the partial relief formula that uses the
College Scorecard<\/a> data. Talk to me about that, how after 18 months i guess in support you rolled this out, why you thought this was the best scorecard, particularly when you only have 20 of the programs involved in that now. How did that become the best one . Well congressman, just to be clear, were using several different data sets. Arent you using the scorecard . Yes as one. Do you agree that it only has 20 of the programs . Yes. Okay, so please continue. We are. Using several different data sets. In looking at each borrower, the program of study that the applicant was claiming was fraudulent, the
Median Income<\/a> for that program is compared against the
Median Income<\/a> for programs like programs. We understand. But what else are you using . The other pieces are
Social Security<\/a>
Administration Data<\/a> and the 2017 gainful
Employment Earnings<\/a> 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<\/a> 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<\/a> . 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<\/a> 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<\/a> 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<\/a> . Are all the parties, all their stuff is in . Were waiting on the courts decision. Yes. Thank you, mr. Chairman. I yield back. Thank you, the gentleman from new york, mr. Morel li. Thank you, so much, mr. Chairman, for hosting this hearing. And thank you madam secretary for being here this morning to answer our questions. I do find interesting the conversation about taxpayers rights and interests versus students who have made claims. And i suppose one way to save taxpayer dollars would be to deny all the claims. Im not suggesting you say that. I just find it interesting. What we need to do is find balance, because if we just denied all the claims, that would neither be legally or in my view morally defensible, but it would certainly save taxpayer dollars. We want to strike the right balance here. I want to just touch on a few things that i find interesting about the department rules. One of them relates to what they call frivolous factors. I want to read under the new rule, institutions that include the nicest dorm on campus is part of the college tour cannot guarantee that every student will have the opportunity to live in that dorm. How many students have submitted a borrower defense claim that they didnt know the dorm room . I dont have the number but i do have a case file of one who submitted a claim who is trying to claim borrower defense for the fact that he or she did not like their professor. Okay. But as it relates to it, in the rule it actually cites the nicest dorm rule. And im just curious whether or not you could follow up to determine since its in the rule, i assume that there were concerns that claims had been made by students that they didnt get the nice dorm room that they saw on the tour. There have been a number of different quite unbelievable claims made. 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 cite because not all of those claims have been not only adjudicated but processed. But i do know that there have been a number of claims made that, you know, your jaw would drop if you actually read the reason for their claiming fraudulent activity. Im not sure my jaw would drop, but perhaps other peoples would. My background is in the new
York State Legislature<\/a> and we are involved in
Higher Education<\/a> but not federal programs. The rule, the new rule, states that it made the changes to the application process about so quote, bor oers seek wisely for seeking the best
Information Available<\/a> and accept the benefits of
Student Loans<\/a> with the full understanding that they generally are legally obligated to repay these in full. I was struck by some of the conversation because the institutions that qualify for this and the guaranteed loan program, the requirement is that they be accredited, either by a national or regional accreddation organization. And given the nature of some of the students particularly that attended corinthian and some of the other schools that have had claims of significant fraud, it seems hard to me as an average citizen that you would put the burden on an individual whos looking to go to school, and these are in often cases nontraditional, at work, may have families, theyre chechlkd but they want to pursue new careers, it would seem to me that the fact that they are accredited should mean something. And the sort of suggestion that i get is that the expectation is that they would not only take the accreddation but be obligated to do
Additional Research<\/a> on the claims made by the chej when they go. So if the chej says or representative says 100 of our students find jobs after take this course in the field, its accredited by the federal government has a federal guaranteed loan program and are accredited by a
National Regional<\/a> organization, why should that student be obligate the to do further research . Why shouldnt they take that as a proxy, the accreditation, that is required by the federal . Why shouldnt they im not sure im clear on the question. The suggestion is, as i understand, that there is a responsibility on the
Prospective Student<\/a> to do more research on the creditability of crimes being made by people representing various colleges. I would just assume if theyve been accredited regionally or nationally and theres a guarantee loan program, that that is an indication that the federal government has essentially put the good
House Keeping<\/a> seal of approval. Why would it require a student to do
Additional Research<\/a> on the validity of the claims being made by an accredited college . I think its imperative we provide as much information for all parties. Clearly accredittors have a rule, ints tugs themselves, and the federal government as a lender has a role to play. Thats why weve continued to improve the
Information Available<\/a>, and to insist on an approach with the regulation that is balanced and that treats all institutions equally. And i apologize, im out of my time. Im going to yield back. But i would say that accreditation would seem to me to shift the balance and the requirement for the student so they should be able to rely on that and i dont think thats what the rule says. Thank you. Dr. Murphy,
North Carolina<\/a>. Thank you, mr. Chairman. Thank you, secretary defrmgevos coming today. I appreciate the effort your department is doing to try to be good stewards. I think this issue highlights some of the problems the government has in education. I appreciate you trying to be a good steward because we are striking a balance between individuals that want to better themselves to pursue
Higher Education<\/a> and also to be won that just doesnt dole out money just because someone claims that they deserve money. I can understand some of the comments or i would probably shake my head at some of the comments and the reasons some people claim they should be reimbursed or whatever. Let me ask you a couple questions, because accreditdation to me just in the medical sphere seems to be in my opinion a way to get a lot of money for institutions that accredit other institutions. By definition, accreddation really means about as much as its worth. You can be accredited by different bodies. I dont give a stamp necessarily. And there is a phrase, cave yaet mtor, let the buyer bewere. On the other hand, what strategies, what practices, does the department use to conduct oversight for these
Higher Education<\/a> 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 and i want to get us back to the reason that were here today, to talk about borrower defense and our approach to handle these claims and ensuring that students are treated fairly and taxpayers are treated fairly in the process. We are committed to following all of the rules and the regulations that the laws that congress has provided for us, and continue do do so regularly. Thank you. What form of penalization, if you were, is used by the department for institutions that are having practices that are causing students what type of deceptive practices are penalized and how by some of these institutions . Well, the department has primarily fiduciary tools and responsibility. Its a balance between accreditors 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 are folks that are doing this as a second while theyre also working at a second job or working a job and doing versus people who are primarily just using this as their main focus as far as
Higher Education<\/a> versus doing it as trying to get a second career . Thats a good question. I dont have the ganular data. I dont know, general brown, if you have a breakdown. No. We dont collect the data at that level to see if theyre doing additional jobs or those things. We adjudicate each case. Just to follow up with that, i just i feel for individuals who are working and trying to better themselves, by all means. Education is the key to a lifelong ka roor and prosperity. I do think the federal government has led to some of the problems that were having in
Higher Education<\/a> now because the money is so free. It comes without many springs, and if you want to get money and go on, you do. Instead i think its led to a lot of bloat within
Higher Education<\/a> and we have a lot of kids going to higher institutions that should be going to
Community Colleges<\/a> first. We are part to blame for all this nonsense. I thank you for your work and trying to keep us informed and doing the right thing. Thank you. I yield back my time. Thank you. The gentlelady from pennsylvania. Id like to first address the new partial release by the department. An expert in the field, dr. Douglas weber, an associate professor of economicics at temple, and was a bipart sap witness before this
Committee Said<\/a> the new borrower defense scheme is nonsensecle and harmful. He pointed out that the standard deviation, the main tool used by the education is defined based on the mean and has no direct relationship to the median. He fientsds that the
Education Department<\/a> has pro prosed a formula which misunderstands and misapplies techniques in a way that makes it harder for defrauded students to find relief. I would like to enter this. Without observe jeks. Moving on, secretary venchts voss the the number has ballooned to 227,000. Many of these are part of group claims submitted by 20 separate state attorneys general including in my state, pennsylvania, and some borers have been waiting for more than four years. These represent thousands of students who were defrauded by predatory colleges. Theres no question 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 those claims were brought, your department attempted to have them summarily dismissed by arguing that a state attorney general could not assert a borrower defense on behalf of a group of borrowers. Is that still your assertion . Thanks for that question. Let me just correct you. Let me just have an answer first. Is that still let me correct you. We have almost 300,000 claims filed. All right, thank you. Is it still your assertion that a state attorney general cannot assert a borrower defense on behalf of a group of borrowers . This is the is assertion its the federal department of education that has the oversight spochblt. And the claims continue to be filed by individuals, and are considered as individuals. So i take it that your answer to my question is yes, that you still maintain that a state attorney general cannot assert a borrower defense on behalf of a group of borrowers . I know. Yes or no . I know there are those marketing the opportunity to file claims. Weve seen facebook ads. Im sorry but you seem to be incapable of answering yes or no. Let me remind you in october of 2018, a federal court ruled in williams versus devos that the actions were unlawful and ruled that the
Education Department<\/a> must review applications submitted by states attorney general and cease involuntary collection activities against those borrowers. W why are those still sitting at the department . The claims cannot be processed without a methodology 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 brought by the states attorney general since that court ruling . General brown will have to answer the question about the specific claims. Why dont you im going to ask you to get that information that have currently been processed because we just start the processing within the last week. General brown if you would like to no, the question is directed to you. If youd like to turn to general brown and ask him for that information, thats fine, but i want the answer to come from you, please. General brown, would you to the secretary, please of your answer. How many of those claims . 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<\/a> decides they need to be, the ones that they are able to process and are processing first. All right. Im going to reclaim my time. In june of 2019 22 senators roe to you asking for a status on each of the group discharged applications submitted by the state attorneys general. And your department responded stating that the request for group relief o are in various stages of review by the department, correct . They are indeed. And what stages . All of the claims are going to be considered individually. On your timetable . Did you not state at the very beginning of your testimony that students are your 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 start that while this process i yield back. Was being set into place, that no student would assume more interest on their
Student Loan Debt<\/a>, and that they would be held in forbearance. I dont like the fact that theyve been sitting there any long as long as they have any more than you do. I said that at the beginning. Ill say it again now. Our goal is to get these claims processed, and to take each students claim individually, acknowledging that each student has unique and separate circumstances. Im sorry but secretary defrmg devos time expired. Thank you. Thank you. Gentleman from kansas. Its good to see you. I noticed 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 ed kairtsz, one being my mother who was here, was an educator in kansas for many years, and reminded me of what shed say when she came home, and students are her number one priority. Thats why you go to work every day. I thank you for that. Youre trying to work and do the best you can at an intersection between politics and ed occasion, where everybody is very emotional about the way ahead. Thanks for your best efforts at patriot and doing your best under the situation. During your tenure, as well before, a lot of things happened. Im going to ask a bit about the timeline about you can feel free to have general brown answer if youd like. November 2016, the
Department Published<\/a> new borrowers defense regulations. That was the first in some 11 years i believe. In accordance with the
Higher Education<\/a> act. The final reg were published in november 2016 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 to be able to delay the implementation of the 2016 rule in order to further refine the rule, which we have now done with the 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 rule, the 2016 rule, and then prospectively, the 2020 rule. Can you tell us when that process began and how long it took to issue the final rulingu rule and during that time did you consider and incorporate feedback from
Higher Education<\/a> stakeholders, including the public . Oh, yes. We went through the rule making process and received input and feedback during the
Public Comment<\/a> period and responded to that appropriately. Yes. Thank you. And again, i just wanted to say thank you for your hard work and thank you for all that you do. And id like it to be a reminder that the challenge here is to assure that we provide and empower the in the case of primary education, the decisionmaking power to teachers and to parents, and assure that we understand what our role what our limited role is oversight out to be. Because i believe its best done by the parents and the teachers. And so thank you again for being here, madam secretary. I yield the remainder of my time to the
Ranking Member<\/a>. Thanks, congressman. I thank the gentleman. Madam secretary, if you could enlighten us a little further on how fsa communicates in a constant way with
Loan Services<\/a>, and how they communicate the changes in borrower status when the
Court Intervenes<\/a> or the borrower files a claim. Well, congressman, the communication with the servicers is an ongoing and regular effort. And it continues to be a challenge, frankly. Id love to have one of the exhibits that we have along here put up, exhibit 2, to better understand the complexity. You know, when federal student aid was created, i dont think congress ever envisioned the kind of complex organization that it would be today. And i think you will see with this chart how many different elements there are. The loan servicers all operate on different platforms. So there is not an efficient and effective way to communicate. It makes communication challenging. But one for which we have continued to take responsibility. That is why we have continued to move to the modernization of federal student aids platform and framework, what we call nextgen. And we are going to be able to have a much better and smoother process and
Communications Flow<\/a> when we are ultimately able to migrate completely to that nextgen framework. And if youre interested in hearing more about it, i know general brown has a lot more detail about that process. Well, with eight seconds, seven, i dont think wed have that detail but we look forward to it. But im delighted to hear that while its cumbersome right now were moving nextgen to do it better and complete those 300,000. Thank you. The gentlelady from washington, dr. Schieer. Thank you. Thank you for joining us today. I come from washington state. And nearly 6,500 students there are stuck. They took out
Student Loans<\/a>, and enrolled in bad actor forprofit colleges that intentionally deseived them, colleges closed. Credits were worthless. They got stuck with thousands of dollars of debt and nothing to show for it, no degree, no credits that could transfer. One of my constituents from pew wale op washington is a single mother. She wasnt able to get her degree. Her socalled education prepared her for nothing. She earned very little and was stuck paying back loans even though they gave her no education and could not afford to leave her parents home. She said, my son has asthma and sometimes needs hospital viftsz. When he gets really sick i cant even take him anywhere. It makes my life a living heldl. She has had to take out loans because she has continued to have to pay on this debt. Now, there was a consensus in it your own department that all of these corinthian and itt loans should be for given, that uniformly students got no benefit. Under the
Obama Administration<\/a> a policy was enacted to forgive that debt because they were victims of fraud. But you have continued to collect on those loans. So students sued and a judge shelled you in contempt for continuing to take their payments. To this day the department of education is still making students pay off federal loans for this fraudulent education sometimes even garn irning wages. So my question for you, who considers students their number one priority, is, do you really believe youve done everything you possibly can to help these students and make them whole . Well, congresswoman, let me disagree with the narrative that you just advanced. I have continued to respect the fact that many students borrower
Defense Applications<\/a> have been pending and all i have directed that all students whose applications are pending are in forbearance and not having interest accrue. So the narrative that you have advanced is not accurate. And so they and i am committed to continuing to implement this methodology to now process the pending applications. And very hopeful that were going to be able to continue to do it without litigation. And that ultimately these borrowers will have their questions answered. I heres my concern. You say theyre in forbearance but people are still paying on these loans. They are still racking up. In the case that they were, they have been remediated. When we have become aware that they have been inaccurately taken out, we have remediated them. And well continue to be vigilant about that. Id like to know about what kind of time frame were looking at. Because you have you have mentored children precisely the kinds of kids who grow up and go to institutions like this. I wonder if you could put yourself in their shoes and feel what it would feel like to go to one of these institutions, be defrauded, told they were going to have a degree, credits would transfer, told they would have an income afterwards and then not, have to wait. Being in forbearance is one thing, but you are continuing to collect on these students. My understanding is that only about 1,500 cases have been processed through to date. Your new process, looking at one case at a time, anticipating another year of waiting, that seems like too long to me. Can you tell me when you anticipate that they will have relief . I can indeed feel for the students that are going to any institution and having hopes that far exceed what they realize and what they ultimately experience. And we are committed to ensuring that every student that submits a borrower defense 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 now that we have a new methodology underway. So the new methodology has multip multiple flaws. Thru theres nothing that prevented you from stopping payments while it was going through this process. But the students are still paying, some of them going into debt, some of their
Credit Ratings<\/a> damaged. I would like to know what youre going to do to fix this, get them money back, to repair their
Credit Ratings<\/a>. There is a long chain of suffering that happens when youre forced to continue to pay on fraudulent debt. Again, any student that ultimately has a claim that has merit and that for which they have experienced financial harm, we are committed to ensuring that they are made whole. Corinthian students and itt students 100 have valid claims because they got zero benefit . Thats simply not true. There are many corinthian and itt students who have done your own staff determined it was true. Thank you. Expired. Gentleman from
North Carolina<\/a>, mr. Walker. Thank you. Been watching some of the hearing and having some other meetings. I thought all the painful stuff was happening in another committee. But obviously were making some space on this one even though were not the featured prime time spot doesnt mean you cant still say some crazy things in this committee as well. Ive got a couple questions but im going to pause and to commend you on your strength. Listen, the reality is all of us when we transition into the political environment, my back voupd a pastor, some educators, youre not going to get everything right at first. But we are taught to look at the heart. 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 heart is pretty clear here on what youve tried to do. Its a little embarrassing to see when it goes personal like it has. But i dont know how youve continued judge unfortunate to kind of take it for three years and just keep moving forward. But you have. And i think that shows great resolve. I think sometimes when people have disgrooemts, its a shame that we make it personal. Because i would tell you i think only god sees the heart. And i just commend you for trying to do the right thing. And i guess ill ask a few questions if thats okay at this point. So after my comment airy is completed. You have released a new methodology for determining relief for borrowers. Can you please walk me through and explain why you think this is a fair and appropriate measure . If general brown needs to provide specific information, he can do that. Thanks. And thanks for the encouragement. The top line is the new methodology really treats 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 they 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 deviations from that mean or median, the borrower would receive 100 relief. And right. Between the median and two standard deviations, it would be a tier ed approach. We believe this is a good way of demonstrating this. Which of these loans does this methodology apply to . Well, all of the pending claims with the exception of the
Corinthian College<\/a> students that have been carved out by the previous lawsuit. Yes. And were hopeful that the judge will review this process and permit it for the claims that were pending there as 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 efficiently process the exponential growth in claims since 2015. If this requires a more technically answer, please elebrat as to why this is deficient in handling these claims and how this can be contributed to the backlog of claims processed . First of all its 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 swinwi itself and with its servicers. But the i think the ponderousness around this thing all speaks to the complexity of federal student aid and the federalization of student lending. And it has continued to manifest itself, 1995 to 2015, only 59 borrower defense claims in that 20year period. Since then, nearly 300,000. Well and it was frankly an allout attack in the last administration on specific ints tugs. And i think thats unfortunate. Our rule
Going Forward<\/a> will treat all institutions equally. The last administration said they werent going to look at materials or realities from, you know, liberal arts programs because the value was assumed there. Well, thats just not a reasonable approach. I wanted to hear more from general brown but my time has expired. Misunderwood. Do you know how many corinthian students have negative information wrongly added to their
Credit Report<\/a>s . How many students with the mistake that was made most recently . How many students had negative information wrongly added to their
Credit Report<\/a> . Im not asking about your staff. Im asking you about. Do you know the exact number . Maam . Secretary devos do you know the number . Congresswoman, i am consulting with the chief operating officer of federal student aid who is charged with the running and impolicemen tax of this program. I appreciate that. If you didnt know the answer could be no, and thats okay. Im trying to find out if i can 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 that information is not collected. Okay. Well, so far your department has publicly released the number, and its 5900 corinthian students whos
Credit Report<\/a>s were wrongly affected. Youre aware that negative information on your
Credit Report<\/a> like information that says youre not paying your
Student Loans<\/a> is lower your credit score, is that correct . All of the students impacted by the mistake that was made have been remediated. Were going to get to the remediation. I was just asking i was stating im reclaiming my time, please. Secretary devos have you ever been denied a home or car loan because your credit score was too low . I have o not. You do know how it can affect students. What are some specific examples of those harms . In fact all of the students that had
Credit Report<\/a>s affected have been remediated. Thank you so much, maam. We will continue to
Pay Attention<\/a> to not having it happen again. Thank you, thank you. We know that students whose
Credit Report<\/a>s get harmed, it impacts their ability to buy a home, auto loans, can lead to job loss. The consequences are real and personal and have really devastating impacts. I want to share a few of their stories. Law kwooesha johnson earned a degree as a medical assistant from a
Corinthian School<\/a> but we know that degree is almost worthless. Shes left with those
Student Loans<\/a>. 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 debt relief she is legally entileded to. She cant find a new apartment to rent. So lets go back to that 5900 number. You previously said that only 900 students
Credit Scores<\/a> were affected. But last week you disclose the an additional 5,000. Are there more to come, or can you commit right now that you have discovered and corrected every unfair report on the corinthian students credit . Congresswoman, i too feel for the individuals that youve cited in your examples. And once again am committed to ensuring we do whats right for all students who have submitted borrower defense claims. We have continued to be diligent correcting the errors that were made. We have acknowledged them. We have said we are sorry. And we are going to continue to be vigilant to make sure we do not incur more of them. We have put notices in the servicers files. We have continued to make sure that consequences for the mistakes that were made are levied, and that students are continuing we continue to put students first in this case, the ones that did have
Credit Ratings<\/a> impacted, again, we have addressed those. We will continue if there are instances in the future, we will do so with them as well. Right. My concern, maam, is that this group may just be the tip of the iceberg. Your
Department Just<\/a> disclosed this larger 9, the additional 5,000 students last week as the result of one lawsuit, a court order. It doesnt include the corinthian students who arent involved in this particular class action or who joined a different lawsuit with their state attorney general or otherwise. It doesnt include the hundreds of thousands of students who went to fraudulent schools that arent
Corinthian School<\/a>s who may also be eligible. And
Wayne Johnson<\/a> gave an interview where he said, i know that millions of people have unfair information in their credit files, causing them to pay more on car loans and apartments. Secretary devos, you both have the responsibility and existing authorities to do something about it. Were trying to determine, whats the right number . 900 . 5,000 . Into the millions . I yield back. Time has expired. Gentleman from georgia, mr. To get into after i just make a couple observations. Secretary devos, i know that we all agree all students who are defrauded by their schools should receive relief. I also want to focus on fairness. Since joining the committee, we have marked up a onesided peter robs paul
Higher Education<\/a> reauthorization act. The
Democrat Bill<\/a> 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 policies that double down on failed policies and cuts out providers, they are not only that are only harming our students. We do a disservice to the students when they focus in on a schools tax returns rather than the educational experience delivered. We can discuss how there are bad actors across the board. But what we should focus on is how we allow students to find the school or
Educational Program<\/a> that best fits their needs and helps them achieve their goals. And i heard a lot earlier today about not having a process and many things in place for you to be able to do that from the
Previous Administration<\/a>. So i just have a couple questions. Can you tell us about what the department is doing to help students and
Prospective Student<\/a>s better understand the options available . Like does the
College Score<\/a> card cover more than just back loriat degrees . Thanks. Yes, the
College Scorecard<\/a> weve recently enhanced the data for now contains information at a field of study level for not only fouryear colleges but also twoyear institutions where for some sert tifcat programs, some graduate programs, and also has links to the apprenticeship programs through the department of labor. We believe this is going to be a good and important tool for students to be able to access and use as they consider future fields of study and future programs. So prior to the
Previous Administration<\/a>, did they cover that broad range of programs available or just focused on the back loriat degrees . They were focused on fouryear institutions and by
Institution Level<\/a>. Now were down to the program level. What that would do would be improving any student at any field of study depending on how long it takes . To acknowledge there are many pathways to a successful adult life and we encourage students to look at all of their options and in fact look at them starting in middle school, frankly. Your scorecard would protect more than the
Previous Administration<\/a>s did because youre including at the degree level and not the
Institution Level<\/a> and youre considering all programs, not just bacheloriat . Correct. Youve done more . I would argue that, yes. Because if previously if i had been going for a twoyear degree, i wouldnt have had that
Information Available<\/a> to me . Thats correct. Thank you. I appreciate it. Also, has the information shared on the
College Scorecard<\/a> been it has. Can you highlight what changes have been made, what the additional educational pathways are available . I know you talked a little bit about that. But, you know, when you look at that, how do you think thats helped some of the other people that arent going for a back loriat but maybe going for a twoyear
Associates Degree<\/a> or
Training Program<\/a> . 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 to be able to compare between institutions, compare between programs, compare different kinds of fields of study. And again, just give students and
Prospective Student<\/a>s many more tools to be able to make good decisions for their future. I appreciate that. And i just want to follow up. I know theres been some previous remarks made about certain, you know, students and they havent but the courts have really held you up on getting relief to all students, is that correct . Correct. We had a process well underway in 2018, and the court stopped us from continuing it in may of 2018. And weve been waiting for the court on appeal since then. Have developed a second methodology and just been able to unveil that and begin implementing it last week. So really the courts have caused some peoples
Credit Scores<\/a> to be harmed more so than the department . Indeed. Thank you. Gentlemans time expired. General lady from kek, miss haze. Id like to return to that january 10th, 2017 memo from the borrower defense unit to undersecretary ted mitchell who was a top former secretary of education, john king. I just want to point out, while this memo was written before you took office, it serves as a fundamental memo between administrations. I have the benefit of sitting next to a former secretary who assured me there are meetings, a briefing book and letters. So, i just think it would be vital for you and your department to read what you inherited, especially since you were saying there was no plan. And, you know, in fact, there was a plan, as this memo indicated. You know, we operate in a count country. There was not a process that wasnt the question. We operate in a question where we have peaceful transitions of power and its understood that we change from administration to administration. And then just the last thing id say before i move onto my questions, is that its been suggested by my colleagues on more than one occasion that wit processing the department had decided to move forward with processing denials while awaiting the courts decision regarding the borrowers defense partial relief methodology. It turns out, in fact, your department has been sitting on approximately 18,000 denial claims. My question is, why would the department purposely not inform borrowers their claims were denied . First of all, the claims are ineligible and we decided not to release a whole bunch of them early before we were able to implement this new methodology because we didnt 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 reach the decision for a number of them, we intentionally did not want to, i think, concern students with pending applications but arent because there are many pending applications i got it. But dont you think a borrower who has no chance of forgiveness should be told their status . Is it fair for a borrower to be waiting for up to four years for a resolution when in fact some have been denied, the institutions are closed, theyre losing access to critical documents, the interest is building up. Is there any, i dont know, political reason to do that so as the number of denials would not be increased . If you have the information. We were concerned about the message it would send to pending students with valid applications. And so that was the reason. But wouldnt a student 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 why we are really focused on trying to get this new methodology fully implemented and, frankly, have been very disappointed that the cord has not opined on our peel to the previous methodology. But the court has not prevented you from informing students of denials. Is it not true that in a sworn declaration filed last month in court that
Principal Deputy<\/a> under secretary diane jones stated, the department did not want to notify borrowers about the denials because of the concern of the
Public Perception<\/a> of the process . Again, just what i said. We did not want students with pending applications to somehow think their application would not have any chance of approval or of relief. And so now that we have the new methodology, its kind of a moot point, actually. We are well under way with processing again. And we will be able to inform borrowers, hopefully many of them, very quickly with regard to the status of their application. To me this looks like a political decision because you arent approving any claims. It would look bad if you were ratcheting up the denial rates, the approvals were flat and dnls were up. So youre sitting on everything to keep better optics at the cost of students who just want a resolution. Ill ask again. If you know a borrower does not have a valid claim or that he has been denied for other reasons, what is the benefit of sitting on that information and not sharing it with the student . I would like to refer us to exhibit 6, which demonstrates the percentage of claims that had relief im talking about the claims you know are denied. Im talking about the history of the claims we were able to process before the court stopped us. And compare that to the percentage of claims that the
Previous Administration<\/a> and they were consistent. You will see 62 62 and so we have conditioned to my time is expired. I have to yield back. Im sorry. Gentleman from georgia, mr. Alan. Good morning, madame secretary. And i thank you, too, for i know you and i share a common faith. I think thats probably what sustains us in these things. Persecution is just part of it. And there is lots of disagreements on how to do things here. But i do remember and, of course, were in a different congress, but and a lot of new, different faces here and a lot of new ideas. But in the last congress, we actually marked up the
Higher Education<\/a> authorization. And one of the most criticized pieces of that by my democratic colleagues was a piece we put in there holding both public and private schools of
Higher Education<\/a> accountable to both students and the federal government for federal debt. In fact, let the we can go back and pull the records, but id like to enter the record of exactly that language that went in there, the vote on it and the comments about it, making our schools of
Higher Education<\/a> more accountable because, obviously, young people have been misled. I come across young people all the time and their first request is, could you please forgive my
Student Loan Debt<\/a>. Because they were ill advised. And frankly, this thing kind of ramped up in the last, you know well, ive been a member this is my third term. I think began hearing about this about ten years ago. Of course, the idea then is every person should get a
College Degree<\/a> so the idea is, okay, were going to loan people the money and not tell them how in the world theyre 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 and 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 welcome that opportunity you to have that opportunity. We have 2 22 remaining. If theres something over there that you think would help my colleagues here understand what youre trying to do and how quickly youre trying to do it, i would appreciate that. The gentleman well, secretary devos, if you would whatever you have to do to defer to general brown or whatever however you want to do that, please proceed. Congressman, thanks for that. You are right. We inherited a difficult situation. We are trying to put in place a process, and we have now a second time put in place a reasonable process, one that streets students fairly, taxpayers fairly, institutions fairly. One that is balanced in its approach. I will just stop and see if there is something that general brown feels we have not been able to share with regard to that new process. Yes, maam. Very quickly i will show you on exhibit 2 while hes getting that up, just to correct one error here. 100 of those people who were impacted with
Credit Report<\/a> ratings have been corrected. And almost all with very few exceptions. Those we have today have had refunds given to them. We have a system of i have to add one thing. There was a mistake in my
Credit Report<\/a> that i didnt know about when i went to buy something. So, it happens. So, go ahead. Yes, sir. Ill quickly tell the committee we have 11
Loan Services<\/a> and 13 collection agencies across the country. Those are not systems that
Work Together<\/a>. Those are individual silos of at least four different systems. To get information from these systems you actually have to go out to the individual loan servicers and craft the question 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 this century. What were trying to do is take ownership of
Loan Servicing<\/a> back into federal student aid so theres one system we own so that if you ask us a specific question, we can get it from our systems without going out to the loan servicers and, therefore, reduce the area. We call that the next generation of student aid. Most well have implemented next year. Secretary, hang in there. Im with ya. Thank you. Gentlemans time is expired. Gentle lady from florida. Thank you very much. Thank you, secretary, for joining us today. Secretary devos you have repeatedly said your new partial formula is necessary for individualized review of claims from de frauded borrowers. Is that correct . Yes. Isnt it true not only for individual but for a framework and a process. Isnt it true your new relief process does not allow for individualized review of claims . No, it does allow for individualized review of claims. Youre sure of that . Each claim is being reviewed individually by general browns robust so, the partial review relief formula does allow for an individualized review of claims . Yes. Yeah. I mean, each of them are being reviewed individually. Thats why there are three times the number of attorneys weve had previously. The gentle lady yield . Yes. Are you ask whether or not the individual cases are reviewed or whether or not the individual dynamics, whether that persons income is individually reviewed . The latter. Oh, not the well, no, its a program to program review. If a borrower has submitted a claim with regard to a specific institution and the program that they studied, the information, the median earnings information from that program, from all who graduated at that program at that institution is reviewed against the median earnings of like programs from other institutions around the country. So thats not an individualized review. You set up a formula there. Its individualized to program. As someone said earlier, you could have an individual whos done remarkably well financially that has made a claim against a program that upon review falls short simply because that individual has earned more, they should not be penalized in that case. Let me ask a quick question to follow up on with my colleague and then i have another question. At what date are you going to notify the 18,000 people that have claims have been denied . I believe thats been rolling out and continues to roll out. And general brown would have the specific. Its happening, maam, even as we speak. And when will all of them be notified by . That first tranche, i expect they will be notified over the next couple of weeks. Some of which have been notified when will the 18,000 be fully notified as part of that . Over the next couple of weeks, maam, they will be. And it has already started. All right. Let me ask a question. How many staff people does the general have for these individualized reviews . Im going to ask him how he has staffed up at my urging reviewing them. Maam, we will have up to 64, and we have most of those already hired now. Thats more than three times as we have ever had. The peak of which, if you go back over the last three years or four years, has been 14. We will have up to 64. So, madame secretary, let me ask you a very specific question about this. So, if he has around haveh 60 and you have 227,000 claims that have to be individually reviewed and you already indicated you intend to do that over 12 months, thats about 300 per person. Even the va and
Social Security<\/a> with the equivalent of a brigade cant review that many. So, explain to me how in 12 months youre going to be able with that limited number of people to process individually over 200,000 claims . Well, general brown has assured me he has the personnel in place to be able to do that. And he has followed through on all of his commitments madame secretary, thats about 300 a day for an individual. Thats technically impossible. The va cant do it. Social security cant do it. We have a lot of experience in government so im questioning the credibility of being able to do that in 12 months. Which youve assured us youre going to be able to do. Again, im going to ask general brown to comment more specifically on that. Maam, i would say not all claims are the same. The complexity of some are far more than others. The amount of documentation is far greater than others. We have people that have been working at this. Theyve looked at the various complexities. The number were at today for processing, were very early in the process. We hope to grow that to a number that exceeds the amount that are coming in and were not stag natured. So if 64 is the wrong number, then we will hire more. We will go back to the secretary and ask for more resources and well look at the production on a weekly basis so, i would not get fixated on 64 other than to say thats greater than the amount we have had in the past. We are looking at this each month. With all due respect, madame secretary, im focused on 200,000, not on the number much staff people. Im simply suggesting that that technically given the number of staff people, you actually cannot process that number. And you ought to look at that. If i have one more if i could just comment. Many of these claims have been adjudicated to the point of being able to be processed. So, there are a lot that are already several steps into the process. Now they just have to complete the process. I yield back. Thank you. Who do we have next . Mr. Smucker, gentleman from pennsylvania. Thank you, mr. Chairman. Thank you, madame secretary for being here. Appreciate your work. Appreciate your comments earlier in regards to the need for congressional oversight, which you stated you understand the need for. You have done an excellent job of outlining your response and the departments response to the questions raised legitimately here today. I find it unfortunate that you continue to be asked about reading a specific memo. And i dont understand what that has to do with your
Department Policy<\/a> on these issues, which is important that we understand. In fact, the memo youre being asked about was written january 10th of 2017, prior to you taking office. I just want to make that clear for the record. I also find it offensive, earlier comments made in regard to your view of
Public Education<\/a>. Anyone who looks at your body of work and says you dont care about children, doesnt care about
Public Education<\/a>, thats untrue. Its false and its offensive. I also find it offensive that the same statement was made about republicans. Anyone can look at my record and others on the republican side of the aisle and know we have worked hard to ensure that every child gets the education that they deserve and that
Public Education<\/a> is working effectively in our states. So the committee has reached a new level when we are throwing those kind of accusations against the other side. And its unfortunate and should not be part of a hearing here today. There have been some questions in regards to your authority and to the idea of partial whats the word . Partial relief. Partial relief. Im sorry. And i want to make this clear, and i want to ask you a question in this regard. Partial relief could be for someone who has already graduated from the institution and who is in the workforce, correct . Correct. Were 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 i hear democrats saying here today. They dont even want us to look into that. They want you instead to make a blanket relief, 100 of any
Student Loans<\/a> that that student has outstanding. Am i correct on that . Well, there is i know there is an attitude that many if not all of no court of law no court of law would look at a situation like this. No
Insurance Company<\/a> would look at a situation like this. Pore us to expect that taxpayers would support something along that line is not a good precedent. I do want to put a few things on the record. Borrower defense, you agree, its a provision included in the
Higher Education<\/a> act, right . Correct. Is that statute states, notwithstanding any other provision of state or federal law, the secretary shall specify in regulations which acts or omissions of a institution of
Higher Education<\/a> a borrower may assert to except in no event may a borrower recover from the secretary and any action arising from or relating to a loan amount in excess of such amount po borrowers paid. Those are the only restrictions that you can tad in writing a rule, am i correct in that . Right. My interpretation means this, one, that the secretary will issue regulations on this issue and, number two, as a said, thats the only limit that you have in providing relief. Turning to the rulemaking activity, then, there are three different regulations. President clintons in 1995, president obamas in 2016, and yours this year, that correct as well . That will take effect next july, yes. The regulation applicable to the loan is dependent on the date the loan was dispersed . Correct. Under the 1995 clinton regulations did the regulations allow the secretary to grant partial relief . Yes. Under the 2016 obama regulations was the secretary allowed to grant partial relief . Yes. Under the 2019 regulations was yes. Secretary allowed to grant partial relief . Yes. Do you agree that partial is clear and not in dispute . Yes. If members of congress disagree with the policy decision, they defer to the department. Can they introduce and pass a 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, pass that law. If that law were passed, i would, indeed, follow it. Thank you, madame secretary. The gentleman yields back. The gentleman from michigan, mr. Levin. Thank you. Good afternoon, madame secretary. Im going to lead you, just to let you know, through yes or no questions just like mr. Smucker did so ably. Lets see if we can get a yes or no answer as well. In a november 7th letter to chairman scott, you wrote the following in reference to claims from defrauded kcorinthian borrows, and i quote, the clear intent of the
Prior Administration<\/a> was to eventually provide blanket relief without review of the facts and evidence. Does that accurately represent your views on the
Obama Administration<\/a>s process for c . Yes. I have two memos that was uncovered in a story by
National Public<\/a> radio. These memos produced by education
Department Staff<\/a> in late 2016 and early 2017 show a
Detailed Analysis<\/a> documenting pervasive and consistent fraud by
Corinthian School<\/a>s. The committees been requesting relevant documents from you for the last year. Did you provide these documents to the committee . We have been providing did you provide these documents, these to memos . I cannot i dont know what memos youre holding up and i theyre the memos that wie been talking about all morning, maam. Yes. The npr memos. Yes. Did you submit them to us or not . Im sure they were part of whatever document dump of 18,000 pages. Would the gentleman yield . Yes, i would. We havent seen those documents. Okay. So, you did not submit those documents to us. So did you halt and curtail loan relief for defrauded corinthian borrows without reading this detailed review of the fraud conducted by your own career staff by these schools . Congressman, i had many discussions early on in my term let me just ask you. Do you know if you read these . Can i finish . No, you may not. Do you know if you read these or want . I had discussions about the
Previous Administration<\/a>s views and policy toward these pending applications. Lets move on to the substance of the memos. According to the memo dated october 24, 2016, the staff at corinthianowned schools repeatedly lied to
Prospective Student<\/a>s by telling them their credits would 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 would transfer to university of south florida for my ba in finance and they did not. So i was stuck with all these loans and no school will take them. Madame secretary, does that sound like fraud to you . Yes or no . Sir, we are considering each let me go on. Theres more. That same document shows another form of fraud in which
Corinthian School<\/a>s told students they were accredited when they were in fact, not credited. One claim from one student, quote, there was speculation the school was not accredited but they continuously posted fake documents around the school claiming they were accredited and any credits we received would transfer over without any problem. Madame secretary, does that sound like fraud to you . Congressman will you go to the ends of the earth to defend a forprofit company that posts fake documents . On its walls. Congressman, i am not committed to protecting any institution no matter what their organization is. Madame secretary i am committed to students and the students that have lets talk about your commitment to students. Can i finish a sentence, please . No, you may not. The
Consumer Financial<\/a>
Protection Bureau<\/a> found fraud at
Corinthian College<\/a>s. The state attorneys general of california, massachusetts and wisconsin found systematic fraud at
Corinthian College<\/a>s. The
Career Education<\/a>
Department Staff<\/a> found fraud at
Corinthian College<\/a>s. Madame secretary, you seem to be the only person who does not believe there was fraud at
Corinthian College<\/a>s. Can you state to me here whether or not you think
Corinthian College<\/a>s committed any significant amount of fraud against its students . Congressman, i know there are student borrower defense claims pending for students that attended kor
Corinthian College<\/a> do you think we all know there are mr. Chairman. We all know mr. Chairman, if i cant answer a question so, do you think, im asking about you yourself, after all these many months as serving as secretary of education, that
Corinthian College<\/a> committed fraud against these students . Time has expired. The secretary will answer. I know there are
Corinthian College<\/a> students that have valid borrower defense claims and we are committed to ensuring that each one of those is considered individually and that the relief is properly attributed to each student that has filed valid claims. Thank you, mr. Chairman. I yield back. The gentleman from texas, mr. Taylor. Thank you, mr. Chairman. Madame secretary, appreciate you taking the time to be here. Mr. Chairman, appreciate this hearing. Ill just say that in my own experience, my general experience when talking to witnesses, letting them know ahead of time theres a particular memo i want to talk about is generally helpful in getting a good response because they can review it and read it. I was in the
Texas Legislature<\/a> for a period of time and served on the
Education Committee<\/a> and im used to a more professional environment. I wanted to talk about the operational challenge that lies in front of you, madame secretary. I believe your testimony is theres been a 5,000 increase in borrower defense claims, did i get that correct . Yes, thats correct. Over what period of time have you seen this 5,000 increase . Since 2015. It was like a spigot turned on. I will say, i served on the
Homeland Security<\/a> committee and we saw a still crisis on the u. S. mexican border, 3,000 increase in the number of families coming over the border. That, of course, creates an operational problem. How do you process all those people . I think you have a similar situation here. Previous administration, for whatever reason, made a series of policy changes that caused a massive increase and youre left, unfortunately in some sense, to clean up the mess. Can you speak to how you have ramped up your operation to handle this kind of increase . The ability to handle the situation as we have it now did not exist in the
Previous Administration<\/a>. You have have had to create it to handle this tremendous burden placed upon you. Thank you, congressman. In addition to developing the methodology to considering the claim, federal student aid, i have hired general brown, who has undertaken a review of the structure internally, has made some significant organizational changes for
Operational Efficiency<\/a> and he has also, as you heard, stood up three times three full number of individuals that are committed to this specific area and we will continue to adjust as necessary with the claims we have with the hope 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 59 claims. I think thats what we should aspire to in the future. That students have the information they need. That institutions are very transparent about what their programs are and that they are accurate in what they represent and i think well all be in a better place if thats my case. Ill share my own experience. Over and over again, articulation between
April Community<\/a> college and a
Public University<\/a>, which is what we were working with, articulation, getting credits to go from a to b is a real problem. Its want just with forprofit schools. Its with
Community Colleges<\/a>, its with dual credit classes and even within
Public University<\/a> to
Public University<\/a>. So, this is something that certainly ive seen for many years. I was intrigued those are some of the things the claim of fraud. Its like, ive seen that all over the place in the public space for years. Is there anything you would like to add at this point . I know youve been cut off many times in this hearing. Its unfortunate youre not given a chance to answer the question. Congressman, i would reiterate that nothing bothers me more than the fact we have had all of these claims pending for as long as we have. Im very hopeful with the implementation of this new method, we will be able to quickly address and process through and, you know, 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 that they have good information in making decisions about their experiences. Again, i want to say i appreciate youve been handed a mess and you have to create a solution. It seems like youve created a solution that will address that in a timely manner. Im grateful to your service to this great nation and the students of this country. Mr. Chairman, i yield back. Gentle lady from
North Carolina<\/a>, ms. Adams. Thank you, mr. Chairman, for holding this hearing. Thank you, secretary devos, for being here. Earlier this year you repealed the gainful employment regulations that the that these obama regulations evaluated programs based on
Earnings Data<\/a>. Just like your partial relief formula. In revealing these regulations the department wrote gainful employment was, quote, fund meblg fundamentally flawed and reliable proxy. 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 no, id appreciate it. Should we grade them on earning data or should we not . Ultimately, no. Unless youre going to do all institutions equally. Thank you. So, youre willing so, we should not. Unless youre going to do all institutions equally. All right. So, youre willing to use
Earnings Data<\/a> 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 . No. Were moving ahead with a process to consider all the borrower defense claims that are pending and we are very hopeful that with the
Additional Information<\/a> we have released for the
College Scorecard<\/a> i want to reclaim my time. Its more than useful tool i need to reclaim my time because i really want to get through my questions. Doesnt sound like youre interested in doing that. Secretary devos, gainful
Employment Data<\/a> only speaks to those who graduate. I was a
College Professor<\/a> for 40 years. I work with students. I know the struggles they have and i even had
Student Loans<\/a> myself. We know many students who attend institutions like korcorinthian 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 is being used to determine the level of harm for those who dropped out . Just using that one metric. How is that . Congresswoman, we believe the methodology we have just implemented is one that is very scientifically robust and one that is going to ultimately treat the all of the pending claims fairly and will answer students questions about whether they have had financial harm ultimately. Let me move on. In your statement regarding the new partial relief formula, you said, and i quote, we cannot tolerate fraud in our education nor can we tolerate frivolous giving away taxpayer money to those who have submitted a false claim or arent eligible for relief, end of quote. Yet the new partial relief formula is not about those false claims or those who were ineligible for relief. So, what possible rationale would you have to deny the if you would measure of relief to students, we all agree, have been defrauded and left worse off . Every student claim is going to be considered. And if they received financial harm, demonstrable financial harm, that will be relieved at some level. Okay. I am concerned we are one data breach away from hundreds of thousands of borrowers private data being compromised. The departments borrow defense unit is currently in possession of private data from hundreds of thousands of students, so are you taking the appropriate steps to protect the personal data of defrauded borrowers . Im very concerned about
Data Security<\/a> for all students. That is a high priority for me and my department and federal student aid are you taking any steps . We have taken steps ever since ive been in office to ensure the protection of data. That is not a onetime process. Its not an episodic one. Thank you very much. Given the errors you and your services have committed regarding borrower defense data and just borrower data in general, can you commit to reviewing the security of that data and reporting back to this committee to assure that current and future applicants and their data is being managed responsibly. Can you commit to that . Yes. Great. Just as i continue to commit to being responsible for
Data Security<\/a> across the board. Thank you very much. Mr. Chair, i yield back. The gentlemen from wisconsin, mr. Growthman. Thank you. I would like to thank you one more time over here. Thank you one more time for taking this job. You knew you were inheriting a mess. Just looking at the
Student Loan Debt<\/a>, i think under the past administration it more than doubled from 6 billion to 1. 3 trillion. I dont mean to be partisan. It doubled under the
Bush Administration<\/a> as well. So this institution in
Prior Administration<\/a>s allowed the student debt to get completely out of control. They should have known a mess was here and you are the one stuck cleaning up the mess. Thank you for trying. I know this is the only mess you have. I know theres fraud in the income repayment, and i know the
Public Service<\/a> loan program has problems. All of which you inherited. We all know you didnt need this job. Thank you. Im going to ask a couple of questions. As i understand it, in the past, theyve been advertising that your
Student Loans<\/a> may be eligible for forgiveness, is that right . Is that so . Thats my understanding as well. Facebook ads, that sort of thing. Obviously, if you look on mottlaw you can get your loan forgiven. There will be people line willing up to do that. Some claims are legitimate, some claims are not legitimate. Have you uncovered instances of unfounded claims filed by borrowers . Claims not valid . I think a lot of people just want to forgive everything. There are many of them. You want to elaborate on that at all . Well, theyre different kind of invalid or, you know, claims that cannot be in any way relieved financially. Some of them fall outside the bounds of the various rules and times of submission. Some of them are clearly not based on anything close to fraudulent. I referenced the one about my professor was mean or i didnt like my professor. Im sorry, thats not a valid claim for your student loan relief. Its a wide variety. Its certainly indicative of why we cant forgive all loans. Correct. How are you mitigating caseless claims in poborrower defense . Are you doing anything to mitigate that . Im hopeful that as we implement the new rule and work through the processing of these claims, that the conversation around this is going to be much more around ensuring those students that actually have a claim of financial harm are the ones that are getting relief and that we will have fewer than 1,200plus applicants a week accruing in the federal
Student Aid Department<\/a>. When fraud is committed, do you have the right to go after any of the colleges and universities that committed fraud . Well, i think thats a very important question and, unfortunately, the bulk a large volume of the pending applications are from institutions that have closed. In that case, obviously, its a different situation but for those institutions that are found to have claim valid claims that are still operational. T the schools would be the first place to go. The taxpayer shouldnt have to be footing the bill in the case that the institution still exists. You think it would be better if this institution did something in the future to make sure those loans didnt get so high in the first place . I guess ill put it this way. If this institution would do more to educate young people that not every student loan is a good student loan . There are many things that both congress and, you know, writ broadly we all can do to he ensure that education experiences in the future are entered into with more thought and more wisdom. Okay. Do you you have new regulations coming out. Could you would you like to elaborate at all on on you your new regulations protect the students and the taxpayers and institutions all at once . If youre speaking about our new borrower defense regulation, it really does protect students, taxpayers and gives institutions an equal footing and 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 make valid claims and give schools the opportunity to review and respond and students respond back. There has to be a due process component for institutions. Frankly, we need to have a more tight definition of what constitutes fraud or misrepresentation, which is part of the 2019 rule. Thanks. Id like to apologize for some of my colleagues. We have a big swamp here. Sometimes theyre a little intemperate but thank you for coming today. Thank you. Thank you, mr. Chairman. Secretary devos, i want to start by telling you a story about my constituent, artemisa. In 2009 she became a student at held college after it was purchased by corinthian. She was pursuing a medical assistant degree. She chose healed because they had a 85 job placement rate. She graduated and couldnt find a job. Now she owes a whopping 40,000 in
Student Loan Debt<\/a> for a degree that hasnt helped her get hired. That may not seem like a lot of money to you, secretary devos, but in the real world, thats devastating. Turns out she wasnt alone. In not being able to find a job. Corinthi
Corinthian College<\/a>s told her it was an 85 job placement rate. Turns out the actual rate was engineer. Not 85 . Zero. Thats a big difference. She and tens of thousands of students were defrauded by corinthian. We all know this. In 2014 the department of education fined them 30 million for this fraud. Everyone agreed. Here five years later, she still has that 40,000 in
Student Loan Debt<\/a>, she still hasnt found a job in her field and she hasnt gotten any help whatsoever. The reason for that is because you have put roadblock after roadblock in front of helping these students. Your job is to fight for them. Instead, your actions suggest you would prefer to be the chief lobbyist for the predatory schools that defrauded them. After being ordered by a federal court to stop collecting debts from cheated corinthian students, you eg anothered the order and kept stealing money from these students. You were even held in contempt of court because of it. Youre not standing up for them. Youre working for the schools that defrauded them. Maybe you have forgotten to refund these students. Maybe her 40,000 in
Student Loan Debt<\/a> doesnt sound like a lot to you because its onetenth of 1 of one of your familys ten yachts. She and tens of thousands of others have been waiting for years for your help. You have deliberately violated a federal court or the. And im confused why. I guess i just have one question for you, secretary devos. Are you deliberating violating this federal court order because you are too corrupt to uphold the law or because youre too incompetent to do your job . The gentleman will address the facts and figure and not question the character of the witness. Secretary devos, why have you been held in contempt of court . Congressman, let me say i took great personal offense to everything you 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 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 part of federal student aid employees and on the part of loan servicers that when they were discovered, were immediately acknowledged and corrected. Secretary devos. They i understand you have been held that you are taking offense. The reality is there are tens of thousands of students whose
Financial Futures<\/a> have been ruined by three years of inaction. And youre just making excuses. Youre blaming this problem on somebody else. You are secretary of education for three years. And you are trying to defy the facts of this matter. Yes or no. Were you held in contempt of court and fined . Congressman, i have not been able to address all of the
Corinthian College<\/a> 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 borrower defense claims. There was something stopping. There was a lack of process. The court said we could simply forgive them all 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 to my goal. Whats right for students is helping the tens of thousands of students who have been defrauded. And blaming this problem on somebody else, taking three years to make absolutely no progress, its not helping these students. Its only helping to scam colleges that defrauded them. Thank you, mr. Chairman. Where students have been financially harmed, they are going to have relief. We have a new methodology, which once again, if you had been here 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 im looking forward to address all of them. Nothing disturbs me more than all of the pending claims that have been there and that we have not been able to address appropriately. The gentlemans time is expired. The gentle lady from nevada, ms. Lee. Thank you, mr. 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 so years, 30 forprofit schools have closed. Brightwood
College Closed<\/a> in las vegas. As we saw with
Corinthian College<\/a>s, itt tech, eca, schools with shaky financials are often completely reliant on federal student loan dollars. And when they collapse and declare bankruptcy, it is us the taxpayers, as well as thousands of students, who are left high and dry. So, i really want to, in my line of questioning, get to, how are we going to prevent this from happening . I wanted to ask you just a simple yes or no question do you believe its important that the department have information about the financial conditions of colleges . 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 that a lot of the tension in this room today is because theres concern about protecting taxpayer dollars from frivolous bd claims, or like id like to focus on, is how do we protect taxpayer dollars from these fraudulent predatory schools and 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 predict
School Closures<\/a> before they happen so that something can be done proactively to protect the taxpayer dollars from going to those institutions through
Student Loans<\/a> . Well, congresswoman, let me just say, first of all, i dont think i think levying a claim of predatory against any school that is organized well, these im talking about schools i want to define what fraud means, okay, because its been used here a lot today. The definition is the wrongful desem deception intended to result in financial or personal gain. Its not lost on anyone here, the preponderance of forprofit schools in the education space and forprofit schools that are now publicly traded companies. So, there is a forprofit 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 these schools and not able to come out and have a job. Therefore, defaulting on their loans because they didnt get the jobs that they were promised. And so thats the purpose of these triggers and these rules is to predict it so were not sending taxpayer dollars to these schools and then they go bankruptcy and the kids cant pay them and then the taxpayers pay it, so my and the same i want to go to i mean, theres lots of institutions that i understand. Im not i understand there are great institutions. I am talking this is really about ferreting out the bad actors in the 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 forprofit schools close. 80 of the
School Closures<\/a> are forprofit schools. Many of these are bad actors. And, by the way, its minority and low income students who are being preyed upon in these cases. So, i really just want to get to one other question and talk about some of the changes that have been made to your borrower defense rule. Specifically around what these triggers are to identify if these schools are eventually going to go under. And under the 2016 rule, publicly traded forprofit schools were required to report any incident or occurrence of an s. E. C. Filing or warning letter against that institution. Under can you clarify this. Under the recent rule that was issued, isnt it the case that an institution would only be required to report that when the s. E. C. Suspends trading of that stock or if the stock is delisted from the exchange . There are changes in the reporting requirements for
Financial Measures<\/a> for an institution in the 2019 rule so, before but there are a number of different measures that are required and there are triggers that will happen to send up flags if an institution is in jeopardy. I think its also important to the gentle ladys time has expir expired. Okay. The gentleman from pennsylvania. I apologize for being a little abrupt. I expect a call to vote shortly and we have several members still trying to ask questions. The gentleman from pennsylvania. Thank you, mr. Chairman. Thank you for your professionalism and decency, as always. Madame 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 and outline. And if people had any idea of what your background really was, the level of work and philanthropy and good youve done, maybe theyd act a little more civilly, but perhaps not. You know, were trying these hearings are supposed to be about ideas, not insults, right . Solutions, rather than s a. Lvos. Questions rather than accusations. Actual problemsolving rather than pointing out problems. But i guess thats 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 it. One of them was at at vistria where, lo and behold, the former number two in the obama
Education Department<\/a>, deputy secretary miller, who left in 2013 and became a partner and chief operating officer who was on track to become chairman of the universitys
Parent Company<\/a> if the sale went through had a little and that is just when vistria had all its problems begin. Would you say that was a contributing factor to this unbelievable escalation in claims and problems . I think its certainly possible it was a contributing factor. Well, what were the number much claims what was the number of claims under the borrower defense repayment rule. Its increased exponentially in the last four years. Do you have any numbers on that . Well, from 1995 to 2015, there were exactly 59 borrower defense claims made. And since then, that number has increased 5,000 to now nearly 300,000 claims. When did those increases begin . In 2015. 2015. So, 2015, 2016, that was the
Obama Administration<\/a>. You came in in january of 2017. February, but close february. Dealing with a mess. A nightmare situation. And what did you do to work on this situation, you and general brown . Well, when i he wasnt here yet. Took office, there were 64,000 unaddressed claims from the
Previous Administration<\/a>. It was clear that promises had been made to approximately half of those and we followed through on the promises immediately. I also asked the
Inspector General<\/a> to do an investigation into what the process was for considering these claims. And that yielded some significant deficiencies in the in other words, there was no process. So, we set forth to be to put a process in place, to be able to consider each claim for its merit and its validity. And we implemented that in early 2018 and we were well under way with processing the pending claims and we were stopped by the court in may of 2018. Based on the data we were using, not on the approach to the relief methodology. Since then, we have been waiting for the court. We have appealed it. We dont agree with the courts decision. Its been appealed. Were still waiting. And in the meantime, we implemented another methodology, which we just were able to implement begin implementing last week. And it will, we hope, be able to address the claims, the pending claims, very expeditiously. How many deserving claims were under your jurisdiction versus 2015 or 2016. How many more people were helped, received loan relief under your jurisdiction and general browns versus your predecessor . So the percentages of claims that received relief were the same between the
Previous Administration<\/a> and the ones that weve been able to process thus far. Theres a chart here that shows the 62 were approved during the
Obama Administration<\/a> and weve continued at that level of approval. 62 , but with more claims. Many people were helped. Correct. Thank you. I yield. Thank you. The gentleman from maryland. Thank you, madame secretary, for your service. I know
Public Service<\/a> can be very hard. But with it comes an accounta e accountability. To help these
Young Students<\/a> who have been defrauded and help them if we can in a timely manner. Before coming to congress, i was a ceo. A business with over 7,000 employees. I know how important people are to any organization. At the end of the day, the buck always stopped with me to make sure we had the right staff. To serve our customers. So lets talk about staffing. If you dont mind, under your leadership. To follow up on what the secretary was touching on a bit ago, within the first year in office, you actually cut the staff in the bars defense 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 a decrease in the number of claims, the opposite as youve clearly stated is actually the opposite. We saw an increase to 54,000 to now as general brown said, over 300,000 are out there. So if my business had more work, i hired more people. So why when you had in the past, this dramatic inkrecrease in borrowers defense claims did you decide to cut jobs instead of hire iing more people to do tha 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<\/a> to the extent we need to to be able to address these claims now that we have a a process to be able to unveil and to implement. Thats great i guess the questions still there is that now, three year es later, you know, we are actually at we were we were at seven people at one point according to the
Public Document<\/a> on march 31st, 2019, you had seven employees remaining in the bars defense unit. Well, we were processing the claims under the previous methodology and that was moving along well when the court stopped us. Ive heard about that. Been here the entire time. I respect that. Still 300,000 folks nationally who are paying the price because the department i think has slow walked this by not having enough staff to process those claims for a little over three years now. Do you believe that is insufficient number of staff in the past three years has b contributed to the departments inability to process these bo borrowed defense claims . No, sir, i dont. It really has been the
Court Decision<\/a> that stopped us. But the
Court Decision<\/a>, i know, weve talked about that. The
Court Decision<\/a> did not stop you from b continuing to process. You could have continued to process when you went through the appeal. Lets talk about the facts a second. Only if i was going to say yes, full forgiveness or no, you dont qualify. Im guessing theres a lot of full forgiveness out there give b ben the horrible work they do. We couldnt use the data we were using. Lets look at the data a second. So on march 31st, if you have seven employees, how many claims does an employee process in a 40 hour workweek . 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 to do the work. Since 2018, we have not been able to process. You have u to have the people to do the work. Right now, youre talk iing abo ramping up to 64 and so youre clearly ramping up to the people because now you said whoa, we missed the ball. We saw that in 2016, went through the roof. The claims tid. You got hammered but you only, while you were cutting back to seven people, now youve done a hockey stick and ramped it back up to 64. Its a convenient narrative, but inaccurate. How much workers, how long it takes them to do that work then i can do my staffing model from that. And we have continued to staff up and will continue to add to that if necessary to process the claims now that we have been able to implement the new methodology. Appreciate thatment general brown told the staff since youve been in office, about 50,000 people have had their claims review ued. But theres 300,000 out there, at that rate, its going to be 15 years. For the first three years, it took you to do 50,000. These young people want to be educated, but they were lied to by these institutions and i think the response to has been run out the clock. Tough louck. We need to keep focusing on the customer. Thank you. Gentlemans time has expired. Gentle lady from michigan. Miss stephens. Thank you. Secretary devoes, were here to provide the public with the full understanding of the departments failure to provide defrauded borrowers with relief theyre legally entitled to. I would like for you to know a fellow michiganander, erica. Someone ive 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<\/a> do. She ended up dropping out of high school. But still managed to get her ged at 21 while raising two children and she saw a commercial one day for everest college. A cory inthan college in 2011. She was recruited into the schools paralegal program. The recruiter told her that in order to become a lawyer, she had to beparalegal first. Erica was ecstatic to go back to school. She earned a 4. 0 while 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 a lawyer and thats when she learned that everest was not considered a legitimate program and she felt cheated. She was saddled with
Student Loan Debt<\/a> and realized that the best choice she could make for herself and her family was to cut her losses and leave everest. Secreta secretary, do you think she made a mistake attending everest . I cant comment her decision there, but i can feel for her if that story is accurate and i look forward to if shes among the bd claims pending, making sure that we can address it promptly. Would you have advised her to b continue attending everest . I cant comment hypothetical. Erica is not working at a paralegal or lawyer, but is instead living paycheck to paycheck with with no way to pay for more school to pursue the career she wanted and dreamed of and shes now in her mid 40s. Do you believe she received any value from this education she receive d at everest . I cant comment specifically. The story is one i certainly feel for. She applied for borrowed defense in may 2015 and had her loans placed into fore berns. Three years later, the department finally approved her application, but then denied her a full discharge and it said that they would only relieve 50 of ericas loans. Why did she deserve to only have 50 of her loans relieved . I assume from what youve told me, that we were considering under the first methodology that we utilized and the programs she attended, the earnings information from that others that had graduated from that program were compared with earnings from like programs of other schools across the country. And that was again a formula and process to consider each students claim individually and uniquely. Despite a kourlt order, her servicer started illegally collecting on her debt in 2019 this year and she became extremely worried when she saw all her loans were back in repayment because she knows theres no way shes really going to be able to repay them. Whats stopping the department from taking action to protect hundreds of thousands o students like erica who were cheated in this predatory way . I cant comment now. Id be happy to have general browns team look sbit. She would love that. She said the one innithing i wao do is make a difference for future people. 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 both taking it to heart and hopefully we can all continue to step up to address this for all americans, all michigananders so they have the opportunity to pursue their dreams and provide for their families
Going Forward<\/a> and with that, mr. Chairman, ill yield back. Thank you. The gentlelady from massachusetts. Thank you, mr. Chairman. Two days ago, you announce d th new formula for calculating relief for students who have been cheated by fraudulent for profit colleges. This formula would make, would take median earnings and subtract from it two standard deviations to determine the amount of ones borrowed defense discharge relief. Now thats a lot of jargon. So i want ed to put it into an example just so it made sense to me. So a young woman and well name her betsy, gets her diploma in business and administration from corinthian. And it says the median comparison earn iings for that degree is about 18,000 and two standard deviations is about 20,500. Any, not to put you on the spot, but you know what 18,000 minus 20, 500 equals . I hate public math. It equals negative 2,500. So using the new formula, youre basically telling us that in order for someone like betsy to get full relief for the debt she unknowingly incured from a fraudulent institution, she would have to earn negative 2,500. Does that sound right to you using your formula . No, it does not. Thats what the numbers bear out. The department of education calculates the median earnings of betsys peers at 11,700 to determine the percentage of relief she will receive. Any idea what the federal minimum wage is right now . Today its 7. 25. If betsiy earns 11,700 on an annual basis, that means her annual wage is 5. 63. 2 below the federal minimum wage. Its astound uing to me, but i think what youre telling me is that student borrowers like betsy who graduate from a fraudulent program and earn 2 less than the federal minimum wage can only get 25 of their loans forgiven because they didnt have negative earnings. I dont think the story youre using is accurate. I trust my math. I poorred over several examples. I dont have confidence in much, but i have confidence in the formula and how i used it for betsys use case. Look, the new partial relief formula you came out with two days ago, it doesnt benefit students who have been floesed. It doesnt take into account individualized earnings, debt load, whether betsy is back in a full time or part time accredited
College Program<\/a> which is why my friend from pennsylvania, represent wild and economists alike call it nonsensical. These are students who wanted nothing more than to get ahead. Took out loans in good faith and 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 to student borrowers who were defrauded by these predatory colleges and every day that goes by is a violation of students rights and frankly, its criminal. There are hundreds of thousands of innocent students with pending claims. That includes almost 3,000 in my home state of massachusetts. On this committee, our focus is creating opportunity and value for students with high quality, affordable education. The formula youve developed, its too little and too late and doesnt demonstrate your commitment to our students. I yield back. Mr. Chairman, if i could respond to that a moment. Respond please. Congresswoman, i am committed to treating each of the students who have filed borrow defense claims fairly and we believe that this method yol that has been developed is one that will treat each of them as an individual and will look at their program of study. If you are advocating for 100 loan forgiveness for all students who claim borrower defense claims, you have the power to get a law passed in this body and i encourage you to do so. If you pass that law, i will enforce that law. The formula the way its design ed now takes in median earnings from others who have been defrauded. There in lies the problem. Thats not a formula that makes sense when youre taking into account kids who have taken out loans, who have to go wback to college, go back to school, an accredited program, theyre already, their debt load is already sinking them and now theyre taking on more. Your formula is flawed. I guess well have to agree to disagree. Time is expired. Gented l lady from minnesota, miss omar. Thank you, chairman. Secretary devos, thank you so much for being here and giving us the opportunity to have this conversation with you. Im curious if youre familiar with
Minnesota School<\/a> of business and university. Im not. Do you know that they were found to be engaged in
Consumer Fraud<\/a> . If they were, im assuming there are some borrower defense claims pending for them. So let me just enlighten you. Weve sent you many letters from our delegation. In my district in 2016, the court found that
Minnesota School<\/a> school of business engaged in
Consumer Fraud<\/a> and purposefully deceived their students by misrepresenting the job b opportunities that would be available to their criminal justice graduates. That same year, that same department independently reviewed the evidence and came to the same conclusion as the courts. The student were blatantly misled and taken advantage of. 1,336 minnesota students were systemically misled to believe that they will obtain a degree and credits that were meaningless. Losing not only 33. 8 million, but their time and countless opportunities. Lets take a minute to imagine if these students, if they werent just students. Imagine they were corporations. The administration and our colleagues on the other side of the aisle and b probably you would be up in arms. Corporate executives would not only get their debt forgiven by our government, they would get compensation for their lost time, opportunities and psychological disstress. But madame 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 attorneys to make their case. Instead, they are struggling to make ends meet as they continue to face incuring interest, negative
Credit Report<\/a>ing and the inable toy restart their education. All the while hoping the government will do the right thing. I like to request consent to enter two affidavits. Objection. These are for my constituents, whitney and cheryl, whose borrower
Defense Applications<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> they may have paid for a diminished
Credit Report<\/a>. We have correcteded or remediated their
Credit Report<\/a>. 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<\/a>. Thats fine. Did that settlement involve federal
Student Loans<\/a> . I imagine there are some involved there. Were any federal
Student Loans<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a>, 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<\/a> and ill guarantee you that the
Insurance Companies<\/a> 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<\/a> in the country. Now we want it to be the biggest
Insurance Company<\/a> 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<\/a> 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<\/a> 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<\/a> 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<\/a> 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. Officials discuss the effectiveness of u. S. Sanctions at the center for new american security. Watch live today at 2 30 p. M. Eastern on cspan 3. Online at cspan. Org or listen live on the free cspan radio app. Tonight,
Pennsylvania Democratic<\/a> congressman, mike doyle, overseeing telecommunications. Our concern is to make sure that we close this
Digital Divide<\/a> that exists in our country and we have an opportunity to do that now. I think thats important that we do that. There are kids that 30, 40, 50 of their homework requires
Internet Access<\/a> and they cant get it where they live. They go to mcdonalds or a library to find a hot spot to do their homework. These young people are being greatly disadvantaged in our country when they dont have access to broad band so thats what i think were going to be focusing on is how do we do that, close the homework gap, the
Digital Divide<\/a>. How do we get broad band deployment out to these under served areas. Watch tonight at 8 00 p. M. Eastern on cspan 2. Tonight, testimony from faa administrator on the safety of boeing 737 max aircraft including the design and certification process. He also answered questions on if faas role in investigate iing two crashes that claimed the lives of over 300 people and their dealings boeing. The hearing is held by the
House Transportation Committee<\/a> and you can watch it tonight starting at 8 00 eastern on cspan 3. Also coming up tonight, a forum examining the role of congress and
National Security<\/a> issues. We also hear about the current impeachment inquiry against
President Trump<\/a>, constitutional war powers and leaks. The event is hosted by
New York University<\/a> law firm and","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia903106.us.archive.org\/21\/items\/CSPAN3_20191216_141000_Sec._Betsy_DeVos_Testifies_at_House_Education_Hearing\/CSPAN3_20191216_141000_Sec._Betsy_DeVos_Testifies_at_House_Education_Hearing.thumbs\/CSPAN3_20191216_141000_Sec._Betsy_DeVos_Testifies_at_House_Education_Hearing_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240716T12:35:10+00:00"}