Veterans groups concerned with DeVos ‘borrower defense’ plan
With help from Caitlin Emma and Mel Leonor
VETERANS GROUPS CONCERNED WITH DEVOS ‘BORROWER DEFENSE’ PLAN: Groups representing veterans and military servicemembers say they’re alarmed by a Trump administration plan that would require defrauded students to default on their loans before they’re eligible to apply for debt relief.
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— Education Secretary Betsy DeVos’ proposal to rewrite the Obama-era “borrower defense to repayment” regulations says the administration is considering that as a strategy to cut down on frivolous claims. Under the plan, borrowers would have to default on their loans and face a collections action (like wage garnishment) before they’re allowed to apply for debt relief.
— But some groups are warning the policy could especially harm servicemembers and veterans because of the consequences for government security clearances. Defaulting on a federal student loan could result in a servicemember or veteran losing their clearance and therefore their job. (Financial problems are the leading reason why the government rejects or withdraws such clearances.)
— Servicemembers and veterans who need security clearances would face a “significant risk” if they have to default on their loans as a condition of applying for loan forgiveness, according to Aniela Szymanski, government relations director for veterans benefits at the Military Officers Association of America. “It’s really putting them between a rock and a hard place: Do I lose my job or get kicked out of the military in order to recoup this money from a federal student loan used to pay for a fraudulent education?”
— Will Hubbard, vice president of government affairs at Student Veterans of America, who represented veterans on the Education Department’s negotiated rulemaking panel earlier this year, said the proposal creates a “strong market incentive to default” that would “directly harm” military servicemembers and veterans. “Is this department really interested in putting our national security on the line to protect bad schools?”
— Requiring borrowers to default on their loans before filing a fraud claim is among the most controversial parts of DeVos’ proposal. Some conservatives and a for-profit college trade group have said the provision goes too far.
— The Education Department acknowledged in the proposed rule that the plan could lead to an increase in “strategic” defaults on student loans. But officials said they wanted to solicit public feedback on the idea. Department officials will accept comments on the entire proposal until the end of this month.
— Meanwhile, California Attorney Xavier Becerra, a Democrat, on Wednesday called on DeVos to withdraw the proposed rule “immediately,” or at least provide another 30 days of public comment. Becerra cited a report last week by Harvard Law School’s Project on Predatory Lending, which said that emails and documents show that DeVos’ proposal erroneously described how the department processed student fraud claims during the last two decades.
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FIRST LOOK — NEW POLL SHOWS MAJORITY OF VOTERS VIEW STUDENT DEBT AS ‘CRISIS’: Majorities of Republican and Democratic voters view the nation’s $1.5 trillion outstanding student loan debt as a “crisis,” according to a new poll commissioned by Americans for Financial Reform and the Center for Responsible Lending. The poll, being released this morning, also shows bipartisan concern over efforts by the Consumer Financial Protection Bureau to scale back efforts to protect student loan borrowers.
— More than 70 percent of Democrats, 67 percent of independents and 57 percent of Republicans agree the amount of outstanding student loan debt “represents a crisis,” the poll found. Majorities of independents and Democrats, 58 and 57 percent, respectively, “strongly” agreed — as did 47 percent of Republicans.
— Overall, more than 80 percent of voters said they were concerned with recent action by the CFPB to reduce efforts “to protect students from abusive student loans and student loan servicers,” according to the poll. That concern cut across party lines, with majorities of Democrats (75 percent), independents (64 percent) and Republicans (51 percent) labeling the CFPB’s actions as “very concerning.”
— The national poll of likely 2018 general election voters was conducted June 28 through July 7 by Lake Research Partners, which works with Democratic clients, and Chesapeake Beach Consulting, which works with Republican clients. See the full results here.
COMMON APP DROPS CRIMINAL HISTORY QUESTION: The Common Application plans to eliminate a question about an applicant’s criminal history beginning next year. The organization announced this week that, starting in the 2019-20 application cycle, it will remove the question from the “common” portion of the Common App. Under the new policy, first reported by Inside Higher Ed, individual colleges will still be allowed to ask about applicants’ criminal histories on their own customizable portions of the application.
— Common App said in an email that feedback from its member colleges showed “strong and differing opinions” on the issue. Although “a majority” of colleges surveyed preferred keeping the question, the organization found growing variation about how institutions approached applicants’ criminal histories. It therefore “decided to prioritize giving members the flexibility they need to best respond to individual institutional policies, as well as legislative and regulatory requirements that pertain to their specific locations.”
— Common App said it will continue to ask about an applicant’s school disciplinary history because there is “greater commonality” about how schools use that information. More than 1 million students each year apply to college using the Common App, which has more than 800 schools as members.
— The Obama administration in 2016 urged colleges to reconsider questions about a prospective student’s criminal past. The Education Department recommended that colleges only ask about such issues in a “narrowly focused” way that also gives prospective students a chance to explain their criminal record. At same time, the Common App narrowed its criminal history question to include only felonies and misdemeanors, not other types of crimes.