Trump vetoes congressional bid to help defrauded students

Move to reject Obama policy seen costing 200,000 borrowers some $11 billion

June 3, 2020

Donald Trump vetoed a bipartisan measure to help student loan borrowers defrauded by their colleges, casting aside pleas to help veterans and other victims of for-profit institutions.

The bill rejected by the president – which was backed overwhelmingly by Democrats, plus 10 Senate Republicans who countered their party line – would have largely restored an Obama administration policy to aid tens of thousands of students of failed for-profit chains.

Mr Trump explained his action by suggesting that he was actually protecting all borrowers of federal student loans, contending that they could be forced to pay higher rates if others did not pay their full share.

As such, he said in a statement, the bill that had been approved by Congress “would undermine the efforts of my administration to protect students and taxpayers”.

The move is part of a battle that has run the entire time of the Trump administration, beginning with the refusal of the education secretary, Betsy DeVos, to implement the existing loan forgiveness policy.

That policy was among a series of Obama administration efforts to restrict the federal student loan eligibility of for-profit institutions, given their students’ relatively poor employment prospects and correspondingly high loan default rates.

Such problems led to the collapse of some major for-profit operations, including Corinthian Colleges and ITT Tech. The Obama administration expanded the forgiveness policy after those closures, expecting it to provide $17 billion (£14 billion) in loan relief to affected students.

Ms DeVos, however, took office arguing that the Obama approach was needlessly antagonistic towards for-profit colleges.

She drafted changes, now upheld by Mr Trump’s veto of the bill to overturn them, that require each student to prove individually that he or she was misled by their college. It also requires a proof of financial loss relative to what the student would have otherwise earned.

The result is expected to wipe out about 97 per cent of the federal loan money that would have been forgiven – costing nearly 200,000 borrowers a total of about $11 billion.

While developing her new policy, Ms DeVos moved slowly on approving loan relief due to students from lawsuits and the existing Obama administration policy. She did so even while facing legal action and a fine for contempt of court, for continuing to collect payments from former Corinthian students.

Congressional Democrats have suggested that they will try to overturn the veto, but they acknowledged that the need for two-thirds majorities in both the House and Senate makes success highly unlikely.

Given that, they and student advocates turned to issuing statements bemoaning the administration’s action.

Senator Patty Murray, the top Democrat on the Senate’s education policy committee, accused Mr Trump and Ms DeVos of showing “that even in the midst of a pandemic, they don’t care about helping struggling students – they care about the bottom lines of predatory for-profit colleges”.

“By vetoing this bipartisan resolution,” said Representative Bobby Scott, chairman of the House’s education policy committee, “President Trump is exposing students, including veterans, to more fraud and abuse at the hands of low-quality schools.”

Military veterans have been a particular recruitment target for for-profit institutions, and they account for a disproportionately large share of their students. The American Legion, with about 2 million members, is among the veterans groups that helped to win Senate passage of the bill to uphold the Obama policy, and then failed to convince Mr Trump to stick with them.

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