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Betsy DeVos’ Elimination of Obama Rules Allows For-Profit Colleges To Swindle Poor Black Students

Betsy DeVos, Trump’s secretary of education, has announced the elimination of Obama-era rules to protect students from the fraudulent and predatory practices of for-profit colleges. Black and low-income students enrolled in these schools will be disproportionately impacted by these changes. (Photo: HBCUbuzz.com)

Under the Trump administration, U.S. Secretary of Education Betsy DeVos is on a mission to roll back Obama-era measures designed to ease the debt burden on students attending for-profit schools, and make these institutions prove their graduates emerge gainfully employed. The lucrative and predatory for-profit higher education sector — which disproportionately exploits Black students who find themselves sinking in debt and with worthless degrees — found itself in check with the safeguards put in place in the previous presidency. However, under President Donald Trump — who was sued and settled for $25 million for maintaining a fraudulent for-profit real estate school called Trump University that swindled students with exorbitant fees and false advertising — the schools themselves are being protected.

President Obama instituted the regulations requiring schools to prove they provide gainful employment to their students, with the government cutting off federally guaranteed student loans to schools whose students could not afford to pay off the loans, as The New York Times reported. DeVos announced these measures, including a debt relief program for student borrowers who believed they were hoodwinked by for-profit schools who made promises upon which they could not deliver, would be eliminated. The program had forgiven at least $450 million in student loans. These safeguards to hold the industry accountable came in light of years of complaints that these previously unregulated companies used fraudulent and illegal methods to lure and take advantage of nontraditional students. While for-profit schools such as ITT Tech and Corinthian College were shut down for fraud and students were able to apply for relief under the “borrower defense” rule, now tens of thousands of students will find themselves saddled with debt, out of luck and with no recourse. A billionaire lobbyist who has championed the privatization of public education and has gutted civil rights enforcement in education, DeVos has killed the investigative team at the Department of Education that deals with fraud at for-profit colleges, and reinstated a for-profit accreditor that failed to meet federal standards. This as DeVos staffs up her team with lobbyists from the for-profit college sector, some of whom fought the Obama rules — such as Career Education Corporation — and worked for the very companies the department was investigating for widespread abuse — such as DeVry.

The rescinded measures are a matter of management of a government program against waste fraud and abuse, and not merely just regulation of a private industry, as Republic Report notes. Many of these schools receive 80 to 90 percent of their revenue from the federal government, have charged exorbitant fees while underinvesting in education and job placement, and have been involved in coercive and misleading financial aid and recruiting. Over half of students in these programs dropped out within four months of matriculation, and 72 percent of graduates earn less than high school dropouts. Both graduates and dropouts of these for-profit programs make less money than before they attended the school, and 23 percent are unemployed. Further, nearly half — 47 percent — of federal student loan defaults are students from for-profit colleges, and 22 percent of for-profit students default on their loans within three years of entering the repayment process.

Eliminating the Obama-era rules will only empower and embolden for-profit trade schools and colleges to continue their predatory practices. Those who suffer are the poor — who must borrow the most federal loans and are the most profitable for these schools that prioritize profit over education — people of color, particularly women of color, single mothers, veterans and others who are vulnerable, disadvantaged and living on the margins.

African-Americans are disproportionately represented in corporate, for-profit institutions, which is concerning given the negative educational, financial and employment outcomes students face in these schools. Black enrollment in for-profit schools — 30 percent — is double the rate of Black students in college — 14 percent. Blacks and Latinos together are nearly half of those enrolled in for-profit colleges. Over half of Black students are low income, and Black people are the most likely have college debt, and are twice as likely to default on their student loans as whites. Seventy percent of Black students who took out loans to enroll in for-profit colleges default within 10 years, making it difficult if not impossible to buy a home, rent an apartment or get a job, and impeding social mobility.

A report from the Center for Responsible Lending, “The State of For-Profit Colleges,” presents a state-by-state analysis of for-profit schools in America, and reveals that students in for-profit schools are generally less likely to graduate, more likely to borrow, are deeper in debt, more likely to default an have poor outcomes than students in public and private 4-year colleges. Further, Black people, women and the poor are disparately impacted. For example, in Georgia, 68.1 percent of undergraduates enrolled in for-profit colleges are low-income, 56.9 percent are Black, and 68.6 percent are women. In North Carolina, for-profit students are two-thirds low-income, nearly 54 percent Black and two-thirds women. Nearly 78 percent of students attending for-profit schools in Mississippi are poor, while nearly two-thirds are Black and 78 percent are female.

One of the Black students profiled in the study, Brianna, 31, a mother of three, earned her medical assistant certificate at the former Everest University and passed her certification exam. Afterwards, with $21,000 in debt, she learned that while the school had promised her a salary range of $35,000 to $45,000, she was only able to find employment for $12 per hour. As a result, Brianna was faced with low credit and crowded housing options.

Another Black student lured into for-profit programs to their detriment is Richard Green, who, according to the Chicago Tribune, had graduated from high school two decades ago and enrolled at DeVry Technical Institute, lured by the promise of finishing his bachelor’s degree in three years rather than four. In 1999 he dropped out only a few classes shy of his degree because he was no longer eligible for financial aid. Green entered the Army because of its loan repayment, yet had to leave on a medical discharge before he was able to take advantage of it. A decade later he found himself working odd jobs to get out of debt from the federal loans he took out at DeVry, and reenroll in school. In 2016, he was on food stamps, working two part-time jobs and a few classes away from his degree.

Lured by glitzy ads and false promises, low-income Black people are victimized the most by racist and predatory for-profit colleges. Already low income and striving to move up the ladder, they are bilked, their dreams exploited and they emerge worse off, loaded with debt and often with nothing to show for it. The Obama rules were meant to hold for-profit schools accountable and protect students from their profiteering. The Trump-DeVos elimination of the Obama rules mean that more Black students will be swindled, and educational corporations will continue to profit at the expense of the disadvantaged.

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