Senate Overturns DeVos Rule Limiting Debt Relief for Defrauded Students
- The Senate has voted to overturn a Trump administration rule that would make it harder for students who were defrauded by for-profit colleges to have their loans forgiven or reduced.
- Education Secretary Betsy Devos’ changes require applicants to individually prove a school knowingly misled them and that they were financially harmed by the deception, among other difficult measures aimed at limiting who gets assistance.
- The legislation will now go to President Donald Trump’s desk for him to decide whether or not to uphold the rule with a veto or side with Congress against his own education secretary.
What Is DeVos’ Rule?
The Senate voted Wednesday to overturn a Trump administration rule that would limit debt relief for students who were defrauded by for-profit colleges.
In a 53-42 vote, 10 Republicans joined Democrats to pass the resolution, which has already been approved by the House. This decision is a bipartisan rebuke of Education Secretary Betsy DeVos’ rule, aimed at weakening an Obama-era policy.
The Obama-era-updated “borrower defense” rule allowed for students who attended schools that committed serious fraud to request that their loan debt be forgiven. It was meant to regulate the for-profit sector and protect students whose colleges engaged in misconduct. It was updated in the wake of the collapse of schools like ITT Tech and Corinthian.
But DeVos made changes that raised the bar for borrowers’ relief claims. Her adjustments made it so that applicants had to individually prove a school knowingly misled them and that they were financially harmed by the deception. It also set a three-year deadline on claims.
According to the New York Times, the education department later adopted a complicated formula for calculating relief that limits nearly all applicants to only partial relief and required the majority to repay most of their loans.
Arguments For and Against It
The rule change is scheduled to take effect in July and the Education Department argues that it protects community colleges, historically back colleges, and taxpayers “from undue harm from the poorly written Obama-era regulation.”
DeVos has slammed the debt-relief system as a “free money” giveaway and told members of Congress last year that her rule would protect taxpayers from people trying to scam the system by applying for debt relief when they suffered no harm. At the time, she said those students who were defrauded would still be eligible for loan forgiveness.
But critics of the rule said this would effectively kill the department’s loan forgiveness program by setting requirements that almost no borrowers would be able to meet. “The burden of proof for these students is so absurdly unrealistic,” said Representative Susie Lee, Democrat of Nevada, who sponsored a companion resolution in the House.
“We don’t believe your life should be ruined because some school lied to you about the education they were promising, the loans you were taking out. We believe that you deserve a second chance in life,” said Democrat Sen. Dick Durbin of Illinois, who sponsored the legislation.
Democrats also stressed that the original loan forgiveness law, which has been around since 1995, was rarely used until for-profit chains started falling apart in 2014.
So far, the Education Department has approved 51,000 loan-relief applications. Nearly all of them were approved during the Obama administration and the department has eliminated some $535 million in debt. Under DeVos, the department stopped processing the applications while the rewrite was challenged in court. There are currently about 170,000 pending applications.
The American Legion and dozens of other veterans groups also backed the effort to overturn the rewritten rules. The focus on veterans attracted much Republican support because veterans have long been targetted with predatory recruitment tactics thanks to their lucrative G.I. Bill benefits.
The benefits are particularly attractive to for-profit schools because federal law requires those schools to obtain at least 10% of their revenue from sources other than Education Department-backed student loans.
Trump Has Veto Power
After the decision, Department of Education spokeswoman Angela Morabito said, “It’s disappointing to see so many in Congress fooled by misinformation from the Left and the fake news narrative about our efforts to protect students from fraud.”
“Students, including veterans, who are defrauded by their school and suffer financial harm as a result deserve relief, and our rule provides them relief,” she added.
The legislation will now go to President Donald Trump’s desk for him to decide whether or not to uphold the rule with a veto or side with Congress against his own education secretary. The White House has already threatened a veto but several outlets reported that Trump told Senate Republicans on Tuesday that he is “neutral” on repealing the rule.
“I have sort of a neutral position,” Trump allegedly said according to people in the room. “I’m in between.”
The White House did not dispute those reports but instead pointed to a statement from the administration released in February. That statement said Trump’s advisors would recommend he veto the resolution and defended DeVos’ plan, saying it “restores due process, the rule of law and student choice.”
A source close to the president told The New York Times that DeVos called Trump after his “neutral” comment. They said Trump supports finding a solution to the loan problem but doesn’t feel strongly about DeVos’ approach. However, Politico reported that after speaking over the phone, Trump indicated that he would vote in favor of DeVos’ regulations.
So at this time, it’s unclear what Trump will decide, but a veto wouldn’t be unlikely. At a news conference on the resolution Wednesday, Durbin said he will work hard to get the votes needed for a veto override if the president rejects the measure.
See what others are saying: (The New York Times) (CNN) (Politico)
Survey and Census Data Shows Record Number of Americans are Struggling Financially
Americans are choosing not to pursue medical treatment more and more frequently as they encounter money troubles.
A recent federal survey shows that a record number of Americans were worse off financially in 2022 than a year prior.
Coupled with recent census data showing pervasive poverty across much of the country, Americans are forced to make difficult decisions, like foregoing expensive healthcare.
According to a recent Federal Reserve Bureau survey, 35% of adults say they were worse off in 2022 than 2021, which is the highest share ever recorded since the question was raised in 2014.
Additionally, half of adults reported their budget was majorly affected by rising prices across the country, and that number is even higher among minority communities and parents living with their children.
According to recent census data, more than 10% of the counties in the U.S. are experiencing persistent poverty, meaning the area has had a poverty rate of 20% or higher between 1989 and 2019.
16 states report at least 10% of their population living in persistent poverty. But most of the suffering counties were found in the South — which accounts for over half the people living in persistent poverty, despite making up less than 40% of the population.
These financial realities have placed many Americans in the unfortunate situation of choosing between medical treatment and survival. The Federal Reserve study found that the share of Americans who skipped medical treatment because of the cost has drastically increased since 2020.
The reflection of this can be found in the overall health of households in different income brackets. 75% of households with an income of $25,000 or less report being in good health – compared to the 91% of households with $100,000 or more income.
See what others are saying: (Axios) (The Hill) (Federal Reserve)
Montana Governor Signs TikTok Ban
The ban will likely face legal challenges before it is officially enacted next year.
First Statewide Ban of TikTok
Montana became the first state to ban TikTok on Wednesday after Gov. Greg Gianforte (R) signed legislation aimed at protecting “Montanans’ personal and private data from the Chinese Communist Party.”
The ban will go into effect on Jan. 1, 2024, though the law will likely face a handful of legal challenges before that date.
Under the law, citizens of the state will not be held liable for using the app, but companies that offer the app on their platforms, like Apple and Google, will face a $10,000 fine per day of violations. TikTok would also be subject to the hefty daily fine.
Questions remain about how tech companies will practically enforce this law. During a hearing earlier this year, a representative from TechNet said that these platforms don’t have the ability to “geofence” apps by state.
Roger Entner, an analyst at Recon Analytics, told the Associated Press that app stores could have the capability to enforce the restriction, but it would be difficult to carry out and there would be a variety of loopholes by tools like VPNs.
Montana’s law comes as U.S. politicians have taken aim at TikTok over its alleged ties to the CCP. Earlier this year, the White House directed federal agencies to remove TikTok from government devices. Conservatives, in particular, have been increasingly working to restrict the app.
“The Chinese Communist Party using TikTok to spy on Americans, violate their privacy, and collect their personal, private, and sensitive information is well-documented,” Gov. Gianforte said in a Wednesday statement.
Criticism of Montana Law
TikTok, however, has repeatedly denied that it gives user data to the government. The company released a statement claiming Montana’s law “infringes on the First Amendment rights of the people” in the state.
“We want to reassure Montanans that they can continue using TikTok to express themselves, earn a living, and find community as we continue working to defend the rights of our users inside and outside of Montana,” the company said.
The American Civil Liberties Union condemned Montana’s law for similar reasons.
“This law tramples on our free speech rights under the guise of national security and lays the groundwork for excessive government control over the internet,” the ACLU tweeted. “Elected officials do not have the right to selectively censor entire social media apps based on their country of origin.”
Per the AP, there are 200,000 TikTok users in Montana, and another 6,000 businesses use the platform as well. Lawsuits are expected to be filed against the law in the near future.
See what others are saying: (Associated Press) (Fast Company) (CBS News)
How a Disney-Loving Former Youth Pastor Landed on The FBI’s “Most Wanted” List
“Do what is best, not for yourself, for once. Think about everyone else,” Chris Burns’ 19-year-old son pleaded to his father via The Daily Beast.
Multi-Million Dollar Scheme
Former youth pastor turned financial advisor Chris Burns remains at large since going on the run in September of 2020 to avoid a Securities Exchange Commission investigation into his businesses.
Despite his fugitive status, the Justice Department recently indicted Burns with several more charges on top of the $12 million default judgment he received from the SEC.
Burns allegedly sold false promissory notes to investors across Georgia, North Carolina, and Florida. The SEC claims he told the investors they were participating in a “peer to peer” lending program where businesses that needed capital would borrow money and then repay it with interest as high as 20%. Burns allegedly also reassured investors that the businesses had collateral so the investment was low-risk.
The SEC says that Burns instead took that money for personal use.
Burns began his adult life as a youth pastor back in 2007 before transitioning into financial planning a few years later. By 2017, he launched his own radio show, The Chris Burns Show, which was funded by one of his companies, Dynamic Money – where every week Burns would “unpack how this week’s headlines practically impact your life, wallet, and future,” according to the description. He also frequently appeared on television and online, talking about finances and politics.
The SEC alleges that he used his public appearances to elevate his status as a financial advisor and maximize his reach to investors.
His family told The Daily Beast that he became obsessed with success and he reportedly bought hand-made clothes, a million-dollar lakehouse, a boat, several cars, and took his family on several trips to Disney World. His eldest son and wife said that Burns was paying thousands of dollars a day for VIP tours and once paid for the neighbors to come along.
Then in September 2020, he reportedly told his wife that he was being investigated by the Securities Exchange Commission but he told her not to worry.
The day that he was supposed to turn over his business documents to the SEC, he disappeared, telling his wife he was just going to take a trip to North Carolina to tell his parents about the investigation. Then, the car was found abandoned in a parking lot with several cashier’s checks totaling $78,000
FBI’s Most Wanted
The default judgment in the SEC complaint orders Burns, if he’s ever found, to pay $12 million to his victims, as well as over $650,000 in a civil penalty. Additionally, a federal criminal complaint charged him with mail fraud. Burns is currently on the FBI’s Most Wanted list.
Last week, the Justice Department indicted him on several other charges including 10 counts of wire fraud and two counts of mail fraud.
“Burns is charged for allegedly stealing millions of dollars from clients in an illegal investment fraud scheme,” Keri Farley, Special Agent in Charge of FBI Atlanta, said in a statement to The Daily Beast. “Financial crimes of this nature can cause significant disruptions to the lives of those who are victimized, and the FBI is dedicated to holding these criminals accountable.”
His family maintains that they knew nothing of Burns’ schemes. His wife reportedly returned over $300,000 that he had given to her.
She and their eldest son, who is now 19, told The Daily Beast they just want Burns to turn himself in, take responsibility for his actions, and try to help the people he hurt.
“Do what is best, not for yourself, for once. Think about everyone else,” Burns’ son said in a message to his father via The Daily Beast.