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Democrats to Undo Rule that Helps Defrauded Students

Today, the House will vote to overturn President Trump’s veto of H.J. Res. 76 that would roll back the Education Department’s efforts to assist students who have been defrauded by colleges and universities.

On the House floor, Rep. Virginia Foxx (R-NC), Republican Leader of the Education and Labor Committee, delivered the following remarks:

"I rise today in opposition of H.J. Res. 76, a resolution that would overturn the Education Department’s efforts to assist students who have been defrauded by colleges and universities, while also taking necessary precautions to protect taxpayer interests. 

"Democrats have resorted to political finger pointing on this issue at every turn. First, Education and Labor Committee Democrats held a hearing at the end of last year to hurl unfounded and personal attacks at Secretary DeVos. Then they passed H.J. Res. 76 shortly after to overturn the Education Department’s borrower defense rule. And now, after President Trump has vetoed this resolution, the Democrats still can’t take no for an answer and want to override the presidential veto. 

"As we sit here today—yet again—to watch the Democrats’ political games unfold, I’d like to begin by highlighting real priorities we are letting fall by the wayside as we waste time debating this partisan resolution. 

"For starters, we should be working on bipartisan solutions to combat the devastating effects of the coronavirus. We should be addressing the concerns of small businesses—the backbone of our economy—and the workers whose livelihoods are being impacted by this crisis. 

"Or we could address labor union shortcomings including the widespread and brazen corruption amongst United Auto Worker (UAW) union leadership. We know the UAW’s senior union leaders engaged in money laundering, tax fraud, bribery, and embezzlement, yet no action has been taken to examine this abuse of power by union bosses. 

"Unfortunately, Democrats have a long track record of pursuing ideological objectives at the expense of taxpayers, students, and schools. 

"Today is no different, so I’d like to spend some time touching upon the advantages of the Trump administration’s new rule and providing context on the Obama-era borrower defense rule, and its many shortcomings. 

"The borrower defense rule was first released by the Education Department in 1994. Borrowers rarely used this process over the next 20 years, until 2015, when a large for-profit school closed. During the final stretch of his presidency, the Obama administration used this school closure as an opportunity to issue new regulations on borrower defense. 

"The caveat? A potential $42 billion price tag to be footed by taxpayers that encouraged tens of thousands of borrowers—whether they were harmed or not—to apply to have their loans forgiven. In fact, claim filings for loan forgiveness went from 59 submitted in the first 20 years to roughly 300,000 claims submitted in the last five years. Let me repeat that. For the first 20 years of the rule, there were 59 claims. Then the Obama Administration begins encouraging frivolous appeals and the appeals jump to 300,000 and climbing.  

"This shouldn’t come as a surprise. Massive loan forgiveness has long been a Democrat objective and the Obama rule was a giant leap toward that goal. One that also ignored the high cost to taxpayers. 

"Furthermore, the Obama administration’s regulations were convoluted, blurring the line between fraud and inadvertent mistakes made by schools. The distinction between the two is important because if institutions are found to engage in fraud, the Education Department can cause schools to close—despite no intentional wrongdoing—through significant financial penalties. 

"But don’t just take my word for it. Colleges and universities, including Historically Black Colleges and Universities (HBCUs), voiced concerns about the Obama regulation. Postsecondary education leaders believed what President Obama’s administration proposed could ruin those colleges and universities that did not have large endowments or significant revenue streams like the ivy league institutions. The Obama rule could shutter the very institutions dedicated to serving low-income, minority, and first-generation students. 

"Additionally, Washington Times pointed out: 'Under the Obama rule, students in the coronavirus era who could not attend classes on campus and were forced to take makeshift Zoom classes would have legitimate claims against their schools because the Obama rule does not differentiate between willful misrepresentation and schools’ varied responses to the coronavirus. Great for trial lawyers, but bad for students and their schools.' 

"The Obama regulations created more chaos than clarity, and the Trump administration recognized immediately the need to right these wrongs. 

"So, working with the Education Department, President Trump produced a rule with clearer standards for borrower defense and increased transparency for both students and institutions. 

"The rule, first and foremost, holds ALL schools accountable. Students who have been lied to and suffered financial harm are entitled to relief and forgiveness. Let me repeat that. The Trump administration’s borrower defense rule delivers relief to students, including veterans, who have been lied to and suffered financial harm. 

"In fact, the Obama rule undermined the ability of veterans to earn relief if the institution was considered an 'elite' liberal arts institution. In contrast, President Trump’s rule makes sure students have the last word no matter what institution they attend. 

"Democrats will have you believe that the President and Secretary DeVos want to intentionally harm students who have been defrauded by an institution of higher education, and that is simply not the case. 

"While my colleagues on the other side of the aisle are willing to spend taxpayer money recklessly, President Trump’s rule actually reduces the cost of the 2016 Obama-era regulations by $11 billion because it helps students go to and complete their education rather than closing schools indiscriminately. This is an $11 billion savings for American taxpayers during a time when many are struggling to make ends meet. 

"Additionally, the Trump borrower defense rule: 

  • Holds all institutions, not just for-profit colleges, accountable for misrepresentations instead of picking winners and losers at considerable cost to taxpayers;
  • It ensures due process for all parties;
  • Extends the look-back window to qualify for closed school loan discharges from 120 to 180 days so when schools close more students are eligible for forgiveness; and
  • Allows for arbitration, which could result in borrowers recovering resources, such as cash payments or other expenses, not provided by the Education Department.

"Furthermore, this rule is the result of more than two years of deliberations, public hearings, and negotiations with higher education stakeholders, as well as considering, incorporating, and responding to public comments on this issue.  

"Thanks to this regulatory reset, all colleges and universities will be held accountable, defrauded students will see relief, and taxpayer dollars will be better protected. 

"Republicans stand ready to provide relief to students who have been harmed by fraud, and the borrower defense rule issued by the Trump administration delivers on that front. 

"I strongly urge a no vote on this resolution, and I reserve the balance of my time."


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