Critics cried foul when Education Secretary Betsy DeVos began rolling back regulations to curb the predatory practices of for-profit colleges, but Henry N. Tisdale, the president of the small campus of Claflin University in Orangeburg, S.C., said that he appreciates the measures she is taking to ensure that colleges are not unfairly targeted.
In a draft proposal obtained by Politico, DeVos wants borrowers to face a higher burden of proof and present more evidence in fraud cases against higher learning institutions.
Since the Obama administration announced that it would establish a smoother pathway for students to claim that they had been misled by their colleges, Tisdale said he has feared an expensive legal battle over the smallest leaflet advertising a service on campus, according to a report published on Friday in The New York Times.
“A small mistake or error at a college like Claflin could put us out of business,” Tisdale said, adding, “We don’t have the resources ready to respond to frivolous claims.
According to the report, “Tisdale and his counterparts at other small, historically black colleges and universities are among an unlikely cohort of supporters for Ms. DeVos’s effort to tighten a wide-ranging regulation that offers federal debt relief to students who were defrauded or deceived by their higher-education institutions.”
DeVos’ plans to overhaul the Obama-era rules for student borrowers reached a crucial stage last week, as a committee convened to renegotiate the regulations began debating the burden of proof students would have to meet to win claims against institutions.
According to the report:
The Education Department has proposed that students establish “clear and convincing evidence” that institutions misled them, compared with a “preponderance of evidence” standard applied under the Obama administration. Students would also have to prove that institutions had an “intent to deceive,” “knowledge of falsity” and “reckless disregard” that resulted in financial harm to borrowers.
Officials in the department said during negotiations this week that they believed the current preponderance-of-evidence standard did not sufficiently protect taxpayers and institutions.
DeVos has portrayed the Obama-era regulations as taxpayer-funded money grabs. In announcing the repeal of the rules, she said that institutions of all types raised concerns about “excessively broad definitions of substantial misrepresentation and breach of contract, the lack of meaningful due process protections for institutions and ‘financial triggers’ under the new rules.”
The United Negro College Fund, which has joined the chorus of criticism over the Trump administration’s lack of tangible commitment to historically black colleges and universities, has long been among the most vocal opponents of the Obama-era rules.
Since the rules were announced in 2015, the college fund has expressed concern that they could threaten the viability of its 37 member institutions, which include Claflin, Spelman College, Morehouse College and Shaw University. The member institutions collectively educate 60,000 students on campuses of about 2,000 or fewer, and 75 percent of their students receive federal Pell grants.
The fund has said that the rules have a disproportionately negative effect on their member institutions because they have historically been underfinanced and serve vulnerable populations.
They fear having to spend thousands of dollars fighting claims instead of backing academic programming at institutions that have been graduating students who consistently post high success and satisfaction rates.
Representatives at the United Negro College Fund are among the panelists hashing out the new standards and are in a unique position of having to represent both students and institutions.
“This would effectively do away with borrowers’ ability to get relief in almost all circumstances,” said Abby Shafroth, a lawyer at the National Consumer Law Center.
The department has struggled to complete a backlog of borrower-defense claims, the bulk of which were overwhelmingly against for-profit colleges, that began pouring in under the Obama administration and swelled to more than 100,000 in the last year. The department attributed the backlog, in part, to an insufficient system established under the Obama administration, which relieved students of $450 million in loan debt after the collapse of Corinthian Colleges and ITT Technical Institute.
Ms. DeVos announced last month that her department would begin notifying more than 20,000 students whether their claims had been approved. Some would see only partial relief under the new system.
Lawyers who represent institutions on the negotiating team said that due process standards were crucial to their constituents because colleges could be held liable for some of the student debt
“We all have bad actors. But in trying to get to the bad guys, are you allocating too much risk on the good guys?” asked Aaron Lacey, a lawyer at Thompson Coburn L.L.P., which represents schools in regulatory litigation.