Sec. Betsy De Vos Testifies at House Education Hearing CSPAN December 20, 2019 12:57pm-5:15pm EST
president benjamin harrison. >> the great since that you as you walk through the space is how understated it is. it's not ostentatious but if anything it speaks deeply of quality and i think that is his character through and through, understated but of quality. >> watch c-span's cities tour of indianapolis as we take in its history and literary scene. working with our cable affiliates as we explore the american story. >> education secretary betsy devos went before the house lay between sets question about her departments student loan debt forgiveness program. it targets students who took out loans at institutions that misrepresent chances for jobs, potential sellers after graduation leaving students unable to pay back large loans. >> the meeting will come to order. i want to welcome everyone and
note a quorum is present. we we will hear testimony from e department of education implementation of borrowed eventual. pursuant to commingle 7c statements are limited to the chair and ranking member. i want to thank secretary devos of being with us today and thank her for a green to hold enough time in the schedule all of the members present to have amendments confinements of questions pursuant to house rules. especially thankful because this cheer i'm exercise my prerogative to go last in question order so it she were to leave early i wouldn't get to ask questions. i want to thank you for agreeing to stay with us for the full-time. i recognize myself enough for the purpose of making an opening statement. we are here to examine the department of education's implementation of the borrower defense rule. i want to thank you, madam secretary, for appearing before the committee to discuss this important issue. borrower defense is a rule
grounded in basic fairness. student borrowers who are defrauded by their college face severe financial and emotional consequences. it is therefore cruel and counterproductive for the federal government to compound their misfortune by collecting on their student loans. accordingly, the higher education act requires the secretary of education to provide debt relief to defrauded borrowers.to until recently, that authority was rarely needed because institutional fraud wase uncommon. but in 2015, corinthian colleges, a large for-profit chain, abruptly closed its doors in the face of widespread allegations of fraud. those allegations were later substantiated with countless reports of schools luring students with false promises of guaranteed jobs upon graduationn and inaccurate information about the transferability of credits. a year later, a second for-profit chain, itt tech, closed under similare circumstances. in response to a surge in claims, the obama administration issued a new borrower defense
rule to streamline the process for providing relief to defrauded students. by the time the trump administration took office, 28,000 corinthian colleges students had already received relief, and the department was on pace to process the remaining 54,000 claims pending by the spring of 2017. however, under the present leadership, the department refused to implement the borrower defense rule. instead of providing defrauded borrowers full and timely relief, as the law allows, the department halted processing of claims so it could invent a new formula that ensured most defrauded borrowers would get only a fraction of the relief they were eligible to receive. .. >> it misused students personal
data. after theel court's ruling asserted they could provide timely and full relief under the obama era framework, the department refused to do so. eighteen months between the ruling, the 2018 ruling 18 ruling in today's announcement for the partial relief formula adid not present the claim. they are left in limbo. the number of borrowers waiting relief grown from 54,000 to roughly to roughly 240,000. madame secretary, your refusal put to serious harm with students you have the power to serve. they have been left with mountains of debt, worthless degrees and none of the job opportunities they were promised
unable to go back to school, start a family or move on with their lives. providing relief to florida students, illegally collected 45,000 borrowers waiting to take action on their claims. some cases, they have wages and tax returns by the very government that was supposed to be providing them relief. in contempt of court for collecting roughly 16,000. collectively on 45,000 borrowers some have been cheated twice. first by their colleagues in the department of education. court filings the department admitted gross negligence and handling the defense rule. got the last year this committee has spent multiple requests for
information and documents. understanding the rationale. the department has continually refuse to comply with those requests. the lack of conspiracy was in full display. published documents revealing the department's own staff conducted an extensive review in the itt text student. fothose that attended the schoos required full debt relief. it raises two important questions. why was there a refusal to provide relief to the florida borrowers for the department staff. the two other relevant documents in the department if the department is withholding from the committee and the public shedding light on policy decisions. getting answers to these and other questions on the
department's policy on behalf of roughly 240,000 borrowers awaiting relief. thank you again for joining us today. i yield now to make it opening statement. >> thank you for being here today. it is my hope that the theory will provide members of the committee the chance to understand how the department of education is working to address the claims that have been filed within the department. i would like to make one thing clear. above all else, committee republican support smart, focused and constructive oversight. members of congress have an important responsibility to protect every single fact dollar everyone in this room knows how seriously we take that responsibility.
strong oversight can strengthen our institutions. including the department of education. the federal government eat fish and accountable to be a top priority for all members of congress. sadly, this committee is committing an opportunity for serious oversight issues. we could investigate the widespread lawmaking by the united auto worker union leaders who betrayed hard-working americans in favor of self-enrichmentd. a tax fraud bribery and embezzlement. this committee has taken no action. we could investigate the potential fraud. a recent reward from the government accountability office there was an income fabrication. impacting the individual's eligibility. we could investigate how potentially tens of thousands of
people may be committing student loan fraud as a gao report found borrowers may have understated their income or overstated their family ties to reduce the student loan payment. there are real opportunities for the serious issues that require honest oversight. instead committee democrats will choose to use their time today attacking the secretary for delays and responses to oversight requests she is responding to. producing the oversightr documents requested by any member of congress including the committee chairman requiring the reviews across multiple offices within the agency. taking time and is necessary. despite the limitations of the
bureaucracy, the education department is trying to work with the democrats to respond to all of their request. contrary to claims i expect here today for my colleagues across the aisle, the secretary and the education department to students who have been harmed by fraudulent practices andt art reforming. both toti clarify standards and make the process more accessible since taking office, the secretary has spent more than two years on deliberations, public hearings, public hearings, negotiations with higher ed stakeholders and ernsidering incorporating and responding to public comments on thisis issue. they did so with a regulatory reset in mind. holding colleges and universities accountable and siprovide relief to students who have beenov harmed by these
practices. claims aren't purposely delaying relief is our fault. the secretaries putting forms in place that will help defrauding students navigate the process of loan relief that they deserve. committee republicans are supportive of these efforts. defrauding students who have been financially harmed should get relief. i think the secretary for being here today. i look forward to our discussion on how the education department is working to protect student bars and american taxpayers by not only holding fraudulent institutions accountable, but also working to prevent fraud from happening in the first place. thank you, mr. chairman.
>> committee clerk electronically microsoft word within 14 days of today. i would like to thank secretary divorce. we will yield to the gentleman from michigan. requesting the honor of introducing the secretary. >> i thank you, mr. chairman to allow me this opportunity. we are proud people. i know there will be disagreements here. what the secretary is doing. having hadse the privilege and honor of knowing her and her family, going back into the early '80s, knowing the impact that her family, as was a family she married into has had not only in michigan, but all but all across this country. not because they were pushed into it, but because they had a
passion for seeing young people educated.si k-college and to make sure it was done in appropriate ways and people have had choices that would not have had choices before. they have done it in a way that has made a difference. it continues on into their children as well.es cultural areas, manufacturing, bringing up people that would not have had the opportunity that they had. i understand this will be a challenging hearing today. i do know from personal experience that our secretary wants to do things right, according to law, wants to make sure that things are carried on both sides of the ledger. students and taxpayers being treated fairly. i know that because knowing how she and her family have carried on the life in michigan, touching lives who would not have been carried on in a way before that lead to success.
even though she is a secretary of education and is entirely capable of answering all the questions we have. i welcome you and thank you for being here. >> thank you very much. chief operating office of the office of students. office of federal student aid. agreement with the committee. general brown is here to assist the secretary. in the course of answering the agreement. or direct him to assist her. reminded that questions, including follow-up questions may not be directed to him personally, but be directed to the secretary. madame secretary, we have received your statement. going onto committee role seven b you are asked to limit your
orientation for the written statement. pursuant to title 18101 you are aware that prohibiting false statements to committee will forgo the spectacle of the swearing-in therefore before you begin your testimony, please remember to press the microphone as you begin to speak, the light in front of you will turn green. after four minutes, the light will turn yellow. you're five minutes have expired we will ask you to ramp up. please remember once again, turn on your microphone. i never recognize the secretary of education. secretary divorce. >> thank you for that very kind introduction. let me first thank the committee
we have provided the committee 18,000 pages of documents during the past month on borrower defense alone. we have reached you several times. i am hopeful we can use today's hearing to continue in that constructive dialogue. let me also thank you for the opportunity to set the record straight. the approach to borrower defense to repayment. i want to be very clear. students are my number one priority. they are why come to work every day. if students have been deceived by institutions and suffered financial harm as a result, they should be made whole. but if claims are false or students and not suffer financial harm, hard-working taxpayers should not have to pay somebody else's student loans, too. it is a matter of fairness. adjudication of these claims must treat all students and
taxpayers fairly. simply just discharging all these loans as some on this committee suggest be done is not fair to taxpayers nor those that have paid or are paying their loans. this commitment to t fairness ad the rulee of law continues to guide our thinking with regard to borrower defense. when it arrived in 1995, a regulation in the higher education act that was lalittle-known and little use. the 20 years fewer than 60 claims were filed. the previous administration weapon iced against schools that simply did not like. they applied the law in a discriminatory fashion since 2015 there has been a 5000% increase in increase in borrower defense claims. this administration is committed
to pulling back the overreach and will enforce a borrower defense that is consistent with congress content that protects all borrowers and treats taxpayers and schools fairly. before discuss the distinctions, let me begin by saying what it does not do. it does not apply retroactively. when our rule goes into effect next year it will apply only to loans first disbursed after that date. this means that the department will continue to enforce in good faith the previous administration's 2016 rule where all loans were dispersed between july 1 and july 2020. our rule does not shield any school froms accountability. nor does it relax oversight a bad ones. no matter the tax status they are held accountable under our
rule. finally, our rule does not demand that students prove that their school intentionally deceive them. instead it provides due process for all parties. our process focuses on individual students and requires evidence from both the borrower and the school before a claim. the student always has the opportunity to respond to the school's case. let me discuss the basics of what the rule does do. clear, clear, understandable and easily accessible. it ensures that claims are processed efficiently, carefully, transparently and carefully. students may file affirmative or defensive claims. all of which will be judged using a o preponderance of the evidence standard. our role provides a legally grounded reasoned and appropriate definition of misrepresentation. it requires them to present
evidence, obtain relevant evidence and respond to any evidence in the record. these constitute much needed course corrections to the 2016 rule currently in place. the obama administration rule punishes for-profit schools that give nonprofits a path for the very same conduct. let me turn to the ongoing adjudication of existing claims before the department.ng yes, there is a backlog backlog at federal student aid. to say that i'm frustrated by that -- rather than focus on why there is a backlog, too many have focus on creating more chaos in a circus like atmosphere. here are the facts about buyer defense. first, we inherited from the obama administration more than 64,000 borrower defense claims. i asked them to investigate why they made such little progress
processing these claims. the ig found material weaknesses in the previous administration procedures for approving and claims. the prior administration was encouraging claims to be filed knowing full well it lacked the ability to even accurately track them. it had no process in place for reviewing any claim. it knew that the department could not quickly and legally give blanket forgiveness for all loans. they left tens of thousands of claims behind. greeted by the crushing number of applications and without effective guidance from congress, we took action to establish a process for reviewing the backlog. using the categories as our baseline. we quickly adjudicated 32,400 claims. our relief methodology was based on same data. that the obama administration used to measure schools under
their gainful employment role. unfortunately, in may 2018 a federal district court in california determined that using that data violates the privacy act. we strongly disagree and have been waiting for a decision on appeal from the ninth circuit for well more than a year. the department stands ready to process these claims. i want to process these claims. we simply need a decision from the court. in the meantime we are doing everything we can to process claims in another manner. i recently approved a methodology that relies on publicly available 2017 gainful employment earnings data. social security earnings, college scorecard data and irs information to determine harm and the results of relief. ultimately, what the department wants, what i want and what taxpayers deserve isto to provie fair relief to all of those
borrowers that actually have been harmed. that is what the law requires. that is what you intended and that is what we are doing. hank you. i will be happy to answer your questions. >> thank you, madam secretary. now question witnesses on the five minute rule. as i mentioned earlier, i will yield to the next standing member. majority side will be followed by the ranking member or her designee. alternate between the parties and remind members that all questions are to be directed towards the secretary who can consult with general brown. i also remind members of the subject is borrower defense for agreement, members should limit their questions to that issue. i now yield five minutes from the lady california ms. davis. >> thank you. welcome. in the course of our discussion with you today, i hope we can
determine your interest on this issue. one of your roles, of course, is to protect the taxpayer. we hope that you will also want to protect students from the harm caused by predatory for-profit programs. today, you are here to get credit for the new formula. but, it does deny full relief to the vast majority of defrauded students. can you tell us how many partial relief funding formulas you discussed with your department before settling on this one? >> thank you,pa congresswoman, r that question and for your continued concern and focus on students. we share that concern and want to do what is right for all students. we considered a number of different methodologies once the court shut us down.
we wanted to make sure that we had a scientifically robust and defensible approach to being able to determine whether a student was indeed financially harmed. we believe that this new methodology addresses those concerns and will indeed treat and consider each student and their individual circumstances vary fairly and straightforwardly. >> i think that you must be aware thatht it does rely on incomplete earnings data which represents only about 20% of all programs. would you agree that that is incomplete? >> it relies on a number of different data sets. it is all publicly available. it is more expansive than just a gainful employmentav data. it is taking into consideration the schools that which the students have filed a claim versus programs across the country. >> i certainly hope that you will look at that again.
80% of all borrowers only includes borrowers that completed degrees. most students seeking relief do not complete their degrees. i want to read to you a quote from a story. are you familiar with that story? >> i have not listened or looked at it in depth. >> okay. i believe that that is one that really had to do with the work in your department. i was also told by the recruits from the school, this was a student student speaking about what happened. i was told about ways i could make that i was yet able to earn. the school is not very credible. the recruiters assured me students graduate making around 50,000-60,000 a year. abs graduate would be around 80,000.
they misrepresented their product, namebrand and education. would you say that that student has been harmed? >> i will not comment to hypotheticals. i am sympathetic to that student and if that student has filed a claim it will of course be adjudicated and processed appropriately through our effort at the department and fsa. >> does the university not have a responsibility to provide what it claims it will? there is is no other consumer protection that does not restore full payment of a project. we are r all aware of that. we have probably been through it internal memos show that career staff advocated for defrauded students to receive full relief. did you review the memos that came from your own department? >> i am not sure to which memos you are referring. there are lots generated in the department of education. if you would like to share the
specific documents. >> i am just wondering, the report for your staff to disagree with you. that was clear in the report. i am sure you will have a chance to look at that. >> i think that there is also a econcern. the career staff telling you what they were seeing. definitely harmed. did you rely on that same staff that you came up with? >> when i came into my job was there were tens of thousands of claims and no process and no structure for actually considering them. we developed a process, implemented it and were well down the way of considering all the claimsnt we had pending in e court shut us down.
the ruling that they made in ma. >> i was going to go into the commission coming up with the university of phoenix ruling. the interesting thing about that is the students had a federal loan, properly not be made whole yielding their loan through the school, they will, which is an interesting dilemma we will have to face. >> thank you again, mr. chairman secretary, it is important to conduct good oversight. to do that,t. we need to have a good working relationship with the department. thank you foror thank you for te efforts. secretary, i know that there are several letters that you have received from the chairman that staff is also sent a significant tumber of e-mails with additional requests. is that accurate?
>> yes, it is. >> my understanding is that you are diligently working on those requests. is that correct? >> yes. and and we have been. >> how many letters have you received from congress from taking office? >> on average we received 1.8 letters every day from members of congresss to address the specific issues. we have responded to 95% of those letters and i have placed a high priority on making sure that we are responsive and timely in our responses. >> 1.8 letters per day from members of congress. >> yes. >> these questions might require more technical information. i am fine with general brown
sharing information with you to answer the question. there isto a report the departmt issued before you were there that claims fsa was on target to clear all borrower defense claims. spring of 2017. are you familiar with this report? >> yes, i am. >> do you know how many claims the administration had processed at that point and how many remained then? >> i believe there were 16,000. that had been process before i came in. >> 16,000?>> >> 16,000. there were 64,000 awaiting when thousand waiting00 when i came. >> okay. could you tell us why you are not able to clear pending claims spring of 2017? >> as i mentioned in my opening
comments, there was no process in place to actually consider the claim. the ones that had been processed early on were clearly one that there was 100% relief involved. as more of those claims were considered, they continued to deteriorate to use the federal student aid terminology, in terms of their validity of claim. without a process in place, we had no way of actually determining what the relief would h be. >> it sounds as though from the information that we have beens given and things you have either said or alluded to, it was as though the obama administration just okayed every single claim. there was no process. is that an accurate thing to
say? it would not have mattered what the student said, but they just said i want my loan forgiven and it was forgiven. >> yes. that is based on the data we have seen in the information we have been able to find from that time. >> no proof was required of te students that a student, that he or she had actually been defrauded. >> no. once again, no real process in place. it was a matter of looking at claims and then forgiving them. that had been done for a number of, thousands of students before i arrived. >> much has been made about the quote career staff," who made some recommendations to you early on about how to hinder these claims. my assumption is, those would have been the same career staff. just simply sending out forgiveness for loans to these
people. what is your understanding of your role when you get a recommendation from a staff person? >> i get many recommendations from staff. both career and politically appointed staff and take them all into consideration. in this case, i am not sure what documents are even being referred to. i don't want to comment on specific documents when i'm not sure exactly what they say. like i said, hundreds of lawyers in the department of education. many of whom generate lots of ideas and recommendations. i take their recommendations in the input. i need to make sure i am
following the law. they are consistent with the first law. >> gentleman from arizona. >> thank you, mr. chairman. no question defrauded. that was so severe they were entitled to full relief. the department of education found it provided little or no value. madam secretary, do you agree? >> congressmen, i know that there were a number of students attended the programs that have claims for financial harm based on their experiences. we are continuing to make sure that those claims are ultimately processed and those students are responded to. unfortunately, the courts have
stopped our processing of those. >> memos developed by the attorneys in the department of education about the wholesale defrauding those students and in fact by over 20 state attorney generals was disagreed that this is a widespread issue. you agree they misled on the graduation rates. asserted a degree would result in the guaranteed employment. academic credits grown. accepted in transferable to other a colleges. >> i think that in some cases it was the case. some schools force them out of business. putting restrictions that dids. not allow the school to even
continue operating anymore. >> agree or disagree. providing no educational values to students as a result of frad that was permissive before. any discussions by any administration regarding that program. >> i do not agree with that narrative. i think there are many students that receive valuable education from corinthian's just like they do manyon other institutions. the question is which students were financially harmed. >> my colleague, ms. davis referenced from yesterday in terms of communication in the department of education. january 10 concludes. given this well-documented pervasive and highly publicized the department has determined the value is likely to either be negligible or nonexistent.
it is appropriate for the department to awardrd eligible borrowers full relief. do you agree that those loans before july 1, 2017, are subject to the standard? >> they certainly are subject to the buyer defense role. they are not automatically subject to full and complete forgiveness of every single loan. i mean, even even the prior administration. individuals acknowledge that there were up to 40% of the corinthian claims filed that were not even eligible for consideration. i goe back to the fact that thee was no way to really consider these claims. i inherited no process. we had to create a process.
understand that some of you want to blanket forgiveness for anyone that raises their hand and files a claim. that simply is not right. >> i think most of us here want justice for these taxpayers that happen to be borrowers. for them to receive the relief that they need to receive. a 1994 standard subject to state law standard. meaning those states found that the college engaged in fraud. how many of these loans, pending loans loans fall within the criteria of the loan you are talking about? >> is that a question? >> yes. >> i do not have the specific number of claims that are still pending. >> the judge in her position said a problem that the government created, madam
secretary. an obligation to provide relief to those borrowers regardless of cost. do you agree with that? >> an obligation to follow the rule and follow the law. we have implemented a process that will allow us to do that. we had implemented one. >> taxpayers, we have to agree that they are seeking relief for taxpayers and the department should be doing something about protecting them as well. thanke you, mr. chairman.. >> i will have to be a little stricter with the time because we may run over. with that, you are recognized. >> thank you, mr. chairman. thank you, madam secretary. thank you for your service, sir. i would like to discuss your authority when it comes to the payment claim. i know this was discussed in your testimony.
i would like the record to be clear. providing a more technical answer. the question the authority under the law claiming full, partial relief. is is that correct? >> that is correct. i would love to refer everyone to exhibit five. it shows the portion of the law that clearly states this has been a question for a lot of people. i want to make sure i need that cheddar cheese -- establishing partial relief. the regulations specifically discuss partial relief. >> that is correct. the case is about the data used to determine partially.
is that correct? >> i know that you should reward full relief if you find there was harm. you are authorized to grant partial relief in some circumstances. is that correct? >> that is correct. >> can you please explain why you believe partial relief is important and what are some examples where it is appropriate >> certainly. the previous approach was either aall or nothing. the new methodology that we have developed is a very scientifically defensible approach that looks at standard deviations from median earnings in a program. it compares it to a claimant making a claim against a school with regard to a specific program, we will take the median
earnings data from that program from that school and compare it to like programs from other schools across the country. if it is more than two standard deviations below that median, the individual would get 100% relief. if it is between it will be a tiered relief. if they are earning more than the median for that, for the rest of the school, then they would not entitled to relief. they cannot demonstrate that they have been financially harmed. >> that seems very fair to me to be able to do it that way. a situation where your earnings are not what they say they should be. i would like to yield, mr. chairman, the rest of my time to the ranking member, doctor fox. >> thank you very much. madam secretary, the cases related to corinthian borrowers. is that correct? >> yes.
>> the plaintiffs in that suit are seeking relief from the claims. the job placement rate. correct? >> yes. primarily job placement claims. >> the plaintiff specifically challenge her methodology for determining partial relief. is thatfs correct? >> i believe they were taking issue with the entire methodology and the court held that the data we were using was the issue. >> the judge issued an injunction preventing you from using the methodology because of privacy protections. >> that was that judges opinion, yes. >> that prevents the department from collecting on the role loan while the case is pending. is that correct? >> correct. >> there was a problem when when those loans were collected tiered continuing to be collected on.
is that correct? >> well, no. let me put that in context. a couple things important to know. before that injunction was ever handed down, i had directed that all of the pending student loan or student borrower defense applications be put in forbearance and also not continue to accrue interest. while this was going on for months and months and months, those students were not going to be sinking deeper and deeper into whatever problem. that was done before the court injunction. when the judge issued that injunction, that was already the directive. that directive was the policy or thean practice that i expected would be carried forward. after a year, there were some processing errors within federal student aid and with our
servicers. >> we acknowledge it. we will correct the issue. which we did immediately. i would like to ask general brown to just talk briefly about the numbers and how quickly -- >> madam secretary, we will come back to that when we have a chance. i do not want to go over. >> a gentleman from connecticut, mr. courtney. >> thank you for being here today. i just want to go back to your response. again, you were very specific about the fact that your discretion by the 1993 student reform act allows you to provide both partial and full relief. you just said that. is that correct?
>> yes. >> i appreciate that answer. mr. chairman, i just want to now enter into the record a memo dated dateded december 14, 2017, published in the new york times from stephen manatt she who was a political employee at the department of education to james manning who had been delegated the authorityty to perform the duties of undersecretary. >> thank you, mr. chairman. in that memo, madam secretary, now judge wrote that quote. it is now oh gc position that borrower defense analysis that the department of regulations and the borrower of defense statute allow the secretary to assess relief at her discretion. do you believe this memo provides you the legal basis to provide, in some instances, full
relief to defrauded students based on your discretion. >> i'm not referring to the memo. i am referring i to that section meof the rule that existed in te ti95 role in the 2016 rule. >> thank you. >> yes.yo that the secretary has discretion. again -- >> we agree. >> there was no process in place. >> i just want to kind of keep going here. on page six of the memo, it goes on to say you only limit to the secretary's ability to grant relief that no student that is rpaid on the loan. certainly a commonsense statement and i think we can agree on that. you cannot overpay with restitution. is thate correct? >> since you took office, i know you did process some of the pending claims from the prior administration, but after that, have you provided any department
borrowers for relief? >> well, we couldn't. the process was shut down. >> let me talk about that. if you look at the court order, shut down your partial relief program because what the judge ogfelt was improper use of socil security data, the judge stated nothing prohibits a secretary from fully discharging the loans of any borrower through successfully completed a form. she actually still left the door open for the department to continue to process these borrower defense requests. >> yes. but without a methodology that we could access the appropriate data. i could not go ahead and say we could not forgive a whole bunch of loans 100% because, number
one, each student's application needs to be considered individually. the circumstances are different and the facts are different. without a a methodology to utilize, we could not continue to process. >> let me just clarify. what we continued to adjudicate, if we have many claims that are awaiting now being processed to respond specifically to whether athere was financial harm or no, now that we have another methodology up and running, we will be able to move through those fairly quickly. >> my time is about to run out. what i hear you say is these claims, after the judge's order stops being processed because, to your discretion, determined that they had to come up with another way of processing the claim. again, that is not because the
judge handcuffed you, in terms of providing full relief. it specifically says she left that door open for you. it really was your decision, based on whatever priorities and policies you had to not continue to process those pending applications. i would just say the congresswoman and i have about 1100 defense applications fromfe the state of connecticut that have been sort of stuffed in this queue during that time. that is based on june data. i am sure that the numbers have grown. i tt tech as per the much institution. again, we at least made some progress here in terms of at least verifying what the scope of your authority is. my time has run out. thank you, chairman. >> thank you. beingyou, secretary, for for being here. we worked a lot together and a
lot of different issues. i am appalled at this judge. did what they did and what they put forward. basically providing a license to just allow the continued abuse. i appreciate the fact that you came into this particular position and, unfortunately, what you inherited from the last administration, which was really no structure, quite frankly, loan forgiveness. we are warranted, we are harmed, i think that is important. there is a duty and responsibility to do this diligently in the right way. i appreciate my colleague bringing that up. how abusive that this judge was. there are a few myths out there about the 2019 borrower defense
regulation that i would like to discuss with you. general brown may have some answers. the first myth is that the 2019 role it eliminates $11 billion in relief. is that true? if not, please explain it for me. >> congressman, that is indeed a myth. the presumed savings account on the fact that with much more clarity around a school's responsibility and what a student claim would and could mean that we will have ultimately fewer borrower defense claims going forward. let's recall the fact that there were a total of 599 claims filed and then a 5000% increase from 2015 to where where we have almost 300,000 claims today. going forward, we have just released a ton of data on the
college scorecard that individuals, if an institution is making claims about a program , it is going to be easy to check. you can go to that school and that field of study and see what the earning is for the first year and we will advocate the data for years after that. a lo more transparency for students and schools, frankly. going forward, the savings will be around the fact that we will not have as many claims. >> a tool for financial literacy. >> it is a good argument for financial literacy, yes. >> eliminating accountability for profit schools. is that true? >> not at all. it really treats all schools equally. i think that that is one of the major deficiencies of the 2016 role. it was strictly focused on for-profit institutions.
i thought some internal stuff at the department saying we will not pay attention to any claims or any schools that a liberal arts program. it is presumed that they are of full value. that is just wrong. if a student has a claim against the school for being fraudulent and deceptive, that should apply across the board to every school. we know that uc berkeley fudged their numbers to get bumped up numbers in college rankings. should those be subject to borrower defense claims like the others were? >> another myth is that the role is cumbersome or overly burdensome too comply with froma borrowers perspective. is that true? >> we have made it very easy for students to find the information that they need. locate on federal student aid's website.
we want to make sure that if and when there are claims that students have a very clear path to understanding how they proceed. >> thank you. >> chairman, i yield what little bit of time i have to the republican leader. doctor fox.bi >> thank you. i will make a statement. just tell me if i am saying this correctly. it was asserted before that the judge gave you discretion to go ahead and discharge these loans. my understanding from you is yes, you have processed all of the applications and once you understand you have a way to do this that will not be challenged in court, then what you say, adjudicate, meaning given answers is that correct? >> close.
i would love to have one put up. >> okay. >> it shows where things are. i would like general brown to actually -- >> i will have to cut you off one more time. i promise you the next time will come to general brown. >> thank you. the young lady from ohio. >> thank you very much. once again, i find myself agreeing with the ranking member we could be investigating other things today but there are so many in this administration, i do not know where i would begin. t e three usda roles getting ready to cut people off. 1 million of them children. maybe i could talk about the daily tragedy on our borders. it is unfortunate that my colleague suffering from amnesia on the other side of the aisle. i remember well how they treated
the last administration. they cannot take this holier than thou kind of attitude. i remember. i was here. >> the other thing i want to bring to our attention as you talked about the two letters you are getting every day, we getat that every day, too. we have a lot less staff than you do. i do not think it is something onerous and not something you can respond to. is it a fair to defraud students? >> no, it isfu not. should those people that have been defrauded be made whole? >> there should be relief for them. >> i yield the balance of my time for my colleague from connecticut. >> secretarym . >> just really quickly, mr. chair, i would like to enter into the record january 10 memo from the e borrower of defense unit to then undersecretary ted mitchell.
>> without objection. >> this memo was drafted by youi office after the previous administration left. i just want to say something, as i'm sitting here listening, i remember our last interaction where you at that point also had not read the memos that came from your office. i just find it a total lack of regard that after the story broke on friday and you knew you are coming here for a memo, a hearing about borrower's defense that you would not even take the time to acquaint yourself with the memo that was talking about that your staff recommended, that borrowers fully complete relief. there is nothing that the congresswoman said so incredibly onerous about 1.8 letters a day from congress. you have over 3000 staff in thousand staff and a budget of 60,000 plus dollars. i get more than two letters a
day and i make it my business to respond to them. i am going to follow up about the same memo. as you said before, you do not opknow what anyone is talking about. you have notn read it. inin this memo, your staff recommended that full relief for borrowers involved in itt colleges and campuses in california be granted. will you explain why you ignored that memogr and then why you did not included in the documents that wereid sent to this commite ? >> congresswoman, once again, without having the document in umfront of me, i will not contie to to comment. >> did you not know you are coming here today? be met there are hundreds of -- >> you are absolutely right. >> friday the story broke in this document specifically was referenced. i do not d thinkhi that it is unreasonable. i know i am a freshman congresswoman. if i were coming to a committee
and i had taken the time to prepare and a document was revealed on a story that went nationwide, five or six days before the hearing, i would say to my staff, can you get the document for me so i can read it cufor myself. i am sure that this committee will have questions in relation to this memo. that did not cross your mind at all? >> last friday. >> january 10, 2017 was the last administration. >> it did not cross your mind? did it not cross your mind. >> there are hundreds of documents. >> you are absolutely right. but on friday when this document was revealed, did it not cross your mind that maybe i should read it, on friday. >> no. >> december 29 teen. >> it did not cross your mind that maybe i should read this
document russia mark. >> i do not need to read every document. >> no. this one specifically. >> because a news outlet chose to print it? >> yes. is that a no? did it not cross your mind that i should read this document. >> ma'am, i am focused on getting a process right right. >> so no? >> for students and taxpayers. >> so, no. >> that is what i am doing. >> part of getting that process right requires reading. thank you, mr. chair. >> the gentlemen's time has expired. gentleman from michigan michigan >> thank you, mr. chairman. thank you, secretary, for being
here. january 10 was before the inauguration. february 17 was february 17 was when you wereh confirmed. i hope it does not concern my constituents too much that i do not read every article that is written about me either. certain articles that would be a waste of time and take me away from doing the job i have been asked to do. especially when you know what you are supposed to do and following the law. talk tod us about your exhibit number one. give you opportunity at this time. .... ....
case. for every one of those cases, we bring them in and that top bar that you see, we have our administrative people as well as our attorneys take them apart, look for supporting documentation and check the validity of that documentation. this is the first part of the case. if it happens to be under the 2016 rule and the case is determined to in fact be a valid case, then the school would be
notified under the 2016 rule and those going forward. not all are under the 2016 rule. at that point the case would start the adjudication process. all cases get to that point. at that point that's the >> we looked at this across administrations. only because those are the questions we have gotten. the percent have really held true. 62-38% throughout both of the times and for the first 65,000 of those cases that have been thousand of those cases that have been completely adjudicatd and processed back down to the students. at that point, if the case is either ineligible or eligible, if it is eligible, that is the point where the secretary said earlier, determining some non-or all. a backlog when those cases got to the final point had to be
stopped, as you all have already referenced by the ninth circuit. a new methodology has to be determined. when you use the backlog, that is is what we are taking. each on its stroke. >> thank you for that explanation. >> there was no official source er the college outcomes for the level. you recently unveiled new teinformation on the college scorecard that would allow families for the first time to compare programs within an institution or similar programs. could you please be ready for information include occluded in this tool. sumer information is d in this tool and how providing
this information up front will help students make informed decisions before starting their school? >> sure, congressman. i'd love to talk about it a little bit more. previously you could go to average earnings would be expected for graduate of thel, school. that is nice information but not looking useful for students for programs that they choose. with the new data release you will be able to look at the new school and go into the field of study of the new school and see what your cost for attending the program and what your earnings potential is and what the earnings for students have graduated from the field of study the first year. we will be able to add subsequent years as more data becomes available. this will give students a whole new tool to use in
decision-making around education and high school, it is useful for certificate programs, we are also linked to apprenticeship opportunities through the department of labor, a very robust set of data and important tools to be used for students as they begin to think about the future and importantly for institutions to ask her questions about the programs they have been offering that may not be the value fore cost that they should t be. >> i yield back. >> before i recognize the next number i would like to ask you nominal consent that document from january 10 from the bar defense unit is omitted in the record and also january 9 and october -- trainer 92017 and
october 24, 2016. these memo describe extensive claims and everest while tech where students, the staff recommended really for borrowers fromst the schools in these mem, 14 pages in 19 pages reflect a process and review conduc conduy the obama administration. we just want those in the record. the gentlelady from florida. >> thank you, mr. chairman for holding this hearing. i am so happy that secretary
scheduled has finally allowed her to address this pressing issue here today. madam secretary there are 200,000 students that are still waiting to have their borrowed defense claims processed by your department, education department has not approved a single new claim in the past 18 months. if a student takes out ael fedel loan to study added institution that behaves deceptively that student loan should be forgive. mr. chairman tens of thousands of borrowers acted in good faith as they apply to schools and loans looking to better their lives, because the bad actors they were left with unfulfilled promises, lies and mounds of debt. i believe it's incumbent upon us to provide relief of the harm that schools acted in a fraudulent manner.
secretary, you wrote with extreme displeasure on the document that the loans had already been to the beatty process prior to your appointment. why would you writear that? why would providing relief to defrauded loans whose claims have been reviewed by experienced professionals gdisplease you? >> congresswoman very good b question. very simply there was no proce process, the claims were simply forgiven without consideration for the individual circumstanc circumstances. >> i heard you say that, i want to tell you a story from a borrower from florida named jessica that gives me extreme displeasure. in january 2017ri ms. madison ws told her defense application had been approved and are $19000 in student debt would be forgiven
in 60 - 120 days it was not. the government started garnishing her paycheck to recruit the money. as a result she did not have electricity for weeks because of garnished checks cannot cover the bills. how is it possible that the department of education could continue to collect her loans after she had already been approved for borrowing defense loan. after the washington post wrote about her story in july of 2017 the garnishment stopped. they did not refund herer money. just $2000 was refunded of the 12000 and been garnished from her wages. do you believe it is appropriate to not fully refund wages that were garnished for student loans that were deemed fraudulent? >> when a student borrowed defense claim is deemed to be -- they have been financially harmed and we have a process to considerer that, the level of tt that students are made whole and
we address each student's issue and situation individually, that's why it's important to have a process because every student situation -- >> do they get all of their money back that was taken from them? >> it depends on the variousei claims. >> because of the garnishment she cannot afford to see a doctor. to address the intense pain she wasa experiencing and when she finally did go to the hospital she was diagnosed with cancer. in october of this year she passed away. sec., can you commit today that you will personally ensure that jessica's wife will receive the remaining $10000 owed to her by the government? >> i can assure you we can and will look into the specific situation and provided the details. once again i go back to the fact that all of these claims --
>> i have dedicated my life to this work. i work with democrats and to advance the goal of quality education for young people. i have had some honest disagreements with my friends on the republican party about how to move education forward but i have never not once believed they were out to destroy public education until i met you. why every decision harmed students instead of empowering them. are you the secretary of education, you're supposed to be their champion. when you approach a public school you a protester. when you spoke you informed two months later the president was made to resign. you are the most impossible person in our government.
billions are registered to vote in many will vote to remove you more than to remove the president. i yield back. >> mr. chairman, i have to say, one of those last comments was over the line. absolutely over the line. to say that sec. is trying to destroy public education is going toooo far. and i believe every one off my colleagues a lease that we all said it very quickly when that comment was said. i like representative and we have talked a lot and we are very concerned about education. but that kind h of comment cannt stand in this committee. the secretary has come here to help us -- >> the gentlelady is taking time out. >> the raking member is making a point of order. >> mr. chairman,. >> ink believe if there have ben set on the floor of the house it
would've been taken down. >> the gentleladies comments are well taken. the next lady, the gentleman from kentucky. >> i've appointed a parliamentary inquiry. >> i'm sorry gentlemen from south h dakota. >> i don't know the rules passwords and forwards, is there a mechanism by which a vote of the committee could strike the comments from the record? >> just a minute. [inaudible conversations] >> the comments from the gentlelady from north carolina have been a part of the record so i think we have both sides have agreed with the ranking member. >> my point a parliamentary inquiry. >> we should refrain from
questioning the motives of the members. >> thank you, mr. chairman. >> and the witnesses. >> thank you. >> gentleman from kentucky. >> thank you, mr. chairman i appreciate the opportunity to be recognized and i'm sorry the tone in washington has reached the way it's reached in the last year. i apologize that somebody who while hatere for a to see it's been that way the way it has. we need to work together to get things done for this country in a forgery we are where we are. i want to get to my questions, i'm sure you agree congress has a responsibility to do oversight administration and i believe you said 95% of all congressional requests have tco been met earl? >> with regard to the letter, let me add 1.8 letters are not just nice constituent can you respond with a half page or page response, these are requiring a lot of research to respond to
and often hundreds if not thousands of pages to be responded in each of them. >> do they include phone calls, e-mails and written response. >> no, these are voluminous responses. >> i'm sure you agree all parties involved to communicate directly. i want to get to this hearing, i agree borrower's are harmed should be granted relief as quickly as possible. after diving in to the nuance of the issue, i understand why you have decided to grant partial relief in some cases, it is my understanding there is a report that estimated the borrowed defense claim would be cleared by the spring of 2017. but your decision to review those cases and grant partial relief met the estimate proposed
in the report would not be met. is this correct? >> yes again, there was no process in short of simply deciding to forgiveld all of thm with 100% validity or not, we need to get a process in place. >> the memo i mentioned, was that an official memo that included processes or any guarantee to borrowers? >> i'm not sure what memo. >> the spring ofde 2017. so it was not official, there was not anything illegal about your decision with the best interest of taxpayers to review these claims and make sure the relief granted was correct. so there was nothing legally requiring you by the spring of 2017 to make those decisions and you made the decision to put in thatcess major private loans were paid but need tod mae sure they were fraudulent so you made -- nothing illegal about where you are today about not
getting that done by 2017. >> it was a matter of building on a lack of policy and process from the previous ministration, the policy of the previous nministration was to forgive claims, however, there was also some opinion expressed that up to 40% of the claims that had been submitted did not qualify. again without a process and framework we could not proceed in progress any of those claims forward which is exactly what we did when coming into office. >> i appreciate that and i want to yield. >> i want to think the gentleman from kentucky. i want to point out, i want to make several clarifications, number one, some of our colleagues don't know evidently the calendar in 2017. the memorandum under consideration that has been brought up was a memorandum to undersecretary ted mitchell who worked in the obama
administration, the obama administration was in office until january 20 when the president trump took office. you again pointed out you did not come into office until february. so if they have an argument with anybody, it ought to be an argument with these folks who got the memo on january 10. this sounds like a lot of other memos that came out around that time. i would also like to point out that contrary to what has been said that for-profit schools have no value, 1995 was when borrowed defense rules went into effect, corinthian was formed in 1959. itt was around since 1969. between the bar defense as you said madame secretary, until
2015, 59 claims were filed, so obviously something happened, yes those schools closed but there has been aou culture chane i believe in our country in terms of what people believe they are owed. thank you, mr. chairman i yield back. >> the gentleladies time has expired, the gentlelady from oregon. >> thank you mr. chairman and thank you for being here. thank you for introducing the january 9 and january 10, 2017 memos. secretary when you made open remarks he said someone on this committee suggestible relief for the borrowers. it is not just someone on this committee it was the bar defense unit in the education department as well.
people who had been working on these cases that's the point. the mission of the department of education is to promote student achievement and preparation for global competitiveness by fostering educational excellence and ensuring equalti access. when i look at how the department and you handled the bar defense cases, i don't see that is consistent with the message and omission of the department was so many hundreds of thousands of students including thousands in my home state of oregon stuck with balances and a worthless degree if they even got a degree. i'm a consumerce protection lawr for this commission and i know fraud when i see it in the students were misled and cheated in the fact that some of them may be making money does not mean they were not defrauded. some of them went in hoping to become a nurse and now they're roselling close out of departmet start does not mean they were not defrauded. i hope you can put yourself in the shoes of some of these borrowers, i know it'ss challenging but they went to find the better path for themselves and instead of getting a good education they got collection notices and wage
garnishment and in september, the department admitted to violating a court order by illegally demanding more from for more than 16000 borrowers seeking borrowed defense in the house increased to 45000. the issue came to the public only after contempt for court order, this is not a new problem, more than a year ago the court ordered the department to stop using tax returns on the bar defense applicant. that was the williams case. you have known about this issue for years so why does the department continue to build more than 16000 corinthian borrowers in violation of the law? >> congresswoman i'm sorry you were not here when i talked about the early on, what i said was it was very clear that the borrowers that we claimed for corinthian college programs were
in forbearance, not accruing interest per my direction prior to the court order or court injunction in may of 2018. since then, a year later, there were errors made within federal student aid and some of our servicers, human errors that once we became aware of them we immediately acknowledged and we immediately went to work to correct and rectify the problems for those impacted. >> i'm going to reclaim my time and ask another question. i did not findcl the a answer. how many times has the court found the department has illegally collected payments from borrowers or siege their wages or tax returns? >> in relationship to the court injunction from may 2018 in general brown can comment to specific numbers ofti impacted borrowers and frankly -- to make
sure that all of those cases were addressed in taking care of which they happen. >> you say secretary, you care about the responsible use of taxpayer dollars, so the case in both sanctions of amount of $100,000 for violating an injunction, you personally or the taxpayers? >> i'm not aware isnc been paid it's an injunction in the judgment against the department of education. >> are you where if it's been paid. >> i do not believe, i do notot knowt. >> who do you expect to pay that, will you pay that personally or the taxpayer. >> i think there is appeal to suggest it is not appropriate to find another federal department. >> in my remaining time it was the borrowers who discovered the department was billing them improperly, this is not resolved, it's a department
oversight, we know there are many borrowed defense claimants who are watching today, how are you going to assure that you're doing everything in your power to get relief, so they won't have their wages garnished or tax returns taken in the future? >> i'm hopeful will be able to continue to move had with the new methodology and assuming no challenge through the courts of the methodology will be able to process these claims that have been pending for many years -- >> that is not justice. i yield back. >> thank you before i recognize the next witness i'd like to enter thear record i report response to this report, the present department of education fsa stated by the previous administration process for adjudicating claims they said, despite these challenges we are
pleased to note they did not identify any errors in adjudicating claims and as a review for each of the claims was properly documented in addition they found they created policies and procedures for bar defense and evolved over time as fsa continued to redefine the process as a descended as december 8, 2017 and often the present ministration. >> without objection. the gentleman from alabama. >> thank you, mr. chairman. secretary, general, thank you for your service to our country. it you give a lot to her country and continue to do so we appreciate you being here and appreciate your service. i will ask questions about oversight and direct too the secretary and if there's something you need to answer feel free to jump in.
let's begin with the basics. do you believe in the need for congressional oversight? >> i do congressman. i think your presence proves that but i want you to be on the record to say you believe. >> have you informed your staff to be responsive to help us dojo our job. >> indeed, i have. i am very keen on making sure we are responsive and never repeatedly directed all of my teams that we must be and we must not do in a timely fashion. >> heidi follow-up to make sure. >> have a regular reporting relationship depending on the area and the department and with respect to the issue that we just talked about i get daily reports on how the claims have been restored back to their standing that they should be and in forbearance and we are continuing to have regular
ordialogue and updates on those. in general did you want to? >> i can provide one example of the reports on exhibit seven. we are asked for all of the students who have had some element of air that were involved in the riaz case when there were erroneously put out and taken out of forbearance and build, since that time we have done daily reports on each one of the cases, this is not a report that we created for this committee it is two days old and itps talks about .5 or so% of those cases not being remediated and today that is less than 30 of those cases. we are responsible for giving that report to the secretary each day and even if it's at 99.5% we will still be doing the
daily report until it's 100% meaning every particular person that had any element of harm done to them has been corrected. if they had a treasury offset like i heard earlier, the term fretreasury would had to refund that to put them in remit area status. that's the way we provide oversight. >> that is very helpful, thank you for providing. i know you get multiple requests from the same member or several members of congress, how do you prioritize request when you get multiple ones from the same member and what communication do you have in place to ensure your staff is able to meet the standard response you set? >> are prioritization is really based on responsiveness in general and we try to be able to respond within 30 days within receipt of one of those
requests. sometimes it has to go longer depending on the volume of material requested and required. but we are very focused on ensuring that we continue to work through the issues as probably as we possibly can. >> i think you'vee said this but remind me what is your response that you've taken office. >> 95%. >> prettyat good. what some of us would like to have that rate within our constituent. isn't there a different standard for oversight in the federal student aid office and other department?he >> know we have high expectation for ourselves across the board. >> is maybe for you, how do they request for data and information through jobs with the loan program done. >> our desire is to answer all correspondence within 30 days however, i will tell you those that are very data centric that require special poles from what
is 11 servicers across the country often will require more time because that data does not exist in the systems that we are working to reform. but for most data request we try to do within 30 days. >> thank you for that. thank you for your hard work and trying to be responsive to congress and thank you for your professionalism and for understanding that the taxpayers moneyr is precious and we have a responsibility all of us including congress to safeguard the money. with that i yield back. >> thank you and i will remind thee members to please select te question to the secretary, the gentleman from california. >> madam secretary you have twice testified that all pending claims you have ordered forbearance of not to collect interest prior to the court decision of 2018.
and you refer to processing errors made a yeart later. are you aware in fact your department submitted in compliance report, to the court on october 8, 2019 that the compliance we are talking about were not the result of conduct and part of the department but the court has recognized gross negligence including negligent oversight over the department servicers. you're aware that your own departments work. are you aware of that? >> what i know once we became araware -- >> it's not simple yes, sir no. >> are you aware that's within your own departments mission toy the court, your department conceded it was gross negligenc- >> there were errors made on both federal student aid as wel- >> on november 21, 2019 your department -- by the way i want
to enter this into the record, the statement of the department, the response to the court. >> without objection. >> on november 21 your department held the first ever quality assurance and performance meeting with executors from the loan servicers to review the case. why did it take your department take 18 months for the first meeting to occur with your phone service provider, why did it take that long. >> the loan servicers continually in dialogue with the loan servicers. >> it took 18 months to have your first meeting, why did it take so long. >> are you interested in learning? >> it's a simple question why did it take so long for you to meet with them. >> i am very pleased with the leadership of general brown who came to federal student aid nine months ago assuming the chief
operatinofficer role per he is responsible for the operation. >> he came on board later in the process. >> moving on, on may 25, 2018 a federal court ordered you to stop collecting on borrowers in the case, 17 months later october 2019 federal judge was highly critical of you and your department attempt to comply with the conjunction consistent of inadequate communication of each of the nine littleto loan e providers. your department only communication would loan servicers providers during this time was three milk? >> that is incorrect. mr. chairman of the two entered into the record, e-mails and her order, onein e-mail was three sentences long, the other e-mail to loan service providers did not even cite the fact that the department was under a court
order. >> the judge was astounded that your department only sent e-mails and did not have in person meetings or phone calls with the loan service provider explaining the court order. judge kim asserted it would've been normal for any entity undr such a mandated court order to have in person meetings with the contractors immediately following and not several months later on november 21, 2019 which is 18 months later, i ready asked you a consent to enter the most, i want to point out on mas providing instructions to loan servicers in july 5 the e-mail they sent to additional five servicers contain no mention of program in every conjunction. who did you assign responsibly to ensure they comply with the
preliminary injunction? >> i am very pleased with general brown'scr leadership of neural student aid. >> when did mr. brown come on board? when did you assign, who did you assign as multiple before compliance? >> federal student aid has a chief operating officer responsible for the operations of federal student aid. general brown is responsible as the chief operating. >> when did he come on board. >> he assumed the coo role nine months ago and he was with the department for four months before that. -- >> so you respond him responsibility to ensure he complies. >> who did you put in charge? >> we continue to be intentional about complying with the court order. we have acknowledged --
>> answer my question, who is responsible for the court orde. >> the chief operating officer of federal student aid is responsible for the operation of federal student aid. >> you referring to mr. brown but he did not come in until nine months ago? >> there was an acting chief operating officer. >> who was at. >> that preexisted him, james manning as an acting and prior to that
address them in a very timely manner. and has hired many additional attorneys to be able to look at each claim individually as it must and should be done. general, would you like to comment to the timing? >> yes, madam secretary. i would say that within the last even within the last 24 hours we are notifying students of their eligibility or ineligibility, if they've provided a claim. we continue to do that. those claimants, they would know now. and if they got relief they would know so within the next or actually have it done within the next 60 to 90 days. i would also say though that the staff at its height was 14 and previous years we have more than tripled that with the emphasis on hiring attorneys. frankly the more you have the quicker you're able to get to these cases. minus any litigation we expect to get to those fairly quickly.
another part of this is the system which we've been rebuilding over the last 12 months, and that systems platform is ready. we expect to clear the majority of this backlog minus any further litigation over the next 12 months. >> do you have the staff that you need to do that currently? >> so i'm happy to say that both the systems and the authority and resources to hire the personnel has been given to us by the secretary. and we have either hired them or they are in the process of onboarding them. so again minus any litigation, we have what we need or will have shortly. >> permanent or temporary staff people? >> the majority. some of them are term employees. we did that out of consideration and stewardship frankly forever the fact we would not expect to forever receive what we are receiving now which is somewhere in the neighborhood of 1,200 cases per week. these are temporary hires.
we will see if we need to extend them further. >> who is involved on how a final decision on relief is made? do all of the borrower defense claims come to general brown or you or are lower employees able to make that decision? >> i have approved the policy, process, by which these claims will be determined. it's general brown and federal student aid's role to implement that policy and see through the processing of the claims. it's really a mathematical, scientific formula and approach. so the policy plays out that framework clearly. >> let me change my line of questioning a little bit. borrower defense seems like an inefficient way to protect taxpayers from fraud. what reforms are you making?
>> thanks for asking about the college score card. we've made considerable changes and enhancements to the data available to students and frankly broadly to taxpayers and institutions. so now prospectively students can look at the cost of a college program, a field of study, the cost, and the earning potential the first year after. we'll be adding data and information to that, as subsequent years become available. but this is going to help clearly reveal whether the value for a program is there. and frankly i think it's going to help a lot of schools make some decisions about whether to continue programs that they've been offering as well. >> thanks to both of you for being here and thanks for always be willing to answer my questions and provide anything that our office needs along the way as well. with that i yield back. >> thank you. the gentleman from new jersey, mr. nor kros. >> thank you, and thank you for
being here today. i want to start out by saying i agree with my colleague on the other side that we wish that we would work together much more often. so let's see if we can start with you and i, that we get direct response today's direct questions and be respectful of each other, which is something that i'm sure you want to do. let me start out by asking you about the partial relief formula that uses the college scorecard data. talk to me about that, how after 18 months i guess in support you rolled this out, why you thought this was the best scorecard, particularly when you only have 20% of the programs involved in that now. how did that become the best one? >> well congressman, just to be clear, we're using several different data sets. >> aren't you using the scorecard? >> yes as one. >> do you agree that it only has 20% of the programs? >> yes. >> okay, so please continue.
we are. >> using several different data sets. in looking at each borrower, the program of study that the applicant was claiming was fraudulent, the median income for that program is compared against the median income for programs like programs. >> we understand. but what else are you using? >> the other pieces are social security administration data and the 2017 gainful employment earnings data and irs information. >> but they don't reflect back to the individual programs that people are looking for. so if my son goes to look and says, let me go to the scorecard, that's the only piece of information that that program would reflect the reality? >> the programs that are included include about 80% to
85% of the students pursuing fields of study. the smaller programs that are not included in college scorecard are because the cohorts are too small to be able to consider. >> it makes up 80% of the entire programs. it's the exact opposite and only has two years. if it took you 18 months to come up with this new one, it seems to me to use something that is such a small part of the solution of what's actually going on. you agree with me you're trying to get potential students that information, right? so that they can make an informed decision? >> we're trying to consider each student's claim individually and the circumstances -- >> no, this is being used, the scorecard, to give potential students an idea of the cost involved and the outcomes. we understand that. but using only 20%, and general thank you for your service, but i guarantee you wouldn't want to send somebody into only a war
zone with only 20% of the information. >> it's 20% of the programs, but it represents 80% of the students aattending at higher institutions. >> but 80% -- >> it's a pretty significant number. >> can we agree it's less than you would and i would desire. >> we'd love to include additional programs but we need larger cohorts. >> when we looked at this, and let's be respectful of each other's time here, 10% relief for the corinthian borrows, you made the decision to give them 10% whether your new formula was involved or not. i have a disabled vet in my district, itt tech, one of the horror stories. he went there for a digital degree. school told him he could use the gi bill. he used those to pay for this and then found out itt lied to him, and he is into a $50,000
student loan. now he's got no job, no degree. i know that tugs your heart as it does me. why is it that corinthians will get a 10% there, but this young man gets nothing until you go et to his application? how did you decide they're worthy but this veteran wouldn't be because he was in a different program? >> sir, the corinthian students have had their institution attacked mercilessly in the media for years. and so in consideration of that and in consideration of the length of time that has lapsed since we were first able to process a number of those claims before the court shut the determination was made.
>> the reports were written under more than 10%, my time has expired. on behalf of all the students, which are no we all care about in a fair and balanced way i yield back. >> thank you, mr. chairman and thank you, madam secretary, i found myself interested in the conversation about the new methodology, i want to learn more about that, you talked a number of times about using the median salary for individuals in these groups, why does the median make more sense than the mean. >> i am not a mathematician but the median methodology and the standard deviation methodology is a scientifically proven
approach to be able to consider the individually and yet fairly. so the goal was to have an approach that would not only allow for full relief if the student is significantly impacted but also f partial relf if there is some financial impact but not as significant as perhaps as others the heart comes down to comparison to. groups and. academic programs. how do you decide what that cohort of comparison programs look like? >> there is a similar program with codes that are considered for each of those programs and they line up across the board, the previous question line
around the percentage of programs included in the scorecard captures the data in the book of the students in the programs that students have and are attending so they are always like comparisons to use when using the newre methodology. >> we had some discussion about to what extent the new methodology is fair or unfair to people who have gone on to better themselves through extraordinary efforts on their own, talk to us about the methodology and whether or not yous think it is fairly and has an impact on students given different economic salary outcomes in the years after other education. >> it looks at programmed programs versus specific salaries. if an individual has done very well themselves financially but
they have a claim against a school and that particular program, that is what the comparison -- that's a comparison made. >> that's an important distinction, if they get credit or distant station for the average impact, negative impact of the program, and that way their extraordinary effort would a benefit to them. they would not be punished for that am i saying that right? >> correct. >> i want to talk about the timeline for replying for relief, if memory serves your new role allow for three-year filing timeline. number one, is my memory right, number two, why is that the right time from? >> we decided on a three year timeframe because following the completion of study of a program three years after seems to be a
reasonable amount of time considering the fact that generally speaking if there was a claim to be made that presumably would have occurred at the beginning of the decision to take that program. so the length of time that a student has is pretty substantial. but it could be up to seven years frankly. >> do we have a sense, you talked about and i don't want to put words in your mouth, push back if i'm categorizing your statement wrong, yet aso methodology you were pretty happy within the courts told you you cannot use that particular dataen set. when you spoke about the earlier, it did not seem as though you had an idea of a timing of a final decision. >> that is correct we have appealed that decision and we believe the data set was a
valuable use in the court has not opined. >> have all legal filings been made -- all the parties and the stuff is and were waiting on the court. >> were waiting on the court decision. >> thank you mr. chairman i yield back. >> thank you the gentleman from new york. >> thank you for hosting this hearing and thank you, madam secretary for being here this morning to answer questions, i find interesting the conversation about taxpayers and rights versus students who have made claims and i suppose one way to save taxpayer dollars will deny the claims which are not suggesting you say that butl i find interesting what we need to do is find balance because sf we simply denied the claims that would neither be legally or morally defensible but sick thtaxpayer dollars.
we want to strike the right balance. i want to touch on a few things that i find interesting about the department rules, one relates to frivolous factors and i want to read under the new rule, the department states institutions with the nicest dorm on campus as part of the college tour, i cannot guarantee every student will have an opportunity to live in the dorm. how many students have submitted a bars defense claim that they did not like their dorm room, do you know the number or percentage? >> i do not havew the number but i have the case file of one submitted a claim who is trying to claim borrower defense for here she did not like their professor. >> okay, as it relates in the rural it cites the nicest dorm rural and i'm curious whether you could follow-up since it's in the rule i assume there was concerns or claims have been made by students that they did
not get the nice dorm room that they saw on the tour. >> there been a numberthth of different quite unbelievable claims made. >> can you give me a sense of how many frivolous claims in your view that 2016 regulation allowed to be forced the department to be discharged? >> i don't have a specific number to cite because not all have been not adjudicated byim process. but i do know there have been a number of claims made that your doll would drop if you actually read the reason for their claiming fraudulent activity. >> i'm not sure my jaw would drop but perhaps other people's wood. one thing i was. struck by in readingg through -- i'm relatively new, my background is in new york state regulation and were involved in higher
education but not federal programs. the new rule states that made the changes to the application process about borrowers shop wisely for personal responsibly for the best information available and informed choices and benefit of student loan that they are legally obligated to pay the loans in full. i was struck by the conversation because the institutions that qualify for this in the guaranteed loan program, the requirement to be accredited by a national or regional accreditation organization and given the nature of the students particularly that attended corinthian and other schools that have had claims of significant fraud, it seems hard as an average citizen that you would put the burden on an individual who is looking to go to school and often cases nontraditional students, their artwork, may have families,
challenged but they want to pursue new careers. what seemed is the fact that there accredited could mean something in the source of suggestion that i get, the oexpectation that they would nt only take the accreditation both obligated to do additional research on the claims made by the college so if the college says, representative says 100% of the students find jobs after taking a course in the field in which they study, is accredited by the federal government as a federal guaranteed loan program and accredited by a national regional organization. why should the student be obligated to do further research and why should they take that as a proxy, the accreditation that is required by the federal government? >> why should they not take that, i'm not sure -- >> the suggestion is there is a
responsibility on the prospective student to do more research on the credibility of claims being made by people representing various colleges. i would assume they have been accredited regionally or nationally in a guaranteed loans program that that is an indication that the federal government has put good housekeeping approval. why would the department as it seems to suggest in the regulation require a student to do additional research on the validity of the claim being made with an accredited college? >> i think it's imperative that we provide as much information forhe all parties and clearly creditors have a role, institutions themselves have a role in the federal government as a lender has aa role to play, that's why we continue to improve the information available and to insist on an approach with the regulation that is balanced and creates all
institutions equally. >> i apologize i'm out of time so i will yield back. that accreditation should seem to shift thehe balance in the requirement for the student so they should be able to rely on that. i don't think that's what the rule says. >> thank you. doctor murphy. thank you, mr. chairman. thank you secretary for coming today. i want to say iu, appreciate the effort that your department is doing to try to be good stewards of the taxpayer money. this entire issue highlights some of the problems of the federal government has an education and will go on a little bit later with that. i appreciate you trying to be a good steward, we are striking a balance between individuals that want to better themselves to pursue higher education andte ao to be one that just does not dole out money because someone claims they deserve money. i can understand some of the comments and i would probably shake my head at some of the
comments that people claim they should get reimbursed or whatever. let me ask you a couple questions,s, accreditation to me inin the medical field seems toe a way to get a lot of money for institutions that accredit other institutions and by definition in my opinion accreditation means as much as it's worth, you could be accredited by different bodies so i don't give a a stand to some institution that's been accredited. let the buyer beware. we do take risks whenever we venture into something. on the other hand, what strategies and practices does the department used to conduct oversight for the higher education institutions to make sure they are not fraudulent? >> the department has a lot of responsibility to ensure that all institutions are treated equally and fairly in this role,
i want to get us back to the reason we are here today to talk about borrower defense and our approach to handling these claims and ensuring that students are treated fairly and taxpayers are treated fairly in the process. we are committed to following all the rules and the regulations that congress has provided for us and continue to do so regularly. . . . us, and continue do do so regularly. >> thank you. what form of penalization, if you were, is used by the department for institutions that are having practices that how are they penalized by the department? >> the department has primarily judiciary roles and responsibility. it's a balance between creditors
and state and the department to ensure institutions are holding up their end of the bargain. the judiciary will be primarily for through that department. >> for those submitted claims, what percentage would you say are folks that are doing this as a -- while they are also working a second job or doing what people are primarily using this as their main focus as far as higher education? >> is a good question. i'm afraid i don't have the data on that. i don't know if you have a breakdown. >> we don't collect the data at that level to see if they are doing additional jobs or those kinds of things.
we adjudicate each based on their own merits. >> just a follow-up. i feel for individuals were working and trying to better themselves by all means. education is theus key to a lifelong career and prosperity. i do think though the federal government has led to some of the problems we have in higher education because the money is so free. it comes without anyhe strings d if you want to get money and go on, you do. i think it's led to a lot of higher education and we have a lot of kids going to institutions that should be going to community colleges first.er we are part to blame for all of us. thank you for your work and trying to keep us informed doing the right thing. i yield back my time. >> thank you. >> i would like to first i addrs partial release by the department and expert in the field got an associate professor
of economics at temple university and was a bipartisan witness before this committee. this scheme is nonsensical and harmful to students. in particular, the standard deviation, the main tool used by the education department is defined based on the means and has no direct relationship to the medium. finds education department proposed a misunderstanding and mint supplies fairly basic statistical techniques in a way that makes it interiorly harder for students to find relief. i like to enter his analysis into the record. moving on, secretary, over the pastde years, the number of pending defense claims ballooned to 20227000. many of these arevo part of grop claims submitted by 20 state attorneys general including the
one in my state, pennsylvania and some have been waiting for more than four years for relief. these group claims represent thousands of students who were defrauded by them. there's no questions these colleges engaged in fraud. twenty-four members of this committee on both sides of the aisle representco students in those states. initially, when those claims were attempted to dismiss by arguing state attorney general could not assert the defense on behalf of of the group of borrowers. is that still your assertion? >> thank you for that question. let me correct you. >> let me give this answer first. 300 -- almost 300,000 claims. is it still your assertion state attorney general cannot assert a borrower defense in behalf of a group of borrowers?
it is the assertion that it's the federal department of education that has the oversight responsibility and the claims continue to be filed by individuals and are considere considered -- >> i take it then your answer to my question is yes, you still maintain a state attorney general to not assert a borrower defense on behalf of of a group of borrowers. >> i know there are many attorneys general for marketing the opportunity to file claims. we've seen facebook ads and many other sources. >> i'm sorry you seem to be incapable of answering yes or no. so let me remind you it's october 2018 in federal court, actions weret's unlawful and ruled that the education department must review applications submitted by state attorney general and sees involuntary collection activities against the borrowers.
why are the claims still sitting on the department? >> the claims cannot be processed without methodology to do so. we now have one and they are being processed again. >> how many of the claims have been processed brought by the state attorney general? since that court ruling. >> general bryant will have to answer that question about this specific claim. >> we just started processing in the last week. >> no, the question is directed to if you would like to turn to general brown -- i want the answer to come from you. >> general brown, would you inform the secretary of your answer?
>> we don't process my attorneys general claims. >> even though the federal court directed you to do so? >> we are processing the claims we'ved had and we will take them as the federal student aid department -- the ones they are able to process in our processing first. >> i will reclaim my time. in june 2019, 22 senators asked for an update on thehe status of each of the group discharged applications submitted by the state attorneys general and your department responded stating they relief are in various stages by the department. correct? >> they are, indeed. all of the claims are going to
be considered individually. >> by your timetable? did you not stay at the beginning of your testimony your number one priority? listening today, i have a hard time believing the defrauded borrower withha think you are in their corner. >> i yield back. >> i was clear from the start that this was set into place that no student would assume more interest on the student loan debt and they would be held in forbearance. i don't like the fact they've been sitting there as long as they have any more than you do. i said that at the beginning, i'll say it again now. our goal is to get these claims processed and take each student's claim individually acknowledging the each student has unique and separate circumstances.
>> your time is expired. >> thank you, mr. chairman. >> gentleman from kansas. >> thank you. i noticed that you tweeted that students are my number one priority, it's why i come to work every day. i know that to be the case as long as other educators. it reminded me of what she would say when she came home and students are her number one priority. that's why she went to work every day. that's why you go to work everyday and i thank youi for that. obviously you are trying to work and do the best you can. everybody is very emotional. thanks for your best efforts in patriot and doing the best under this situation. during your tenure, before actually, a lot of things.
i would ask about the timeline about, feel free to have general answer. november 2016, the department published defense regulations, that was. the first in some 11 years i believe. in accordance with higher education act, the final regulations were published november 2016. was scheduled to go into effect july 1, 2017. but you put a hold on them. why? >> we were hopeful to be able to delay the implementation of the 2015 will in order to further refine the rule which we have now done with the role that will go into effect next july. as it stands now, we have three different sort of buckets of claims and rules under which we will ultimately have to operate,
the 95 rule, 2016 rule and the 2020 rule. >> callous when that process began, how long it took to issue the final rule, did you consider corporate and higher education stakeholders including the public? >> we went through the process and received feedback during the public comment. in responded to that appropriately. >> again, or to say thank you for your hard work and thank you for all that you do>> and i woud like it to be a reminder that the challenge hereor is to assue we provide and power in the case of primary education, the decision making power to teachers and parents in short we
understand what our limited role isis or ought to be because i believe it's best for the parents and teachers. i yield my time. >> thank you. enlighten us further on how they communicate in a way with services and how they communicate the changes in filing status when the court intervenes or they file a claim. >> the communication with the services is an ongoing andb regular effort and continues to be a challenge. i would love to have one of the exhibits we have a long here put up exhibit two to better understand the complexity when federal student aid was created, i don't think congress ever
envisioned the kind of complex organization that it would be today and i think you will see with this chart how many different elements that are are. the loan services operate on different platforms so there's not an efficient and effective way to communicate that makes communication challenging. but one for which we have continued to take responsibly. that's why we have continued to move to thehe modernization of federal student aid platform and framework. next gen. we are going to be able to have a much, better smoother process and communications when we are ultimately able to migrate completely to that next gen framework. interested in hearing more, general brown has a lot
more detail about that process. >> i don't think we have that detail but we look forward to it. delighted to hear we are moving next gen. do a better and complete, 307,000. i yield back. >> thank you for joining us today. come from washington state. nearly 6000500 students there are stuck. they took out student loans and enrolled in for-profit colleges that intentionally deceived them. colleges closed, credits were worthless and got stuck with thousands of dollars of debt and nothing to show for it. no victory, no credit transfer. one of my constituents from
washington is a single mother. she found herself broke because she wasn't able to get a degree for a so-called education, prepare her for nothing. she earned very little pain back these loans even though they gave her no education and she could not afford to leave her parents home. she says my son has asthma and sometimes these hospital visits, when he gets really sick, i can't even take him anywhere. it makes my life a a living hel. she had time to take out loans because she continued have to pay on this debt. there was a consensus in your department but all of these loans should be forgiven. uniformly, and under the obama administration, to forgive that debt because they were victims of fraud. you have continued to collect on those loans so students suit. a judge held you in contempt for
continuing to take their payments. to this day, the department of education that the project education, sometimes even thrashing wages. so my question for you who consider their number one priority is, do you really believe you've done everything you possibly can to help the students and make them, whole? >> let me first disagree with the narrative you just advanced. i have continued to respect the fact that many students have been pending and all -- i have directed all students whose applications are pending are in forbearance and are not having interest accrued. so thehe narrative you have advanced is not accurate. >> i admitted tona continuing to implement this methodology to now process the pending applications and i'm hopeful we are going to be able to continue to do it without litigation and
ultimately, these borrowers will have their questions answered. >> you say forbearance but people are still paying on these loans. >> they have been remediated and where we have become aware that they have been inaccurately taken out, we have remediated them and we'll continue to be vigilant about that. >> i would like to know what kind of timeframe we are looking at because you have mentored children, precisely the kinds of kids that grow up and go to institutions like this. i wonder if you could put yourself in their shoes and feel what it would feel like to go to this institution, week deceived and told they will have a degr degree, the credits transfer and they would have an income "afterwards" and then not and have to wait this long for
forgiveness. being in forbearance is one thing but you are continuing to collect on these students. my understanding only 1500 kids have been truly processed through to date. you're looking at one case at a time, anticipating another year of waiting. that seems like too long. can you tell me when you anticipate they will have release? >> i can feel for the students that are going to any institution and having hopes that far exceed what theyt realize and what they ultimately experience. we are committed to ensuring that every student that submits a claim is considered an individual merits and we have a fair and robust way of considering each of those claims. we are moving -- >> address the claims now that we have a new methodology
underway. >> is a new methodology that has multiple flaws. there's also nothing that prevents you from simply stopping payments while it was going through this process. the students are still paying. some of them going into debt, some of their credit is damaged. i would like to know what you're going to do to get the money back and prepare their credit ratings. as a long chain of suffering that happens, reinforced to continue to pay on fraudulent debt. >> any student that ultimately has a claim that has merit for which they have experienced financial harm, we are committed to ensuring they are made whole. >> it students, one 100%. they have valid claims because they got zero benefit. >> that's simply not true. there are manyd students who ha-
>> your own staff determined this. >> time is expired. >> thank you. having some meetings, i thought all the papal painful stuff was happening in a another committee but obviously we are making space on this one.s that doesn't mean you can't still say some crazy things in this committee as well. i have a couple of questions. the reality is, when we transition into those environments, some educators you're not going to get everything right at first but e are taught to look at the heart. i think with your career, before coming to this wonderful decision, secretary of education that you have, and other things you've done, i think the heart
is pretty clear here. it's a littlehe embarrassing to see how personal it has gotten but i don't know how you continued to take it and keep moving forward. but you have. i think that shows great results. i think sometimes people have disagreements. it's a shame we make it personal. i think only god sees the heart. i commend you for trying to "do the right thing". i guess i'll ask a few questions if that's okay. you have released a new methodology, can you walk me through the methodology and explain how it's fair and appropriate measures? if general brown needs to provide specific information, you can do that as well.
>> the new methodology really treats students t individually d fairly and also respects the taxpayer. it has established a process scientifically proven to consider students that made claims against whatever institution, i programmed they attended and it compares the earnings from that program the institution with median earnings from like programs from other institutions. if it falls outside of two standard deviations from that median, that the borrower receives one 100% relief in between median and two standard deviations, it would be a tiered approach. so we believe this is a very fair and goodbye.
>> which of these methodologies applies to it? >> all of the pending claims with the exception of the corinthian students that have been carved out by the previous lawsuit, we are hopeful the judge will review this process and permit for the claims there as well. >> my understanding the systems used to process these crimes and borrower information is out of date process these claims since 2015. if this requires it a more technical answer, elaborate as to why this system is deficient in having these claims and how this can contribute to the backlog of claims processed. >> it's a very complex organization. congress never envisioned, i don't think when it was founded,
what it would become today. we are in thehe process of updating that foundation and claim work so it doesn't more smoothly and easily top within itself and with its servicers. i think the pondering around this whole thing speaks to the cecomplexity of student aid and federalization of student lending. it has continued to manifest itself, 1995 -- 2015, only 59 filed claims in that period. since then, nearly 300,000., it was frankly an all-out attack in the last administration on specificas institutions and i think that's very unfortunate. our role going forward will treat all institutions equally.
last administration said they were going to look at materials or reality, liberal arts programs because value was assumed there. that's just not a reasonable approach.ue >> my time is expired so i yield back. >> young lady from illinois. >> thank you. you know, corinthian students has information wrongly added to their credit report? how many students with the mistakes made most recently, negative information wrongly added to their credit report. i'm not asking about your staff now, i'm asking about you. you know the exact number? >> i am consulting with the chief operating officer of federal student aid whoseta
charged with running and implementation of this program. >> i appreciate that but if you didn'tal know, the answer can jt be no and that's okay. i'm trying to find out if you i can give you an accurate answer. the reality is, we don't distinguish within the loans that have been pending in process. so the answer is, that information is not collected. >> so far, your department has publicly released a number and it's 5900. their credit reports were wrongly affected. you are aware ofr, many information your credit report like information says you're not paying your student loan to lower your credit score, correct? >> all of the students who were impacted by the mistakes that was made have been remediated. >> we will get to the remediation. >> while i'm getting to it now.
>> is at my time? >> have you ever been denied a home or car loan because her credit score was too low? >> i have not. >> but you do know how and unfair credit score or bad credit report can affect students. what are some specific examples? >> all of the students that have credit reports affected have been remediated. >> thank you so much. ma'am. you know students whose credit reports harmed and impact their ability to buy a home and autos, the consequences are real and personal and they have devastating impacts on students. i want to share this story. my homess state of illinois, we now know her degree is almost worthless.
she just had a job offer rescinded because her credit score shows delinquent loans. indiana, another lady lost her while waitingar for the debt release she's legally entitled to. her credit is affected sog much, she cannot find a new apartment to rent. so let's go back. you previously said 900 students credit scores were affected but last week, you discloseder additional 5000 students. other more disclosures to come can you commit right now that you have discovered and corrected every unfair 5 report? >> i do feel for the individuals you have cited inn your example and again, we are committed to ensuring that we do right for all students who have submitted claims. we have continued to be dilige diligent, correcting the errors
made. we have to acknowledged them, we have said we are sorry and we are going to continue to be vigilant to make sure we do not inquire more of them. we have put notices in the servicers while rock which has never get implications for future contracts. we have continued to make sure that consequences for the mistakes made are levied and students are continuing, that we continue to put students first in this case. the ones who did have credit ratings impacted, we have addressed those.as we will continue, if there are instances in the future, we will do so with them as well. >> my concern is that chris this group of students has seen the tip of the iceberg. the additional 5000 students last week, as a result of one
lawsuit. that doesn't include the students involved in this class action or a different lawsuit with their state attorney general or otherwise. doesn't include the hundreds of thousands of students who aren't at these schools might also be eligible and even worse, dwayne johnson gave an interview a few weeks ago about student loans that he said right now, i know millions of people have unfair information in their credit files that caused them to pay more on performed and auto apartments. you have responsibly and authority to do something about it. but we are trying to determine is what isou the right number? is a 900, 5000 or are we into the millions? i yield back. >> time is expired. judgment from georgia.
>> thank you. thank you for being here today. thank you for your service to america's students and educati education. appreciate it very much. i have a couple things i would like to get f into after i makea couple of observations. i know we all agree, all students who are defrauded by their schools should receive relief. i also want to focus on fairness. since joining the committee, we have marked up a onean sided po, higher education reauthorization act. vthe democrat bill struck me as being unfair to the students they are trying to help. it's insulting to the students who make the education in the best interests. as democrats continue to push policies that doubleig down and
cut out specific educational providers, they are not only -- harming our students. we do a disservice to the students when they focus in our schools tax returns other than the experience. we can discuss how there are bad actors across the board. what we should focus on is how we allow the student to find school or educational program that best fits theirir needs and ups them achieve their goals. i heard a lot earlier today about not having a process and many things placed to do that from previous administration. i have a couple of questions, can you tell us about what the department is doing to help students and prospective students better understand the optionsel available? does it cover more than just these degrees? >> thank you for that question. as i mentioned earlier, the
score card that we recently enhanced the data for now been contains information for not only four-year colleges but also two-year institutions or some certificate programs, some graduate programs and also has links to the apprenticeship program to the department of labor. we believe this is going to be a good and important tool for students to be able to access andam use as they consider futue fields of study and programs. >> prior -- the previous administration, after they cover that broad range of programs available? where they just focused on the backat degrees? >> they were focused on four here institutions, now we are down to the program level. >> what that would do would be improving any student and any stilled field of study. >> there are many pathways to a successful adult life.
we encourageg students to get al of their>> options and look at them starting in middle school. >> so it should protect more students than the previous administration because there including the degree, and not the institution bubble you are considering all programs. so you've done more to help students than previously. >> yes. >> i've been going for a two year degree, i wouldn't have had that available to me. >> correct. >> thank you for that. as the information shared on the scorecard been expanded? highlight what i changes have bn made, what the additional pathways are available. i know you've talked a bit about that but when you look at that, how do youio think that helped some of the other people?
>> this is relatively new so within the last several weeks, this data was made available. i think prospectively, students are going to behi able to make better comparisons and be able to compare between institutions, compare betweenre programs, compare different fields of study and again, just give students and prospective students many more tools to be able to make good decisions for their future. >> i appreciate that. i want to follow-up. i know there have been previous remarks made about certain students but the courts have really helped you up on getting relief to all students. correct? >> we had a process well underway in 2018. the court stopped us from continuing in may 2018. we've been waiting for the courts and appeals since then developed a second methodology
and have been able to unveil that and implement that as of last week. >> so people's credit scores harmed more so than the court. >> time is expired. >> i like to groomer return toge the 2017. under secretary, ted, a former secretary of education, john king. while this was written before he took office, it serves as a fundamental transition memo between administrations.ng i have the benefit of sitting next to a former secretary who assured me there are meetings, debriefing book and letters. i think it would be your department, there was no plan you said.
in fact, there was a plan as this indicated. >> we have transitions of power in this country, it's understood thatte we change from administration to administration. before i move on to questions, on more than one occasion, i don't understand but this i understand. everything about these hearings i understand. >> you told the senator that the department decided to move forward with processing, processing denials while waiting the court's decision regarding the partialal relief of fidelit. it turns out that your department has been sitting on approximately 18000 denial claims. my question is, why would the department purposely not informed borrowers that their claims have been denied? >> first of all, the claims are
ineligible and we decided not to release a whole bunch of them early before we were able to implement this new methodology because didn't want to concerned students that had pending applications that perhaps this would be the case for everyone. so while we could reach the conclusion reached therh decisin for a number of them, want tonally did not concerned students with pending delegations. there are many pending applications. >> don't you think a borrower who had more chance of getting forgiveness should be told their status, is it unfair for borrowers to wait up to four years her resolution so some of them may have already been denied the institutions have closed, they are losing access to critical documents, the interest is building up. is there any political reason
for drink that? so that denials would not be increased? >> we were concerned about the message it would send to pending student with valid applications so that was the reason. >> wouldn't a student want to know if they are waiting for a decision? decision already made that the application was denied? >> am sure all students want to know about why we are focused on trying to get this methodology falling and fermented and frankly, have been very disappointed it does not find them to the previous methodology. >> but that is not print continue to denial. as a not true informed declination that principal under terry diane stated that the permit did not want to notify
borrowers about the denials because of concerns about the public perception of the process? t >> again, just what i said. we did not want students with pending applications to somehow think that their application was not going to have any chance of approval of relief. now that we have the new methodology, it's kind of a moot.back. we are well underway with processing again. we will be able to informed borrowers, hopefully many of them very quickly. with regard to the status of their application. >> this looks like a political decision. it would look bad if you're rushing up this and approvals were flattened variables were up. you are sitting on everything to keep them at the cost of students.
what is theer benefit of sitting on that information and notso sharing with the students? >> i would like to refer us to exhibit six. it demonstrates the percentage of claims that had relief -- >> i'm talking about the thing things -- the history of the claims we were able to process before the courts stopped us and compare that to the percentage of a claims at the previous administration -- and they were consistent. you will see 62% so we have continued -- >> time has expired. i'm sorry. >> timex expired. gentlemen from georgia. >> good morning. i think you, i know you do not
share common faith and i sure that what sustains us in this. it's loss of disagreement and how to do these things. we are a different congress but a lott of new ideas here but in the last congress, we had higher education authorization. one of the most criticized pieces by my democratic colleagues was a piece we put in the, both public and private schools of higher education accountable for the students and federal government. we could go back and improve records but i would like to have a record of that language that went in there to vote on it and the comments about it.
hold them more accountable becauset obviously the young people have been misled. i come across young people all the time and the first request is, could you please forgive my student loan debt? they were illpl advised and frankly, this wrapped up in the last, i've been a member, this is my third term but i've been hearing about this about ten years ago. every young person should get a college degree so okay, not tall them how they are going to pay back. that's wrong. the federal government should foot the blame right here. whoever came up with this idea in the beginning, did not put into place and provide for to
keep young people from being misled. that's the tragedy here. i realize you inherited a lot of this so what i'm going to do right now, you have some charts overth there. if you haven't been able to share exactly what you're trying to do to correct this situation, i welcome the opportunity. we have two minutes and 22 seconds remaining. if there's something you think would help my colleagues here and how quickly you're trying to do it, i would be glad to hear it.a >> whatever you have to do.
however you want to do that. please proceed. >> thanks for that. you are right. atwe inherited a difficult situation. we are trying to put in place a process and we have now a second time put inn place a reasonable process, one that treats students fairly, taxpayers fairly, institutions fairly. one that is balanced and approached. i will stop and see if there's something general brown feels we have not been able to share with regard to that process. >> i will show you exhibit two. one 100% of those people infected with credit court rates, almost all with very few exception and they have had refunds given to them. we have a system -- >> i have to add one thing..
there was something on my credit report that i didn't know about when i went to buy something. so it happens. so go ahead. >> we have 11 services and 13 collection agencies across the nation, they are not systems that work together. they are at least four different systems. to get information from these tsystems, you have to go after the individual services and craft questions exactly like that. it's not the way any of you do for your ranking, it's not the way most people do business. we are trying to take ownership of loan servicing back into student aid so there's one system the own so if you ask us a specific question, we can get it from our systems without going to lump services and therefore, reduce errors. recall that the next generation of federal student aid. we are almost there.an some of it we are lamenting now and most of it extra.
i'm with you. >> time is expired. >> thank you. secretary, you have repeatedly said your new formula is necessary for individualized review claims from borrowers, correct? >> not only for individuals but for framework in the process. isn't true relief formula does not allow for individualized claims? >> it does allow for it of the large individualized review. >> youu are sure? >> each claim is being reviewed individually by general brown's partial review relief formula does allow for an individualized review of claims. >> yes.
each of them are being reviewed individually. >> three times the number of attorneys we have had previously. >> are you asking whether or not the individual case is reviewed or the individual, whether that person's income is individually reviewed? >> the latter. >> it's a program to program review. if a borrower submitted a claim with regard to a specific institution and the program they studied, the information, median earnings information from our program, from all those graduated from program is against the median earnings of like programs from other institutions around the country. >> that's not an individual
review. you set up a formula there. >> it's individualized toar programs because as someone said earlier, you could have an. individual who's done remarkably well financially and has made a claim against a program upon review fell short simply because the individual has earned more, they should not bely penalized n that. >> let me ask a quick question, at what date are you going to notify the 18000 people with claims denied? >> i believe that's them rolling out and continues to roll out. >> it's happening even as we speak. >> when will all of them be followed up by? >> over the next couple of weeks. t some of it notified --
>> one for the 18000 ber fully notified? >> over the next couple of weeks. >> let me ask, how many people does the general have for. these individualized reviews? >> i'm going to ask him to comment how he has staffed up at my urging the area in reviewing the. >> we will have up to 64. most of the are already hired now, more than three times as many as we have ever had. over the past few years we've had up to 64. >> let me ask you a very specific question. so he has around 60 and you have 227,000 claims that had to be visually reviewed. you've already indicated the intent to do that over 12
months. that's's about 300 a person, evn the va and social security is the equivalent, they can't refute that many. explain to me how in 12 months you're going to be able to with limited number of people to process individually over 200,000 claims. >> general brown assured me he has to personnel in place to be able to do that. he has followed through on all of his commitments. >> 300 a day for an individual. that isro technically impossibl. the va can't do it, social security can't do it. we have a lot of experience in government. questioning the court ability of being able to do that in 12 months.
>> i will ask general brown to comment more specifically on that. >> i would say all are not the same. the amount of documentation is far greater than others. they looked at the various complexities, the number we are at today for processing were very early in the process. we hope to grow but to a number that exceeds the amount coming in. we are not stagnated. so 64 is the wrong number. then we will hire more. we will go backno to secretary d ask for more resources and look at the production on a weekly basis. i would not be fixated ond 64. we are looking at this -- >> i'm focused on 200,000, not on the number of staff people. mai'm suggesting that technicaly
given the number of staff people, you cannot process that number. you ought to look at that. >> if i could just comment, many of these claims have been adjudicated to the point of being able to be processed. there are ae lot of the steps already in the process. now we just have to complete the process.re >> thank you. which we have next? gentleman from pennsylvania. >> thank you for being here. appreciate your work and your comments earlier in regards to the need for congressional oversight which you stated you y understand the need for. you have done an excellent job of outlining your response in the department wants to the
questions laid legitimately here today. it's unfortunate you continue to be asked about reading a specific memo. you understand what that has to do with the policy issues. the memo you're being asked about was written in january 10, 2017 prior to you making office. i also find it offensive, earlier comments in regards to public education. anyone who looks at your body of work and says you don't care about children or public education, it's untrue. it's false and offensive. i find offensive at the same statement was made about republicans and anyone can look at my record and others on the republican side of the aisle and snow we have worked hard to ensure every child is the education they deserve in public education is working effectively in our state the committee has
reached a new level when we are flowing those accusations against the other side and it should not be part of the hearing here today. there have been some questions in regards to your authority and the idea of partial -- what's the word? >> partial relief. >> partial relief. let me make this clear, partial relief could be, for someone who has already graduated from the institution and whose in the workforce, correct? >> correct. >> summary who may have graduated years before the school closed who's had a beneficial education has had a job as a result of that education. what i am hearing democrat say here today is they not only want us to look b into that, they wat
instead you to make a blanket relief, one 100% of any additional studentmo loans that the student has outstanding. correct? >> there's an t attitude -- >> no court of law would look at a situation like this. no insurancef company would expect taxpayers would support something along that line, i think it's not apo good residen. i do want a few things on the records. you agree it's a provision included in the higher education act,r correct? in section 458 state notwithstanding any other provision of state of federal law, the secretary should specify in regulations which acts of remissions may assert as a defense repayment of the law made underla this except make up
borrower recover. those are the only provisions that restrict the activities you can take in writing. am i right? my interpretation means this one. that's the only limit that you have in providing relief. turning to the rulemaking activity,re president clinton'sn 1995, obama's in 2016 and yours this year. is that correct? >> yes. >> the regulation s applicable s dependent on the date it was dispersed. >> correct. >> under the clinton regulation, they allowed secretary to grant partial relief? >> yes. >> and under the obama
regulationnt was he allowed to grant partial relief? >> yes. >> and then in 2019. do you believe that authority is clear and not in dispute? >> yes. >> if members of congress disagreed with the policy decision, they defer to the part and introduce and pass a bill mandating you to provide full relief and would you continue to follow the law that congress has written if that were the case? >> they would indeed pass the law and if it were passed, i would indeed follow it. >> thank you. >> thank you.ee a gentleman from michigan. >> thank you. good afternoon. i will let you know yes or no questions, let's see if we can get these answers. in thehe november 7 letter karen to scott, he wrote in reference
nsto claims, the clear intent of the prior administration was to eventually provide blanket relief without review of facts and evidence. is that accurately presenting your views on the obama administration process for reviewing printing claims? >> yes. >> i have in my hands to her number was uncovered yesterday in the story by national public radio. these memos, which are produced by education department staff in late 2016 an early 2017, and shows an analysis documenting pervasive and consistent fraud by corinthian schools. the committee has been requesting relevant documents from you for the last year.oo did you provide these documents to the committee? >> we have been providing -- >> did you provide these documents? >> i don't know what memos you
are holding up. >> the memos we've been talking about all morning. >> yes. >> did you submit them or not? >> i'm sure they were part off whatever. >> we haven't seen those documents. >> so you did not submit those documents to us. ... so did you halt and curtail loan relief for defrauded corinthian borrows without reading this detailed review of the fraud conducted by your own career staff by these schools? >> congressman, i had many discussions early on in my term -- >> let me just ask you. do you know if you read these? >> can i finish? >> no, you may not. do you know if you read these or want? >> i had discussions about the
>> i had discussions about the >> repeated the lie to prospective students by telling them that their credits were transferred to otherls schools. the memo quotes one of many similar claims from students. the student says i was told my credits would transfer to university of south florida for my ba in finance and they did not so i was stuck with all these loans and no school will take them. madam secretary does that sound like fraud cracks yes or no. >> sir, we are considering each. >> let me go on. there is more. that same mo document in which currency and schools repeatedly told students they were accredited when in fact they were not the memo quotes a claim from one student who says "there was speculation
the school was not accredited but they pace one - - posted fake documents around the school claiming they were accredited in any credits received would transfer over without any problem. madam secretary does that sound like fraud to you? if you go to the ends of the earth for a for-profit company posting fake documents? >> i am not committed to protecting any institution no matter what their organization isny. >> let's talk about that madam secretary the consumer financial protection bureau found fraud at corinthian colleges the state's attorneys general of california, massachusetts and wisconsin found systematic frau fraud.
the career education department staff found fraud at corinthian colleges madam secretary you appear to be the only person who does not believe there was fraud at corinthian colleges can you state to me here whether or not you think corinthian colleges committed any significant amount of fraud against its students? >> congressmen i know there are students with defense claims pending for those who attended corinthian college. >> do you think? >> mister chairman. if i can't answer a question,. >> i am asking if you your you yourself think after serving as secretary of education that corinthian college had fraud against it students. >> the secretary will answer.
>> and know there are corinthian college students that have valid claims and we are committed to ensuring that each is considered individually and that relief is properly attributed to each student that files valid claims. >> thank you mister chairman high-yield back. >>. >> the gentleman from texas. >> madam secretary thank you for being here i will just say in my own experience when talking to witnesses to let them know ahead of time there is a memo i want to talk about or an issue off the beaten path that is helpful to get a good response then the more thoughtful the answers are.
i am use to more professional environment where they allowed the witnesses to answer the questions if you don't cut them off but so talking about the operational challenge that thrives in front ofme you 5000 percent increase in the number borrowers do i have that number correct? >> that is correct. >> over what period of time have you seen this b 5000 percent increase? >> since 2015 like a spigot. >> i served on the homeland security committee we saw on the border with a 3000 percent increase of the families coming over theheom border overa very short period of time and that's an operational problem how you process all these people with a very similar situation for whatever reason
to cause a massive increase and then you're left can you speak to how you ramped up your operation? you have the ability to handle the situation now doesn't exist so you had to create it as part of the process to handle this tremendous burden placed upon you. >> in addition to developing the additional methodology to the claims i have hired general brown who has a review of the structure internally to make significant changes or operational efficiencies and has also previously stood up with a number of individuals committed to a specific area
and we will adjust as necessary based on the claims that we have with the hope and frankly we should be returning to the level ofwi claims that were prior to 2015 there was a total of 59 claims. that is what we should aspire to in the future that students have information they need that institutions are transparent about their and accurate in what they represent and we will all be in a better place if that's the case. >> i will make my own observation that over and over articulation between a community college and a public university getting credits to go from a to b is a real problem and not just with
for-profits but communityed colleges, dual credit classes and even within public universities. this is something i have seen for many years i am intrigued so the claim of fraud i have seen that all over the place in the public space for years. is there anything you would like to add at this point i know you have been cut off many times. >> i would just reiterate the fact that nothing bothers me more than the fact we have had all these claimsan pending for as long as we have and i am very hopeful with the implementation of this new method we can quickly address and process through. i feel for the students involved and i'm also very
sympathetic students broadly we want to make sure students have good experiences and good information to make decisions about their experience tie. >> i appreciate you basically have been handed ms and you have to create a solution and it seems like it will address that in a timely manner i'm grateful for your service to the nation and the students of this country. i yield back. >> the gentle lady from north carolina. >> thank you secretary for being here earlier thisth year you repealed the gainful employment of the obama regulations based on earnings sedata so in fulfilling these regulations the department wrote the gainful employment was unreliable that gainful
employment was low-quality profit colleges from obtaining federal funds in the data that should not be used for for those colleges but instead of bad schools you're using it to deprive of load relief. so if we grade schools on earning data or not? should we grade them on earning data or not? >> ultimately no unless you do all institutions equally. >> thank you. >> so we should not. >> unless you do all institutions equally. >> you are willing to use earnings data to say fraudulent schools they attend are high quality will you
commit to using this data to tell students which are low-quality to reissue that gainful employment regulationus? >> we are moving ahead with the process to consider all borrower defense claims that are pending and we are very hopeful with the additional that we have released from the college scorecard. >> i need to reclaim my time. doesn't sound like you are interested in doing that with the gainful employment data only speaks to the outcomes of those who graduated i was a college professor 40 years i know the struggles ofin students and i have student loans myself but the reasons to attend an institution that corinthian dropout with a significant amount of debt so how is it possible that it
speaks to the outcomes of graduates only for the level of harm just with that one metric? >> we believe the methodology we implemented is one that is scientifically robust and will ultimately treat all of the pending claims fairly and lancers students questions whether they have had financial harm ultimately. >> in yournsw statement with the formula you said "we cannot tolerate fraud in our education nor can we tolerate frivolous giving away of taxpayer money for those that are eligible for relief but yet the new formula is not about those claims that were ineligible for relief so what
possible rationale word you have to deny the full measure of relief to students that we all agree have been defrauded? >> every student's claim is considered and if they received financial harm that is demonstrable that will be relieved at some level. >> i am concerned we are one data breach away of private data beinge compromised. so to be in possession of private data from hundreds of thousands of students are you taking the appropriatete steps h for borrowers? >> i'm varies concerned about data security for all students priority for me in my department we have taken steps ever since i have been in office with the
protection of data it is not a one time process. >> regarding the data can you commit to reviewing the security of that data and reporting back to this committee to make sure it is managed responsibly? can you commit to that? >> yes also to be responsible about data security across the board. >> first of all i would like to thank you one more time for taking this job you knew you were inheriting a mess when it
deviled i don't mean to be partisan it was the bush institution as well so this allowed the student debt to get completely out of control when you are the one stuck cleaning up the mess so thank you for trying i know this is that the only mess that you have another's fraud in the repayment program and the loan forgiveness program all of which that you inherited we all know that you didn't need this job andnow thank you. as i understand it in the past they have been advertising the student loans could be eligible for forgiveness. >> through facebook or you can have your loan forgiven there will be people lining up to do
that have you covered over instances. >> for those that are not valid? >> there are many there are different kindsou of invalid that cannot be relieved financially some fall outside the bounds of rule or time of submission. some are clearly not based on anything a reference the one that my professor was meaner i did not like my professor for go that is not a valid claim for your student loan relief it is a wide variety.
>> you just can't forget all of them sleep how do you mitigate those cases of baseless claims? >> as we implement the new rule and continue to work to the process of these claims that the conversationn around this will ensure those students that actually have a claim of financial harm get relief and we will have fewer than 1200 plus applicants a week accruing in the federal student aid department. >> and this is great important question and unfortunately a
large volume of pending applications that have closed it's a different situation but for those institutions that are found to have valid claims that are still operational the schools are the first place to go the taxpayer shouldn't foot the bill. >> it would be better if the loans didn't get so high in the first place if this institution were do more that not every loan is a good student loan. t>> women what we can do to ensure the education experiences in the future are entered into with more thought and wisdom.
>> we have new regulations coming out lead you like to elaborate how that protects the students and taxpayers all at once? >> really does protect students and taxpayers and gives institutions an equal footing a it is a matched more balanced approach and will let students make valid claims in schools the opportunity to respond back. there has to be a due process component forho institutions and frankly we need to have a more tight definition of what
constitutes fraud or misrepresentation - - representation which is part of the 2019 rule. >> i would like to apologize for some of my colleagues. we have a big small peer but thank you for coming over here today. >> thank you mister t chairman. secretary devos i want to tell iu a story about my constituent in 2009 she was a student in modesto just months after it was purchased by corinthian colleges wanting to make a difference in her community pursuing a medical assistant degree because she saw in the commercials an 85 percent job placement rate that's a good investment but then she graduated and could not find a job now whopping $40000 in student loan debt for a degree that did not help her getsh hired that may not
seem like a lot of money to you but in the real world that is devastating. turns out she was not alone to not find a job. caribbean colleges across the country lied about their job placement rate told her was 85 percent per field it turns out the actual rate was zero. that's a big difference. tens of thousands of students were defrauded by corinthian in 2014 department of education find them $30 million for this fraud everyone agreed. for five years later she still has a $40000 in student loan debt and still has not found a job in her field and has not gotten any help whatsoever. the reason is because us but roadblock after roadblock from helping the students you are supposed to fight for them at your action suggest you would prefer to be the chief lobbyist for predatory school
that defrauded them after being ordered by a federal court to stop collectingst debts corinthian ignored the order and still took money from the students and were held in intent loan - - in contempt of court because of that this is the school that defraudedd them have schiff she was refunded maybe that doesn't sound a lot to you but that is one tenth of 1 percent of one of your families yachts others have been waiting years for your help you have deliberately court order and i am confused why brick i guess that's justhe one question. are you deliberately violating this court order because you are too corrupt to uphold the law or because you are too incompetent to do your job?
>> the gentleman will address the facts and figures and not address the character of the witness. io>> secretary devos why are you held in contempt of court. >> let me begin to say take great personal offense everything you just said i come to my job every day on behalf of students. i don't need>> to sit and listen to what you just spewed out of your mouth. i did not defy any court order. i instructed federal student aid to follow the court order. if you had been here earlier you would have known mistakes were made on the part of federal student aid employees and loan servicers that when they were discovered were immediately acknowledged and corrected they have been
remediated. >> so you are taking offense but the reality is there are tens of thousands of students who financial future has been ruined by three years of interaction. you are making excuses blaming the problem on somebody else. you are secretary of education for threeng years and you try to defy the facts of this matter. yes or no were you held in contempt of court and find? >> congressman i cannot address all of the corinthian college claims because the court stopped us and may 2018. that is true. >> the court says there was nothing to stop you to process the borrower defense claim. >> there was something. there was a lack of process. the court said we could forgive them all that that was not the right answer. the right answer is to do
what's right for students and to do what's right foriv taxpayers. that is my goal and that will continue. >> what's right for students is helping the tens of thousands of students who have been defraude defrauded. into blame this problem on somebody else it takes you three years to make absolutely no progress? and those that are financially harmed if you would've been here earlier you would have known we just implemented it week but the claims will be considered individually and i'm looking forward to addressing all of them that we have not been able to address appropriately.
>>. >> thank you for being here this is quite a mess. with those for-profit schoolswa have closed and wrightwood college closed as we saw with corinthian colleges and then reliant on student loans and when they collapsed and those that are left high and dry so in my line of questioning how we prevent this from happening? do you think it's apartment
important the department has information of colleges? >> and you are protecting taxpayer dollars and i cannot agree with you more i think a lot of the tension in the room today is because there is concern about protecting claims on how we protect taxpayer dollars from the schools to prevent this from happening before he put thousands of students into turmoil so i want to ask a second question is of the point of financial responsibility to predict school closures before they happen and to protect them
from going to those institutions. >> and any school that is organized. >> i want to know what fraud means. the definition is deception intended to resolve over financial or personal gain. in the education space that are publicly traded companies so there is the for profit motive and there has been fraud but this question was simply yes or no do you believe the point of the financial responsibility monitoring is to project?
>> to the extent possible that is desirable, yes. >> i agree. and that they don't have a talk and then dell - - defaulting on their loans because they didn't get the jobs they were promised so that's thefo purpose of these triggers and rules so that we are not sending taxpayer dollars to the schools then they go bankrupt. >> there is lots of institutions. >> i understand. but it is about ferreting out bad actors in this space the
lesson for all of us is the regulations that we have consequences intended and unintended - - unintended with thousands of for-profit schools closed at 80 percent and many are bad actors but minority and low income students that are preyed upon. but with those changes that have been made to the borrower defense role. and then to identify and under the 2016 rule we are required to report any incident or occurrence or warning letter against that institution.
>> thank you for your professionalism and decency as n.always want to ask questions about your progress in the level of work and philanthropy but the hearings are supposed to be about ideas and not insults and solutions. and the questions rather than accusations and actual problem-solving rather than problems so when you became secretary three years ago in 2015 the number
of claims and problems in one of the reasons and the obama education department deputy secretary miller who left in 2013 became a coo was on track to become chairman of the company if the sale went through was that a contributing factor to this escalation to this claims of problems. >> i do think it was a contributing factor.
>> and to increase exponentially do you have any numbers on that there were exactly 59 borrower defense claims made and since then that number has increased 5000 percent to now nearly 300,000 claims. >> when did they begin in 2015. >> that was the obama administration you came in january 2017. >> a nightmare situation. what did you do to work on the situation?
>> when i took office there were 64000 unaddressed claims from the previous administration and it was0 clear we could do half of those we follow through on the promises immediately and also with the inspector general to do an investigation on what the process was to consider these claims and that yielded esome significant deficiencies so in other words there was no process so we move forward to put a process in place and we implemented that in early 2018 and are well underway with processing the pending claims and then we were stopped in the court by may 1 - - in may 2018 based on the data we were using not to the approach
of the relief methodology we have appealed that we don't agree with the court's decision has been appealed and then to open another methodology which we were just able to implement and with those claims a very expeditiously. if you received relief the year previous versus 2015 or 2016? how many people were helped or received loan relief under your6. jurisdiction versus your predecessor? >> the percentage of claims that received relief were the
same between the previous administration and the ones we have been able to process. there is a chart that shows 62 percent approve during the obama administration and we have continued at that level of approval. >> but you have many more claims so more people were helped. >> correct. >> i know that public service can be very hard with that comes accountability to help these young students before coming to congress i was a ceo of a business of 7000 employees and at the end of the day the buck stops with be to make sure we had the right
staff to serve our customers. so let's talk about staffing and what the secretary was touching on a bit ago within the first year in office in the borrower's defense unit from 29 people to seven people and to see the claim is opposite to see a dramatic increase dong - - increase to over 300,000 are out there. my business had more work so i hired more people so why in the past with this dramatic increase ofad borrowers and then
instead of hiring to do more people to do that work? >> that's a good question we had significant attrition when i first came into office and since then i have instructed and urged general brown to staff that segment of the federal student aid office to the extent that we need to to address these claims now that we again have a process to implement. >> and the questions that are still there according to the public document and those borrowers in the defense unit and then we were moving along well when the court stopped us. >> i have heard about that.
but there are still 300,000 that the department intentionally slow walk to this not to have enough staff to process the claims for three years now. do you believe the insufficient number of staff the past two years contributes to the inability. >> no sir i don't really has been the court's decision. >> the court decision we have talked about that did not stop you from continuing the process as you went through the appeal. >> only for full forgiveness or know you don't qualify. >> given the horrible were corinthian did.
>> but we cannot use the data we were using. >> let's look atgi the data a second. march 31st how many claims does a employee process and a 40 hour work week? >> best on a relevant question because we can't process. >> it is relevant. >> in 2018 we have not been able to process. >> right now you talk about ramping up to 64 c you are currently ramping up the people because now you said we miss the ball because in 2016 it went through the roof you got hampered now you are doing a hockey stick to ramp up. >> that's a convenient aarrative but that is an accurate.
>> so how much workers can do how long it takes to do the work and then i can do my staffing model from that. >> we have continued to staff up and we will continue to add to that if dhe necessary to process the claims now that we have been able to implement the new data. >> general brown since you have been in office 50000 people have had their claims reviewed but there are 300,000 out there currently that would be 15 years for the first three years it took to do 50000 these young people want to be educated but they were lied to by these institutions and i think the response has been a bit of tough luck so we need informed decisions based on the data. thank you. >> the gentle lady from michigan. >> thank you secretary devos we are here to give the public a full understanding of the
process and the failure to provide to friday did one - - defrauded note one - - students for them to get relief that they are entitled. so when i have had the privilege to get to know when she was a child she wanted to become a lawyer and growing up she faced multiple challenges and ended up dropping out of high school but still managed to get her ged at 21 while raising twoo children. she saw a course that corinthian in 2011 and was recruited and the recruiter told her to become a lawyer to go back to school she needed a four.oh and after her first year she took the next step
she contacted a law school to learn what she had to do next to become a lawyer and that's when she learned it was not considered a legitimate program she had loan debt and felt cheated and the best choice she could make for herself and her family was to cut her losses and leave everest so do you think that was a mistake? >> i cannot comment to her decision but i can feel for her if that is accurate and if she is among the claims pending to make sure that we can address that promptly now that we can start the process. >> would you advise her to continue attending everest? >> i could not comment.
>> instead living paycheck to paycheck with no way to pay for this career that she wanted and dreamed of do you believe she received any value from that education? >> i cannot comment specifically to her education the story as you tell it i certainly feel fo for. >> she was placed into forbearance and three years later they finally approved her application but then denied the charge and said they would only believe 50 percent of her loan why only 50 percent? >> i have to assume from what you told me we were considering under the first
methodology that we utilized the program that she attended some others that graduated from that program compared with earnings from like programs of other student loan - - schools across thepa country and that was a formula and a process put into place to consider those claims individually and uniquel uniquely. >> despite a court order she saw all the loans were back in retirement because she know there's no way she can pay them so what stops the department from taking action for those students like erica.
>> i cannot comment specifically to her experience right now. i am happy to have general brown's team look into it. >> she said the one thing i really want to do was make a difference for future people to make sure this doesn't happen again. so buried in the testimony are thousands of stories like erica's she did want me to share the story and i appreciate you both taking it to heart and hopefully we can continue to step up to have justice for all americans so they can pursue theirup dreams going forward. >> the gentle lady from massachusetts. >> secretary devos two days
ago the new formula for calculating relief for those that were cheated by fraudulent predatory for-profit colleges this would take median earnings and subtract two standard deviations to determine the amount of loans that is a lot of jargons i want to put it into an example so what made sense to me so a young l woman named betsy gets her diploma in business administration from corinthian and it says here on this chart the median comparison earning for that degree is about 18000 and those standard deviations $20500.
do note that equals? it's negative $2500 so using the new formula basically telling usv for someone like betsy to get full relief for the debt she had knowingly incurred from a fraudulent institution she have to earn negative $2500 does that sound right to you using your firm one - - formula? >> the department of education calculates the median earnings of her peers in her program at $11700 to determine the percentage of relief she will receive. do you know federal minimum right one - - wage right now? today it is $7.25.
if betsy earns $11700 on an annual basis that needs her hourly wages five dollars an hour that's two dollars below the federal minimum wage so i think what you're telling me is student borrowers like betsy who graduated from a fraudulent program earning less than minimum wage can only get 25 percent of their eloans forgiven because they didn't have negative earnings. >> i don't think that story is accurate. >> i trust my math i poured over real examples i used your two standard deviations i don't have confidence in much but i do in the formula how i used it the new partial relief formula does not benefit
students it does not take into account individualized earnings or debt load whether she is in a full-time or part-time accredited college program which was why my friends fromer pennsylvania and economist call it non-w sensible. they wanted nothing more than to get ahead and they were taken advantage of instead and your response to them is cheat them again. i know right now you have the authority to provide full and fair and immediate debt relief to student borrowers defrauded and every day that goes by is a violation and quite frankly it is criminal there are hundreds of thousands of students with pending claims almost 3000 in the home state of massachusetts our focus is
to have opportunity and value for students with high quality affordable education. the formula that you haveue developed is too little and too late and doesn't demonstrate commitment to our students. i healedve back. >> and i repeat - - can i respond? >> i am committed to treating each of the students who have filed proper defense claims fairly and we believe this methodology that has been developed is one that will treat each of them as an individual and look at their program of study if you are advocating for loan forgiveness for all students who claim defense claims you can get a law passed in this body and i encourage you to do so if you pass that law i will enforce it the formula
designed right now takes on median program earnings were other people who have been therein lies the problem that is not a formula that makes sense when you take into account for those who have to go back to college to an accredited program the debt load is already sinking them in taking on more your formula is flawed. >> thank you for being here and having this conversation i am curious if you areyo familiar with the minnesota school of business and global university? >> i am not. >> they were found to be consumer fraud. >> if they were i would assume there is a defense claim
pendin pending. >> with our delegation the courts found that minnesota school of business and global university engaged in consumer fraud and purposefully to see their students to misrepresent the job opportunities available to the criminal justice graduates madam secretary that same year your department independently review the evidence and came to the same conclusionri of the courts theya were blatantly misled and taken advantage of. 1300 students were systematically misled believing that they would obtain a degree that was meaningless 33.$8 million and
countless opportunity let's take a minute to just imagine if they were corporations the administration and our colleagues on the other side of the island probably you would be up and arms they would only get their debt forgiven by the a government and compensation and their psychological distress and madam secretary you don't seem to be up in arms nobody seems to be concerned with what is happening to the students. they do not have access to attorneys to make their case instead they are struggling to make ends meet with negative credit reporting and the ability to t restart their
education all the while hoping the government will do the right thing i would like ask unanimous consent to enter into the record to affidavits. >> these are my constituents whose borrower defense obligation has been on hold since january of this year between the two of them they have approximately 78000 in crippling student debt to make matters worse the consequences are severe with the snowball effect to receive additional federalul student aid and effects to their credit memo after memo the education department sent to you memos
that indicate these students deserve nothing other than full relief i know you said you have not read these memos yet but the court has come out and i would expect you will take the time to read them before appearing before us today i ask him his t consent to enter these three memos into the record. >> without objection i feel you should be ashamed you don't have an answer to these memos the responsibility you have as a leader to give us a response and the public should be ashamed they have a secretary of education that isn't putting the interests of students before the interests
of the wealthy that are benefiting the students and i yelled back. >> mister chairman? >> congresswoman with all due respect i am focused on doing what is right for the students the memos to which you are referring preceded me and may have been and they were relevant how we proceed with policy but administrations change in policies changed they are precisely relevant to the conversation you are preparing to come to talk to us today it in your preparation you should have read those memos i yield back. >> your time is expired.
first these for-profits are nonprofits but the fact is we have several hundred thousand complaints of fraud for the public colleges for public institutions subject to of fraud.s >> how many cracks i don't have a specific breakdown i would be happy to get back with you. >> do you have very many complaints? >> there are quite a few frankl frankly. >> there are claims that have been filed. >> you indicated you have remediated the credit report problem? >> yes we have remediated those problems but does that mean you have corrected the credit reports or have reimbursed for higher interest rates? >> whatever the issue is all
>> not that i'm aware of. >> there a request for defense from the university of phoenix. 8000 come is that right? >> right now today we have 14,000 of those claims are from the university of phoenix. >> okay what is the status of those? >> those applications are in various t stages. >> it has been a relief then granted? >> i do not believe. i can get that for the record and provided for you. >> as i understand it if you have been defrauded you should roget relief if you have sufferd financial harm. we have had back-and-forth about how you establish financial harm you have two similar schools and you have your. comparison group where they did not lie cheap and defraud the students. justsh knowledge that the credis
weren't transferable and you weren't going to get a job. you have another school that defrauded the students lied to them about accreditation and lied to them about transferability and job placement. is it true under your formula you get no relief because you don't show financial harm? >> mr. chairman the methodology looks at all the programs across the country better like programs to the one that the borrower is making the claim against. >> and if the one you are making the claim against a frauded students with the comparison group not lie about the placementd and lie about accreditation and didn't lie about transferability of credits and ended up with the same income as the one that in fact a frauded the students. is it true that under your formula the students were a frauded and would get relief?
>> there is no financial harm to the student making the claim, that would be correct. >> okay. and i think we established that there's no individualized consideration. considered by class. you make a lot of money or you didn't make any money he did exactly the same relief. said the claim is against the school and program. >> okay. can you briefly describe what the department at the two when it admitted to gross negligence in thef lawsuit to contempt of court? >> i think those are attorneys words.. >> the department. >> wellfleet knowledges there were human errors made in federal student aid and/or student loan servicers and we
acknowledge them. we take responsibility for them and we have corrected them. >> let me since council's representation in the out over seven hearing and further information contained in this brief establish that compliance airs at issue here were not the result of any will form or intentional conduct but as the court has recognized gross negligence including negligent oversight of department services my time has expired and i yield to the gentlelady for closing statement. >> thank you mr. chairman and i want to save publicly thank you for your response to what i consider inappropriate comments made earlier. i very much appreciate your response to that. as we agree oversight and i said
earlier oversight is important and i stand ready and the secretary said she stands ready to work withov the chairman to conduct good oversight of not just the education department that every venue would have been the jurisdiction. we need to work in a bipartisan manner with the secretary and solve they problem efficiently and focuses the secretary does on helping students and not playing gotcha games with the secretary.nd and i ask you madam secretary to working faster and harder to get to the information requested and respond as quickly as possible so we can all be clearer and more direct about the concerns we have and what information we need. mr. chairman i would say when requests go too the department
and again i'm not trying to play gotcha games. did you get this memo on january 10 written before you came into office? those are the kinds of things that should be said instead of going on fishing expeditions. the higher at the act does not permite secretary from providing partialon relief and i want to make an analogy here. i'll bet you there's not a member of this committee who has not had a car accident or problem with homeowners insurance and i will guarantee you that the insurance companies don't ride you a check for what you think is your damage. they assess the damage. they look at your car and they come to your home. with these members are saying is they just ride a check from the taxpayers and say it's okay if you tell us you've been defrauded or you've been damaged. that's not the way it works.
the biggest loan institution in the country now we wanted the to be the biggest insurance company in the world and that's just not heright. what has been going on is nothing new. regulations under president clinton and president obama and now president trump have all allowed for partial relief for borrower defense claims. the grandstanding today about unfairness could all be resolved if congress had amended the provisions in any of the hda reauthorization's over the last two decades. if members of congress don't like that authority it's given them to the secretary then we should work together to amend the statute. no one has asserted that the secretary has not followed the law. that's what oversight should be if that's what it is we are doing. and mr. chairman we disagree on
policy a lot of times but we don't disagree that students who represent not only our current situation in the nation but our nations future deserve all the opportunities to succeed and frankly i am saddened that i need to remind my colleagues. i think we need to respect this institution and honor it with the decorum that it deserves hanshou the students how we should he hates and the examples for them. so thank you mr. chairman and i look forward to your indulgence today. >> i think the secretary for your participation today the beef herd very credible information. members may have additional questions for you and we will submit them to you in writing. i remind members that questions for the record must be submitted within seven days and the hearing record will be open for 14 days. does want to say finally on the
whether partial relief is available or not in some of these cases it's so widespread in the findings of n the previous administration were absolutely worthless. the university of phoenix and 190 month million-dollar settlement for fraud, nothing has been done so far on federal loans. we would think that if the fraud has been well established each person wouldn't have to come up individually to prove individual fraud if there is such widespread fraud i think the bird not to shift to the business. finally a lot has been said about the obama process in the memos were presented shows there was a process. they discharged loans for 20,000 borrowersbe and it would have eliminated the backlog in o a hauple of months. as i indicated we hadn't seen them in submission by we got
those memos showing the process from the media and not from submission so we would expect if we would have gotten those earlier we could have discussed them not as gotcha but part of the process. if there is no further business to come before the committee without objection this committee stands adjourned. [inaudible conversations]
>> i don't want it to go away. i want to disprove it categorically so i wrote the book and i have all the documents in the back. i have interviews in the narrative she wrote. i have the e-mails she tried to suppress. i have papers from her lawyers. there is nobody reading this book that can come away with any doubt whatsoever that this woman made up the story completely out of whole cloth and i had never met her. i have never met her.
>> and think it's helpful to see what came before because now the #me too movement, thanks to all of this and thanks to technology and the web is now all over the world but it's a process and now it is a majority of consciousness. >> at 9:00 p.m. eastern on "after words" university of maryland baltimore county president freeman hrabowski on his book the empowered university peace interviewed by author and antipoverty firm robin hood ceo wes thorne. >> we are through our work in the humanities to the sciences looking at ways of helping students to learn to ask the hard questions, to read critically but to appreciate the value of evidence in a society that is bombarding us with information and different points of view with things being
confused about what is truth and what is not. educated people should have the skills to ask the questions that will lead to the evidence that can determine what is truth. secretary of state mike pompeo announced new actions named his human rights abuses in iran including sanctions and restricting visas for iranian officials involved in the abuse and killing of peaceful protesters. >> good morning everyone. i am morgan ortagus with the department of state. thank you everyone for coming today to this event to focus on an important and very serious