STUDENT LOANS AND BETSY DeVOS

Into the teeth of the student loan crisis walked Trump’s Secretary of Education Betsy DeVos. She’s already making it worse.

The problem goes far beyond DeVos’ embarrassing ignorance on display at her confirmation hearing, Her main qualification for Trump’s cabinet appears to have been her status as a Republican billionaire-donor. She knows nothing about basic educational policy, the decades-old Individuals with Disabilities Education Act, fraud by for-profit colleges and graduate schools exploiting students, or any other subject about which an aspiring Secretary of Education should have at least some rudimentary knowledge.

Why DeVos?

None of DeVos’ shortcomings kept Trump Party senators from confirming her. With an expertise in lobbying, she pushed Michigan money away from public education and into charter schools that had little or no accountability for their dismal performance. And Michigan now leads all states in the number of charter schools operated for a profit.

For law students, DeVos’ actions in Michigan are more than just a troubling analogy. In an earlier post, I wrote about Jerry Falwell Jr., the president of Liberty University, which has a marginal law school. His newest assignment is leading Trump’s task force on deregulating higher education. Most law schools — especially those whose graduates have the toughest time finding meaningful JD-required jobs — love the idea of deregulating an already dysfunctional market that props them up.

Law School Winners

If marginal schools had to operate in a completely competitive market, many would have closed their doors long ago. As they lowered admission standards and admitted students who produced declining bar passage rates, federal student loan dollars have kept them afloat. Trump embraces deregulation as a panacea. But that’s because, as with so many things, he lacks an understanding of how the absence of regulation would make the currently dysfunctional market in legal education even worse.

Only federal student loans keep the worst law schools in business. Educational debt is not dischargeable in bankruptcy, and federal guarantees add another layer of protection for schools that don’t deserve it. Meanwhile, schools themselves have no accountability for their students’ poor bar passage rates or dismal employment prospects.

The Obama administration had been making life more difficult for schools that exploit students and leave them deeply in debt from which many will never recover. Specifically, schools that grossly underperformed for their students faced the prospect of losing eligibility for the federal student loan program. Charlotte Law School felt that heat directly.

The Other Shoes Dropped

Less than a week after Falwell’s task force appointment, Vice President Mike Pence’s tie-breaking vote in the Senate confirmed Devos as Secretary of Education. Immediately, she chose advisers:

— Robert S. Eitel, an attorney, is on unpaid leave of absence from his job as a top lawyer for Bridgepoint Education, Inc., a for-profit college operator whose stock is up 40 percent since November 9. Bridgepoint faces multiple government investigations, including one that ended in a $30 million settlement with the federal Consumer Finance Protection Bureau over deceptive student lending.

— Until July 2016, Taylor Hansen was a lobbyist for the Association of Private Sector Colleges and Universities, the largest trade group of for-profit colleges. In June 2016, his mission was to eliminate the government’s “gainful employment” rule, which can cost a school federal funding if too many of its recent graduates fail to repay their student loans. But then Hansen became a DeVos adviser and a member of the Education Department’s “beachhead” team — a group of temporary employees that doesn’t require Senate approval. On March 6, the Department announced a three-month delay in deadlines associated with the gainful employment rule.

On March 14, ProPublica reported on Hansen’s unseemly status. On March 20, Sen. Elizabeth Warren sent the ProPublica article with a letter to DeVos asking for an explanation. Hansen resigned the same day.

Bottom line: If you’re counting on help in dealing with the worsening student loan crisis, count the Trump administration out.

JERRY FALWELL JR.’S NEW ASSIGNMENT

Since his inauguration, Donald Trump has dominated news cycles with chaos. It was easy to miss his new task force charged with deregulating higher education. The leader is Jerry Falwell, Jr., president of Liberty University.

“The goal is to pare it back and give colleges and their accrediting agencies more leeway in governing their affairs,” said Falwell, an evangelical leader with a law degree.

Heaven help us all.

Liberty University

Falwell’s father founded Liberty University in Lynchburg, Virginia. It thrives on federal student loan and grant dollars — $347 million for undergraduates alone in 2015, according to The New York Times. Liberty’s nominal student loan default rate within three years of graduation is nine percent. But only 38 percent of Liberty borrowers are paying down at least one dollar on their student loan principal amounts within three years of leaving the school. The Times also reports that six years after entering college, 41 percent of Liberty students earn less than $25,000 a year. That’s about what a typical 25-year-old with only a high school diploma earns.

For years, law schools have been the leading edge of this crisis. Falwell’s Liberty University has one of those, too. Tuition is $32,000 a year. Twenty percent of first-year students entering in 2014 left for academic reasons. Of 61 students who graduated in 2015, only half got full-time long-term jobs requiring a J.D. —  including one graduate who went to work for Liberty. There was some relatively good news: the average debt load for Liberty’s class of 2015 students who borrowed for law school was $68,000 — a lot lower than the $112,000 average for all law schools.

Reversal of Fortune 

Any progress that the Obama administration made to increase accountability in higher education seems destined for Trump’s dustbin. The Department of Education had put heat on schools that were exploiting students who incurred enormous educational debt for degrees of dubious value. Last summer, one of the department’s advisory committees took the American Bar Association to task for allowing law schools to run such scams. In November, the ABA put Charlotte Law School on probation while the school tried to work out its problems. In December, Charlotte lost its eligibility for federal student loans and its death spiral accelerated.

At long last, someone noticed that federal money was allowing bottom-feeder law schools to stay in business. But the legal profession’s accrediting agency – the types of organizations that Falwell says he wants to vest with greater decision-making power – hadn’t pulled the trigger on Charlotte. The DOE had.

President Obama also moved the vast majority of student lending from the private sector to the federal government. The expectation is that Trump will move it back. Since the election, the stock prices of private student lenders and loan servicing companies have soared. They’re a good bet. Federal guarantees protect lenders; borrowers can’t discharge educational debt in bankruptcy.

The end result is that marginal schools still have no financial skin in the game. They keep filling classrooms with students who borrow huge sums for degrees that aren’t worth it. Income-based repayment programs may provide some relief, but eventually someone will figure out that the U.S. Treasury will wind up footing that bill, which could become a very big number. When loan forgiveness programs shrink or disappear, an entire generation will live — and, in many cases, die — with educational debt incurred to pay the big salaries of people like Jerry Falwell, Jr.

How much damage could Falwell’s task force do? Plenty. The ABA is institutionally incapable of cracking down on law schools that should have closed long ago or never opened at all. Watch out for this: If the federal student loan spigot reopens for Charlotte Law School, there’s no bottom in sight.

What Would Jesus Do?

Jerry Falwell, Jr. was an anchor of Trump’s evangelical constituency. As president of Liberty, he earns $900,000 a year. In fact, Falwell said Trump offered him the Secretary of Education position that DeVos now occupies, but he turned it down. Trump wanted a four-to-six year commitment; Falwell reportedly said he couldn’t afford to work at a cabinet-level job for more than two years.

As Falwell and others like him prosper, their students suffer. Now that Falwell is in charge of deregulating higher education, Trump’s victory speech after winning the Nevada primary last year takes on new meaning: “We won the evangelicals… We won with poorly educated. I love the poorly educated.”

I suspect Jerry Falwell, Jr. loves the poorly educated, too. When it comes to selling a dubious degree from a marginal school, they’re especially inviting targets.