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Few Details on Tougher Borrower-Relief Standards

Department of Education officials said Monday that they do not have any estimates of how many borrowers would clear new, tougher standards proposed for claims of loan relief when a student is defrauded or misled by their college. The department’s proposed language would require a student borrower to demonstrate clear and convincing evidence that their college intended to deceive them or had a reckless disregard for the truth in making claims about job-placement rates, credit transferability and other outcomes.

The language was offered ahead of the second round of negotiated rule making to produce a new rule governing how students can seek forgiveness of federal student loans if they are misled by their institution, known as a borrower defense. Negotiators representing student advocates pressed the department repeatedly Monday for details on how students would make demonstrations of evidence under the new tougher standard and for estimates of how many current applicants would clear the new standard.

Department officials said they could provide neither -- partly because borrowers have never been asked to provide evidence of intent under existing standards.

The student advocates on the panel argued that requiring borrowers to demonstrate intent or knowledge of misrepresentation on the part of a college would effectively mean no student gets relief on their loans under the rule.

“I really think this would effectively do away with borrowers’ ability to get relief in almost all circumstances,” said Abby Shafroth, a lawyer with the National Consumer Law Center and a negotiator representing student legal assistance organizations.

The new federal standard would apply to borrower-defense claims made on federal loans issued after July 2019. The department’s proposal would also allow for successful claims when a borrower wins a judgment against their college from a court or arbitrator. The existing loan-forgiveness rule bases misconduct findings on violations of state law related to federal student aid. The Obama administration in 2016 issued a borrower-defense rule that for the first time established a federal standard for those claims. But Education Secretary Betsy DeVos blocked the rule last year just before it was to go into effect, setting up the current round of rule making.

Negotiators were unable to reach a compromise Monday on tweaks to the standard for relief but will continue discussing the proposed standard during the four-day rule-making session this week.

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Grand Canyon U again tries to become a nonprofit

Grand Canyon University announces another attempt at converting to a nonprofit, with plans for its holding company to partner with other colleges.

Grand Canyon U tries again to become a nonprofit

Grand Canyon University announces another attempt at converting from a publicly traded for-profit to a nonprofit.

Education Corporation Buys Vatterott

Education Corporation of America, a privately held for-profit chain of colleges, announced Thursday it would buy for-profit Vatterott Educational Centers. The financial details of the sale were not released.

The Vatterott institutions will continue to operate as Vatterott College, Vatterott Career College and L'Ecole Culinaire. The institutions had previously been owned by TA Associates, a private equity firm.

"We are very excited about this acquisition," said Stu Reed, chief executive officer of ECA. "ECA is committed to being the premier provider of postsecondary education with a career focus, and the purchase of the majority of VEC campuses helps us realize that goal. They expand our footprint into key markets in the Midwest and add a range of new trades-oriented programs to our current offerings. We feel it's a great fit culturally as well because both organizations are passionate about helping students transform their lives through career education."

Education Corporation of America owns and operates Virginia College and Brightwood College, among other institutions.

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For-Profit Group Wants Extension for ACICS Colleges

Career Education Colleges and Universities, a trade group for the for-profit college sector, this week called on the U.S. Congress to give colleges that are accredited by an agency the Obama administration terminated more time to find a new accreditor.

Shortly before the Trump administration began, the U.S. Department of Education ended federal recognition of the Accrediting Council for Independent Colleges and Schools, a national accreditor for roughly 270 institutions, most of them for-profits. That move was due largely to the Obama administration's view that ACICS failed to adequately oversee the failed Corinthian Colleges and ITT Technical Institute. ACICS has challenged the decision in court and also sought to have its recognition restored, saying it has fundamentally changed.

In the meantime, the ACICS-accredited colleges have been scrambling to find a new accreditor in the 18-month time frame allowed under federal law. The for-profit group, however, said this week that colleges should be given more time. Other accrediting agencies lack the time and staff to move fast enough to process applications from ACICS institutions, CECU said. A Senate committee in September voted to back an 18-month extension, but that bill has not moved forward.

“Early in this process, a group of accreditors wrote to the department making clear they would be unable to consider all the requests for new accreditation within the current timeline. The only way we can protect the more than 235,000 students attending these institutions is to give the schools and the accreditors more time,” wrote Steve Gunderson, CECU's president and CEO, in a letter to congressional leaders. “Unfortunately, this requires legislative action. We continue to work with the Congress to include such legislation in the Omnibus Appropriations Bill. But that legislation keeps being delayed.”

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Education Department sets up standard for partial relief of defrauded borrowers

Department's decision is major departure from Obama administration, which provided full relief for approved claims. Advocates for students say policy provides inadequate help and creates confusion.

N.Y. Governor Vetoes Scholarship Aid for For-Profits

New York Governor Andrew Cuomo vetoed legislation Tuesday that would have extended the state's tuition-free scholarships to for-profit institutions.

The legislation would have allowed for-profit institutions to participate in the Enhanced Tuition Award that the legislature adopted earlier this year in response to concerns that the state's tuition-free program for New York's public colleges would put nonprofit, private institutions at a competitive disadvantage.

"This bill, had it passed, would have been a stark departure from New York's record of leadership in protecting students and consumers," said Yan Cao, a fellow at the Century Foundation, in a statement. "The difference between for-profit and not-for-profit colleges in New York is crystal clear. Evidence shows that New Yorkers who attend for-profit schools are twice as likely to default on student loans compared to those who attend not-for-profit schools. And New Yorkers have filed thousands of claims of predatory practices at for-profit schools."

However, the Association of Proprietary Colleges called Cuomo's decision unfair to women, veterans and people of color.

"Governor Cuomo turned his back on nearly 40,000 New York college students who are earning associate, bachelor's, master's and doctoral degrees at state Board of Regents-certified proprietary colleges by vetoing a measure that would have allowed them to apply for the state's new Enhanced Tuition Award," said Donna Gurnett, president and chief executive officer of the association, in a statement. "Excluding these students is extremely shortsighted, as they are exactly the type of student New York needs and should be empowering."

The APC says nearly 70 percent of its institutions' students are women and 41 percent identify as black or Hispanic, according to Gurnett.

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For-Profit Music College Closes Suddenly

The McNally Smith College of Music, a small for-profit institution in Minnesota, announced Thursday that it is shutting down all operations at the end of this semester, The Star Tribune reported. College officials cited declining enrollments and revenue and said they could no longer meet payroll. Officials said the college had been trying to convert to nonprofit status. An outpouring on social media from students and alumni suggested many viewed the college as offering a high-quality education and were stunned by the abrupt closure.

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Democratic AGs Sue DeVos on Borrower Defense

Four Democratic attorneys general filed separate lawsuits Thursday seeking to compel Education Secretary Betsy DeVos to grant debt relief to students defrauded by for-profit colleges.

California Attorney General Xavier Becerra filed a lawsuit in the Northern District of California arguing that delays in approving borrower-defense claims of defrauded Corinthian Colleges students violate federal law. A separate lawsuit filed in the D.C. District Court by the attorneys general of Massachusetts, Illinois and New York argues that the Department of Education has illegally delayed review of pending claims and improperly rejected group discharge for thousands of borrowers who were misled by for-profit institutions.

Borrower-defense applications allow student loan borrowers to apply for loan discharge when they are misled or defrauded by their institution. Tens of thousands filed the debt-relief claims after the collapse of Corinthian in 2015 and ITT Tech in 2016. Although the Department of Education granted 28,000 claims between 2015 and Jan. 20 of this year, the Trump administration stopped processing the claims this year as it re-examined the existing process for ruling on applications. More than 95,000 borrower-defense claims, meanwhile, are pending review by the department.

Earlier this week, the department's inspector general called for review of the claims to resume while also recommending the Office of Federal Student Aid take steps to better document the legal memorandums it uses to justify discharges and establish clear policies on review of unique claims, among other changes.

Becerra's lawsuit argues that the department has provided no reasonable or adequate justification for the delay in reviewing pending claims, which it says are indistinguishable from already approved claims. And DeVos, he argued, has evinced hostility toward the borrower-defense process.

"After having their American dreams stolen by a so-called higher education institution, Corinthian students are now being denied critical relief by a secretary of education hostile to their plight," he said in a statement. "It is hard to believe that we are forced to sue the Department of Education to compel Secretary DeVos to carry out the department's legal duty and help these students rebuild their lives."

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Kaplan Buys For-Profit College From Apollo

Kaplan Professional Education recently signed an agreement with Apollo Education Group to purchase the College for Financial Planning for an undisclosed amount.

CFFP offers financial education and training to students interested in becoming certified financial planners. Kaplan Professional Education is owned by Kaplan Inc.

"This opportunity is beneficial both to the College for Financial Planning and Kaplan and will help us continue providing the high standard of education in financial planning that we have offered for decades," said John Sears, president of the college, in a statement. "We are proud of the important role we play in supporting professional development in the financial services industry and this transaction brings together the resources and institutional experience of two of the most significant education providers in the sector."

The sale is expected to close next year and requires approval from CFFP's accreditor, the Higher Learning Commission.

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