Today, The Nevada Independent reported that Republican attorney general and gubernatorial candidate Adam Laxalt has failed to fight for Nevada students who were scammed into taking on massive debt by for-profit colleges, after promising last spring to fight for those same students.
Despite issuing a press release in April 2017 to “fight for students who fall victim to institutions that misrepresent themselves,” Laxalt has skipped numerous opportunities to join his fellow state attorneys general in fighting Education Secretary Betsy DeVos’ repeated attempts to weaken protections for students and provide cover to the for-profit college industry. This is yet another issue on which Laxalt broke with Republican Gov. Brian Sandoval, who joined governors from every state in urging DeVos to reconsider dismantling state oversight of predatory student loan servicers.
Nevada State Democratic Party spokeswoman Helen Kalla released the following statement:
“After promising Nevada students he’d fight for them 18 months ago, Adam Laxalt has reneged on his commitment and left Nevadans twisting in the wind. Nearly 1,300 Nevadans remain saddled with debt they can’t pay back from fraudulent institutions who misrepresented themselves to students, including veterans. There’s only one thing Nevadans can count on if Laxalt wins, and that is he’ll always put his loyalty to the Trump administration before what’s best for the people of this state.”
The Nevada Independent: As attorney general, Laxalt took few public actions in fight against predatory student lending
By Michelle Rindels
October 31, 2018
Republican Attorney General Adam Laxalt has largely stayed out of a fray about whether to give students more recourse if they’re subject to a predatory lender, even as hundreds of Nevada students who attended shuttered for-profit colleges have unresolved claims for debt relief and as attorneys general in other states have filed several lawsuits trying to boost borrower protections.
Laxalt’s office put out a press release in 2017, along with attorneys general from 44 other states, to inform Nevadans that they might be eligible for student loan forgiveness if they enrolled in Corinthian Colleges, a network of for-profit schools that included Everest College in Henderson and went bankrupt a few years ago.
“My Bureau of Consumer Protection will continue to fight for students who fall victim to institutions that misrepresent themselves, in an effort to help make Nevadan’s aware of their rights and options,” he wrote in April 2017.
But there were no other press releases issued on the matter of student loan forgiveness in the year and a half after that, as other attorneys general launched a fight with the Trump administration on the matter. Asked about whether Laxalt’s office had been involved in unpublicized activity on student loan fraud, a spokeswoman said he was involved in confidential working groups that deal with fraudulent lending.
Laxalt’s office didn’t directly answer questions about why Laxalt didn’t join a number of lawsuits in recent months, mostly involving Democratic attorneys general, that sought more stringent rules on for-profit colleges.
The Corinthian Colleges saga is the most visible in the predatory student loan fight. Critics say the company — which included brands such as Heald College and Everest College — had a business model that required a constant flow of new students and relied heavily on federal financial aid.
The colleges marketed their vocational programs to non-traditional students through heavy TV advertising, but were accused of inflating their job placement rates and misrepresenting the career prospects awaiting its graduates. Lawsuits have also alleged that the company pushed students into high-interest private student loans to pay for their education in an attempt to meet a requirement that schools receive at least 10 percent of their revenue from sources other than federal financial aid.
Critics also accuse them of aggressively targeting veterans because GI Bill funds are not considered federal money, and can help colleges achieve the 10 percent requirement.
At an average cost of more than $20,000 a year, the programs left many students saddled with debt if they didn’t complete the program or made less than they were expecting. Corinthian and an affiliated loan program are accused of harassing students about repayment, including threatening not to let them graduate and sending them notices that they would be subject to lawsuits if they didn’t pay.
The company’s demise came after the federal government, concerned that Corinthian had falsified job placement data, restricted federal money. A deal struck between the schools and the federal government called for the closure and sale of Corinthian schools and cut some students’ private loan debt by about 40 percent, but did not address federal student loans that made up the majority of the debt.
One of the first actions on the matter was in June 2017, when the Department of Education announced DeVos would “[press] pause on burdensome gainful employment regulations.” The regulations, adopted during the Obama administration, require for-profit schools and non-profit and public certificate programs to demonstrate they’re preparing students for “gainful employment in a recognized field” before they can receive federal funds.
A few months later, a group of 18 Democratic attorneys general sued over the lack of implementation of the rule. The agency called it an attempt for the plaintiffs to score quick political points, but the prosecutors framed it as defense of students.
“It’s outrageous for the department to say they’re going to allow these predatory institutions to continue to take advantage of people who are vulnerable, people with very few resources,” Maryland Attorney General Brian Frosh, who led the lawsuit, told The Washington Post.
In another incident of pushback against DeVos, a group of 20 attorneys general (this time bipartisan; Colorado AG Cynthia Coffman signed on) wrote to DeVos in July over the department’s proposed changes to student loan regulations. They argued new limitations on information that would be disclosed to law enforcement agencies including state attorneys general offices would hamper states’ abilities to pursue cases of fraud in the for-profit education sector.
Laxalt was not part of that group.
DeVos has also gone after a “borrower defense to repayment” rule, which has been around since the 1990s and nullifies federal loan obligations for students whose colleges used illegal or deceptive tactics to sign them up for loans. The rule was little used until 2014, when the failure of Corinthian College brought a rush of claims, and the Obama administration tweaked it to shift more of the burden to the schools and prevent colleges from forcing students into arbitration.
Twenty AGs — but not Laxalt — wrote to oppose Devos’ changes, saying that the burden of proof for a defense of repayment claim was nearly impossible to meet.
In September, a federal judge ruled in favor of the attorneys general who sued to oppose the effort to delay the rule. The same judge ruled earlier this month against for-profit colleges that sought to intervene and block the regulation, meaning the Department of Education will have to implement the rule.
Critics of the administration have said the Department of Education is too slow to resolve the cases of students of the since-shuttered for-profit schools. Data from May show that since President Donald Trump took office, more than 800 borrower defense claims have been filed in Nevada, 115 have been approved, and 1,295 remained unresolved.
Nearly half of the claims were from Corinthian Colleges.
A group of four attorneys general sued last December over what they said was the Trump administration’s refusal to discharge loans for students from Corinthian Colleges, in spite of promises under the Obama administration that the loans could be forgiven. Laxalt was not part of the suit, or an amicus brief from eight other states that were in support of the lawsuit.