By:  Lauren Camera
Source: U.S. News & World Report

Whistleblower: Education Department Killed Website That Made Applying for Loan Forgiveness Too Easy

THE TRUMP administration rejected a website that the Education Department's Federal Student Aid office designed to help students who have been defrauded by their colleges apply for loan forgiveness, arguing the tool made the process too easy, according to a whistleblower complaint.

The development of the website was part of a $90 million federal contract to build one main hub for all federal student aid needs that modernized existing loan servicing portals and made them more user-friendly – in the same way that the application for federal student aid was recently redesigned and streamlined to make it easier for students to apply. 

As part of the larger redesign, staff at the Federal Student Aid office, all of whom are career officers and not political appointees, were tasked with developing a website that would allow students to apply for what's known as borrower defense – a process by which students whose colleges mislead them about things like job placement rates, average earnings post-graduation and the transferability of credits to apply for some or all of their debt to be forgiven.

The Trump administration recently rewrote the borrower defense rule and the new website was supposed to reflect the changes to the rule as well as streamline the application process so that claims could be processed more easily. As it stands, the Education Department has a backlog of roughly 200,000 claims.

But problems arose in late February, the whistleblower says, just days before the country went into lockdown to stem the spread of the coronavirus, when Diane Auer Jones, principal deputy undersecretary at the Education Department, asked to meet with the team in charge of developing the new borrower defense website and instantly pushed back on some of the more user-friendly features of the site. That's when the whistleblower, a career staffer who was involved in the development of the website, first lodged a complaint with the Office of Inspector General, noting that Jones, who is a political appointee, was not respecting the firewall that's supposed to exist between the Education Department and the Federal Student Aid office.

Jones, who the whistleblower says was unhappy with the prompts the smart application would ask of borrowers and said it provided them with too much information, told the team it didn't match the vision she had for the borrower defense policy. Two weeks ago, Jones told the Federal Student Aid team that it could not launch the website, effectively killing it. That's when the whistleblower filed the second complaint with the Office of Inspector General.

According to the whistleblower, Jones said the website provided borrowers with too much information and ordered staff at the Federal Student Aid office to scrap it entirely.

The website was scheduled to go live July 1, when the new borrower defense rule is set to go into effect. Now, FSA staff is in an ongoing back and forth with Jones to create a tool she feels reflects the stated goal of the new borrower defense rule, the whistleblower says – to restrict loan forgiveness to those most severely wronged.

Mark Brown, the chief operating officer at FSA, has said publicly he expects the revised tool to launch in the fall, but the whistleblower says that's an unrealistic timeline given that the FSA team redesigning the website with Jones' input hasn't finished building it yet.

The whistleblower and others involved directly with the development of the website say the only explanation they have for why Jones spiked it is that it was too user-friendly and would have helped too many borrowers complete the application correctly, without any disqualifying mistakes. 

"Diane doesn't want more people applying for it," the whistleblower says. "If it was just the way questions were worded, we could make those changes. Content questions can be made late in the game. If I notice a spelling error or if a question is misleading, I could point this out and say, 'I think we should change this,' and it would be done almost instantly."

"If it was truly about the way the questions are worded," the whistleblower says, "then why didn't she work with us in February to make those changes?"

A spokeswoman for the Education Department refutes the whistleblower's account. 

"Anyone who says that there has been any effort by anyone at the Department to delay or obstruct the development of a new borrower defense form or website is lying," Angela Morabito, a spokeswoman for the department, says. "It's as simple as that."

According to the department, FSA staff submitted to Jones and other senior department officials data that they wished to include in the new website that she says represented a significant bias and that would have been unhelpful to borrowers. The proposal, according to the department, would have led borrowers down an unhelpful path. 

For Jones, the department says, rejecting the new website was a question of accuracy and not personal preference. In fact, officials say, it was FSA staffers who were trying to push their policy preferences – not the other way around.

"As for the claims about policy interference, perhaps this so-called 'whistleblower' needs to read the Higher Education Act to understand that Congress designated the policy-making function to the Department, not FSA," Morabito says.

The department underscored that the original online application for borrower defense is still operating and there have been no disruptions for borrowers seeking to apply. Officials added that building of the new website is underway and that Jones signed off Monday on a round of public comments, eight days ahead of schedule.

"Nothing about that signals an intent to block the publication of the form," Morabito says. "In fact, on the contrary, Diane has consistently asked for the process to occur more quickly so that the new form can be ready as soon as possible."

The borrower defense rule – revised in 2016 by the Obama administration to protect students from predatory for-profit colleges – recently underwent a contentious overhaul to reflect Education Secretary Betsy DeVos' long-standing belief that the rule was too lax and should be revamped to limit relief to those who were most seriously harmed. 

The new rule makes it more difficult for student loan borrowers to qualify for relief, and, for those who do qualify, the rule includes a new formula that provides only partial relief to the majority of claims. The new rule is viewed as extreme even by some congressional Republicans who joined Democrats in the House and Senate earlier this year to pass a bipartisan resolution that would have nixed the rule's revision entirely. 

President Donald Trump vetoed the resolution last month. Democratic-controlled House is set to vote Friday to overrule the president's veto – an effort that would require two-thirds vote in both chambers.

Despite the dramatic politics involved in the rule itself, the development of a new website that allows students to seek loan forgiveness through borrower defense was supposed to be an apolitical endeavor – like nearly all of the work that comes out of Federal Student Aid. Career officers at FSA who were tasked with designing the website didn't create the policies baked into the rule. Their job was to create an online application that reflects the qualifying criteria of the new rule and processes claims more quickly than is currently possible.

To that extent, FSA staff, in concert with web development company Accenture, developed a new, auto-populating smart form that student loan borrowers could use to apply for loan forgiveness. By entering a name and identifying information, the new site would direct borrowers to the correct application and automatically import certain information that's already on file – similarly to how tax preparation software guides people through complicated filings. 

The website would also flag any information that's missing that would otherwise render the borrower ineligible. 

When a borrower applies for loan forgiveness through borrower defense, the loan is put into forbearance, so the new website would also provide a detailed breakout of what a borrower's financial responsibility would look like if, for example, it took six months for the Education Department to evaluate the claim and it's denied, including how much interest would accrue and how much the new loan balance would be. 

"The website was built in order to filter out people who don't qualify and ensure that borrowers who do qualify have the correct information to apply," the whistleblower says. "The people who are putting these things together are some of the best people at FSA. They are really tuned into the challenges borrowers are experiencing with the website."

This isn't the first time questions have been raised about the motives of Jones, who came to the department after working for and on behalf of for-profit operators, including as vice president of regulatory and external affairs for Career Education Corporation, where she was responsible for companywide regulatory operations, licensure and accreditation, government affairs, among others things, and oversaw the organization's political action committee.

Last year, Jones and other department officials designed a new plan to process the backlog of more than 210,000 borrower defense claims using a new formula that provides only partial relief to the majority of them. When the Education Department dispatched the first round of notifications to some 17,000 borrowers, 95% of them were rejected.

At the time, Jones said department officials rendered a large portion of the first batch of claims ineligible for a number of reasons, including, among others, that the applicant did not have a federal loan related to the claim or that the applicant didn't make an allegation or provide sufficient evidence that the institution violated an applicable state law.

The whistleblower agreed that some applicants try to apply for borrower defense who don't meet the qualifying criteria, but the new website was designed to filter out borrowers who don't meet the qualifications. The bigger contributing factor to rejections, the whistleblower says, is borrowers inputting information incorrectly or leaving required fields blank, both of which the new website tried to prevent. 

The whistleblower complaints are just the latest in a long line of criticism over how DeVos and other high-ranking officials like Jones have sought to provide more flexibility to for-profit colleges.

Much of the Trump administration's higher education agenda has focused on unraveling Obama-era regulations and rewriting them to allow for-profits to flourish, arguing that the degrees and certificates at career and technical schools are often more in line with local workforce needs and offer more flexible class schedules for real-world students, like working parents and members of the military.

Though DeVos has had success in bringing for-profits back into the fold through the regulatory process, she's had much less success in courts, where she's been repeatedly sued by state attorneys general and student advocacy groups representing borrowers who were defrauded by for-profits schools. 

In May, for example, a federal judge preliminarily approved a final settlement agreement between a class of student loan borrowers and the Education Department that would require the department to process about 170,000 applications for loan forgiveness that have been stalled. And earlier this month, in a separate lawsuit, Public Citizen and the Project on Predatory Student Lending sued the Education Department over the new methodology used to provide relief to students who have been defrauded by for-profits schools. 

The House Education and Labor Committee is readying to release the full findings of its two-year oversight investigation into how DeVos and other high-ranking Education Department officials handled borrower defense regulations, including, among other things, for-profit closures and mergers and the distribution of debt relief.

House Democrats have repeatedly threatened to subpoena DeVos, accusing her and high-ranking department officials of willfully obstructing their investigation by failing to substantively respond to questions and provide requested documents, including into Jones' role in allowing the operator of two now-defunct for-profit colleges to mislead students and continue operating the schools despite losing their accreditation.

"My Committee has been looking into this Department's implementation of the Borrowers Defense rule for nearly two years and we are still uncovering new ways in which the Department is preventing defrauded student borrowers from getting relief," Rep. Bobby Scott, Virginia Democrat and chairman of the committee, said in a statement. 

"In this latest account, a senior Department official apparently directed staff to redesign a newly developed tool to help defrauded students, because it would have been too easy for students to apply for relief," he said. "The Department's new Borrower Defense rule makes it unreasonably difficult for defrauded students to get relief."

"I am deeply troubled by the impropriety of a political appointee at the Department interfering with the operations of what should be an independent, non-partisan office," Scott said. "Its resistance to providing a consumer friendly tool simply reflects the Department's continued opposition to helping students who have been cheated out of their future.