Updated July 30, 2018
This week, advocates for student-loan borrowers have seen some of their worst fears come true. More than a year after Education Secretary Betsy DeVos announced that the U.S. Department of Education would begin to unwind two Obama-era regulations aimed at holding for-profit colleges accountable, the department has started to make good on that promise. One of the regulations is being scaled back significantly; the other is reportedly going to be eliminated altogether.
When the Education Department announced, in June 2017, that it would begin the process of rewriting the rules, borrower advocates saw it as evidence of a coziness with the for-profit sector. Several staffers who had relationships with for-profits were forced to recuse themselves from working on regulations such as these. But now it has come to light that in the early days of Donald Trump’s education department at least one official was communicating with his contacts in the for-profit industry while also eagerly seeking to discuss the two rules now being rolled back.
The two regulations are known as the “borrower defense” and “gainful employment” rules. Borrower defense provided students a streamlined path to debt relief if they were defrauded by their college; the 2016 rule was rolled back before it even took effect. The gainful-employment rule sought to cut off federal loans to schools if their students did not make enough money after graduation to pay them off. Both regulations were an attempt by the Education Department under President Barack Obama to protect students from fly-by-night colleges in the for-profit sector.
The department announced on Wednesday its proposal to significantly dial back the borrower-defense rule, raising the bar that students have to meet to receive debt relief. “The regulations proposed,” DeVos said in a news release, lay out “clear rules of the road for higher education institutions to follow and [hold] institutions, rather than hardworking taxpayers, accountable for making whole those students who were harmed by an institution’s deceptive practices.”
Borrower advocates weren’t sold on the change. And their fears were once again piqued on Thursday night when The New York Times and The Wall Street Journal reported that, instead of rewriting the gainful-employment rule, the Education Department planned to eliminate it altogether.
“These are two of the highest-priority rules for the advocates, and their nightmare would have been that borrower defense becomes entirely unusable and gainful employment no longer exists,” Clare McCann, a policy analyst at New America, told me. “And that seems like where we are headed right now.”
But the news wasn’t exactly a surprise. Higher-education observers assumed that the department would be taking a fresh look at the Obama-era regulations, which for-profit colleges have called overly burdensome, and which they have fought to eliminate. Changing these rules was one of the first agenda items for some officials in the Trump administration.
Taylor Hansen was one of those officials interested in rolling back the regulations. He was a member of the “beachhead” team—paid temporary appointees who help get the government up and running and who do not require Senate confirmation—at the department at the beginning of the Trump administration. According to emails obtained through a Freedom of Information Act request by the left-leaning think tank The Century Foundation and shared with me, Hansen, who formerly worked as a lobbyist for the largest trade group representing for-profit colleges, Career Education Colleges and Universities (CECU), set to work immediately. He scheduled meetings to discuss the regulations with top officials in the department. (Hansen, who resigned in March 2017, did not immediately respond to a request for comment.)
“Since gainful employment is a hot button item it may be good to discuss that as one of the items—if possible,” he told Colleen McGinnis, the chief of staff at the Federal Student Aid office, in one email on February 14, 2017, seven days after DeVos’s confirmation. A day later Hansen told Michael Dakduk, a senior official at CECU, that he would pass along a letter from the CECU president and CEO, Steve Gunderson, requesting a meeting with the new secretary.
In an email, Gunderson confirmed that CECU reached out to people at the department, but insisted that all of their interactions were "aboveboard, transparent, and in line with all ethical requirements." He added that the organization has not met with Secretary DeVos.
One week later, in an email to a staff member at the Federal Student Aid office, Hansen again asked to discuss gainful employment, as well as borrower defense. Other items, he said, could be discussed if there was time, but these were his primary focus.
Hansen was later told by the ethics office at the department that he was not to work on projects involving his former employer or the gainful-employment rule. He told ProPublica, shortly after his resignation, that he had not been working on the gainful-employment regulation.
Elizabeth Hill, a spokeswoman for the Education Department, told me in a statement that the department, “under the leadership of Secretary DeVos, takes seriously its commitment to all ethics rules and guidelines. Mr. Hansen was a member of the beachhead team and left the department more than a year ago.” She added that Hansen was not involved in “developing the substance of the gainful employment rule which has yet to be finalized and published.”
Still, advocates worry that this was not an isolated incident, but a trend. In one email exchange, Hansen tells CECU that he, along with Robert Eitel, a senior counselor to DeVos who has also been questioned by Democratic lawmakers and advocates about potential conflicts of interest from his time at a for-profit college operator, and James Manning, a senior department official, would be “happy to meet” with the leadership.
“There has been a clear shift” in the priorities of the Education Department, Tariq Habash, a policy analyst at The Century Foundation, told me. “There’s no question that there have been ties to the industry directly,” he continued, citing Hansen and Eitel, “and that really raises red flags about who these individuals are really working for.”
Here are the emails: