The hearing focused on the departments implementation of the Student Loan Debt for forgiveness program. Its aimed at helping highly indebted students with loans that misrepresented graduate outcomes and potential salaries. Meeting on education and labor will come to order. I want to welcome everyone and note decorum is present. The oversight hearing from the department of educations implementation of the barr defense rule pursuant to Committee Rule 7c, Opening Statements are limited to chair and Ranking Members. This allows us to hear from witnesses sooner and provides all members time to ask questions. Id like to thank secretary betsy devos and thank her to hold enough time to allow all of the members present and have five minutes of questions pursuant to house rules. I am especially thankful pause in this chair i am exercising my prerogative to go last in the question order. So if she were to leave early, i wouldnt get to answer questions. I thank you for agreeing to stay with us the full time. I recognize the opening statement. We are here to examine the department of educations implementation of the baar defense rule. I want to thank you, madam secretary, to discuss this important issue. It is grounded in basic fairness. Students face severe financial and emotional consequences and it is, therefore, cruel and counterproductive for the federal government to compound their misfortune by collecting on the Student Loans. Accordingly, the Higher Education act, requires the secretary of education to provide debt relief. Until recently, that authority was rarely needed because institutional fraud was uncommon. But in 2015, crackdown thi cori closed abroad allegations of fraud. They were later substantiated with countless reports of schools luring students of false promises of guaranteed jobs upon graduation and inaccurate transformation about the availability of credits. A year later, another for profit change itt tech rose under similar circumstances. Response to a surge of claims, the Obama Administration issued a new borrowers defense rule to streamline the process of providing relief to defrauded students. By the time the Trump Administration took office, 28,000 corinthian students had already received relief and the department was on pace to process the remaining 54,000 pending claims by the spring of 2017. However, under the present leadership, the department has refused to implement the bar defense rule instead providing full and timely relief as the law allows. The department halted processing claims, so it can prevent a new formula and most would get a fraction of relief that they were eligible to receive. The departments initial partial relief formula would have deprived about 93 of defrauded students full relief. In 2018, a federal court blocked the initial partial relief formula because it misused students personal data. Even after the courts ruling, which specifically asserted the department could provide timely and full relief eligible borr borrowers under the obama framework, the department refused to do so. In fact, 18 months between the june 18th ruling, june, 2018 ruling and todays announcement of a new revised partial relief formula, the department did not pros stacy single bar defense claim. Meanwhile, the victims of predtary schools are being left in limbo. The number of bars awaiting relief has grown from 54,000 to roughly 240,000. Madam secretary, your refusal to process claims is inflicting serious harm on students that you have the duty to serve while the department has been searching for a legal method to short change these defrauded borrowers. These defrauded borrowers have been left with mountless debt and worth less degrees and none of the things they were promised. In many case they were not able to go back to school, start a family or move on with their live itself. Not only has the department provided relief to defrauded students and illegally collected on 45,000 borrowers who are waiting you to take action on their claims. In some cases these individuals had wages and tax returns garnished by the very government that was supposed to be providing them relief. The court found you in court in contempt of court for collecting on roughly 16,000 of these borrowers. Now the department has conceded that it was illegally collecting on about 45,000 borrowers. Some of the defrauded borrowerers have been cheated twice and they refuse to make them whole. The court found the department admitted the gross negligence in handling the borrowers defense rule. Throughout the last year, this committee has sent multiple requests for information and documents in an attempt to understand the rational for changing the departments policy. The department has continually refused to comply with those requests. This lack of transparency was on full display yesterday when a media outlet published documents revealing the departments own staff conducted an extensive review of claims from former corinthian and itt tech students and found student borrowers who attended these schools, deserved full debt relief. Those memos should have been provided to the committee in response to our repeated requests. Their existence raises unfortunately two important questions. One, why was there a refusal to provide relief and immediate debt relief to defrauded borrowers despite the clear finding of the Department Staff and two, are there other relevant documents in the department that the department is withholding from the committee and the public that would shed light on policy decisions . Todays hearing is intended to get answers to these and other questions by the departments policy on behalf of roughly 240,000 borrowers awaiting relief. So thank you again for joining us today and i yield now to the Ranking Member, dr. Fox, for the purpose of making an opening statement. Thank you, mr. Chairman. Thank you, secretary devos, for being here today. Its my hope that todays hearing will provide members of the committee with a chance to understand how the department of education is working to address borrowers defense claims that have been filed with the department. Mr. Chairman, id like to make one thing abundantly clear. Above all else, Committee Republicans support smart focused and constructive oversight. Members of congress have an important responsibility to protect every single tax dollar. Everyone in this room knows how seriously we take that responsibili responsibility. Strong and effective oversight can strengthen our institution, including the department of education. Ensuring the federal government is efficient and accountable to be a top priority for all members of congress. Sadly, this committee is missing an opportunity to address serious oversight issues. We could investigate the widespread embrazened law making by the United Auto Worker Union leaders who betrayed hard working americans in favor of self enrichment. We know the uaw senior Union Leaders engaged in money laundering, tax fraud, bribery and embezzlement. But this committee has taken no action. We could investigate the potential fraud within headstart, a recent report from the Nonpartisan Government Accountability Office gao indicated there was income fabrics and doctored applications to impact an individuals eligibility. We could investigate how potentially tens of thousands of people may be committing student loan fraud as a gao report found borrowers may have understated their income or overstated their family size to reduce their student loan payments. There are real opportunities to Work Together to address the serious issues that require honest overtight. Instead, Committee Democrats will choose to use their time today attacking secretary devos for delays and responses to oversight requests shes responding to. Let me remind everyone here today that the process to produce the oversight documents requested by any member of congress, including the committee chairman, requires reviews across multiple offices within the agency. All of the takes time and is necessary to produce documents and answers that are actually responsive to members. Despite the limitations of the bureaucracy, the Education Department is trying to work with the Committee Democrats to respond to all their requests. So contrary to claims i expect to hear today from my colleagues across the aisle, secretary devos and the Education Department are committed to providing relief to students who have been harmed by fraudulent practices and are reforming the borrower defense to repayment rule vote to clarify standards and make the process more acceptable. Since taking officer, secretary devos spent more than two years on deliberations, public hearings, higher ed stake holders and considering incorporating and responding to Public Comments on this issue. They did so with a regulatory reset in mind, to hold colleges and universities accountable and provide relief to students who have been harmed by deceptive practices. Claims that secretary devos is unnecessarily or purposely delaying relief for these bow proce borrowers are false. Secretary devos is putting reforms in place that will help defrauded students navigate the process of getting the loan relief they deserve. And Committee Republicans are supportive of these efrs. Defrauding students who have been financially harmed should get relief. I think secretary devos again i thank secretary devos for being here today and look forward to how our Education Program is working to protect student borrowers by not only holding fraudulent institutions accountable but also working to prevent fraud from happening in the first place. Thank you, mr. Chairman. Thank you, and dr. Fox without objection, all other members wish to insert written recommendation, they may do so by submitting to the Committee Clerk electronically in microsoft word format by 5 00 by 14 days, within 14 days of today. Id like to welcome secretary devos and thank her again for appearing be every the committee. I now yield to mr. Wal berke who has requested the honor of introducing the secretary. I thank you, mr. Chairman, for your deference to allow me this opportunity. We michiganians are proud people and i know there will be disagreements here in this hearing today about what the secretary is doing. But having had the privilege and honor of knowing her and her family going back in the early 80s and knowing the impact that her family as well as the family she married into has had in not only michigan but all across this country. Not because they were pushed into it. But because they had a passion for seeing young people educated from k through college and to make sure it was done in appropriate ways and that people have had choices that wouldnt have had choices before. Theyve done it in a way that has made a difference. And it continues on into their children as well. Cultural areas, educational areas, manufacturing. Bringing up people that would not have had the opportunity that they had. So i understand this will be a challenging hearing today. I do know from personal experience that our secretary wants to do things right, wants to do it according to law. Wants to make sure that things are carried out on both sides of the leger. Especially that students and taxpayers are treated fairly and i know that because knowing how she and her family have carried on the life in michigan touching lives who would not have been carried on in a way before that led to success. So, i just want my colleagues to know, that Background Information is well. Even though she is the secretary of education and is entirely capable of answering all the questions we v. I welcome you and thank you for being here. Thank you very much. Before you begin your testimony, madam secretary, id like to acknowledge the retired air force major gem mark brown, chief operating officer of the office of federal student aid. Agreement with the committee. General brown is here to assist the secretary in our answers. He is not a witness at this hearing. In the course of answering the question directed to her. The secretary according to agreement may consult with general brown or direct him to assist her in the response and insofar as he is not a witness, members are reminded that questions, including followup questions, may not be directed to him personally but must be directed to the secretary. Let me remind you, madam secretary, that weve received your written statement. I know it will appear in full in the hearing record, pursuant to Committee Rules 7d, you are asked to limit your oral presentation to a fiveminute summary of your written statement. Pursuant to title 18, u. S. Code section 101, you are aware that code section prohibiting false statements to committee. So well forego the spectacle of the swearing in. Therefore, before you begin your testimony, please remember to press the button and the microphone in front of you so it will turn on and the members can hear you. As you begin to speak, the light in front of will you turn green. After four minutes the light willal yellow. When the light turns red, your five minutes have expired. I would ask you to wrap up. During members questions and answering questions, please remember to once again turn on your microphone. I recognize the secretary of education, secretary devos. Thank you so much, mr. Chairman, thank you congressman wahlberg for that very kind introduction. Chairman scott and Ranking Members of the committee, let me first thank the committee for its willingness to make this that productive hearing. We have provided the committee 18,000 pages of documents during the past month on borrower defense alone. We have briefed you several times and im hopeful we can use todays hearing to continue in that spirit of constructive dialogue. Let me also thank you for the opportunity to set the record straight. This administrations approach to borrower defense to repayment. I want to be very clear, students are my number one priority. They are why i come to work every day. So if students have been deceived by institutions and suffered financial harm as a result, they should be made whole. But if claims are false or do you understand ustudents did no suffer harm, then hard working taxpayers, including those who saved to pay their own Student Loans should not have to pay somebody elses Student Loans, too. Adjudication must treat all students and taxpayers fairly. Simply discharging all of these loans as some on this committee suggest be done is not fair to taxpayers nor to those who have paid or are paying their loans. This administrations commitment to fairness and the rule of law continues to guide our thinking with regard to borrower defense. When borrower defense arrives in 1995, it was a regulation in the Higher Education act that was little known and little used. In fact, in the 20 years from 1995 to 2015, fewer than 60 claims were filed. Then the Previous Administration weaponized the regulation against schools it simply didnt like. They applied the law in a discriminatory fashion. So since 2015, there has been a 5,000 percent increase in borrower defense claims. This administration is committed to pulling back the Previous Administrations overreach and will enforce a borrower defense rule that is consistent with Congress Intent that protects all borrowers and that treats taxpayers and schools fairly. Before i discuss the important distinction of our bow rohrer defense rule, let me begin by saying what it does not do. First it does not apply retroactively. When our rule goes into effect on july 1st next year, it will apply only to loans first dispersed after that date. This means that the department will continue to enforce in good faith the Previous Administrations 2016 rule for all loans dispursed between july 1st, 2017 and july 1, 2020. Second, our rule does not shield any school from accountability nor does it relax oversight of bad ones. All institutions no thats their tax status are held accountable under our rule. Finally, our rule does not demand that students prove that their school intentionally deceived them. Instead. The rule provides due process for all parties. Our process focuses on individual students and virus everyday from both the borrower and the school before deciding a claim. And unlike the priored a lyadmi rule, the school has the opportunity to respond to the schools case. Let me respond to the basics of what our rule does do, first it puts into place a process that is clear, understandable and easily accessible for borrowers. It ensures claims are transparently and fairly. Second, students may file either affirmative or defensive claims, all of which will be judged using a preponderance of the evidence standard. Third, our rule provides a legally grounded reasoned and appropriate definition of misrepresentation. It enables both borrowers and institutions to present evidence, obtain relevant evidence worth considering in the case and respond to any evidence in the record. These constitute much course corrections to the 2016 rule currently in place. The Obama Administrations rule punishes for profit schools that gives nonprofit aspas for the very same conduct. Now let me turn to the ongoing adjudication of existing claims before the department. Yes, there is a backlog of borrower defense claims of federal student aid. To say i am frustrated by the that is an understatement. But rather than focus on why there is a backlog, too many have instead focused on creating more chaos and a circus like atmosphere. Here are the inconvenient facts. First we inherited from the Obama Administration more than 64,000 borrower defense claims. So i asked the ig to investigate why they had made such little progress processing these