Trump winks at for-profit college fraudsters, hires industry vet to run key oversight team

Sen. Tim Scott (R-SC) and former Sen. Joe Lieberman (D-CT) sit down to introduce Education Secretary Betsy DeVos at a January hearing regarding her nomination to the job. CREDIT: AP Photo/Carolyn Kaster

A former for-profit college administrator will join President Donald Trump’s administration in a job vital to oversight of the industry he formerly served.

Julian Schmoke spent four years in various jobs at DeVry University before moving on to a gig at West Georgia Technical College. He will now run the Education Department’s Student Aid Enforcement Unit, Politico reports.

The hire puts a for-profit veteran in charge of a specialized anti-fraud team established specifically to police the industry after activists and regulators pushed the industry’s decades-long pattern of abusive practices to the fore over the final years of Barack Obama’s presidency. Thousands of defrauded former DeVry students still have casework pending before the team Schmoke will now run.

Schmoke’s former employers spent $135 million a year on advertising stuffed with lies about what students could expect from a DeVry degree. The firm insisted that 90 percent of graduates who sought a job found one in their field of study. But to get to that figure, the Federal Trade Commission found, the company counted business administration graduates working as retail sales drones, customer service specialists, and Cheesecake Factory servers. It also excluded jobless graduates who were actively engaged in a job search.

The company further claimed that its alums earned 15 percent more than the median wage for other degree-holders in their fields, citing a 2012 study it had commissioned of graduate incomes. But DeVry employees “expressed concerns over whether the data sufficiently supported the higher-income claim” before the company rolled it out in advertising anyway, the FTC alleged last year.

The company eventually agreed to pay a $49 million fine and forgive $51 million in outstanding debts from recent students to resolve the FTC charges. The settlement deal allowed DeVry to “neither admit nor deny” the factual allegations about its fraudulent advertising scheme.

DeVry is among the most notorious bad actors in the for-profit education industry, but far from alone in its reputation for defrauding hopeful strivers with worthless degrees. Corinthian Colleges, ITT Tech, and The Art Institute all engaged in similarly abusive practices for decades, cashing out taxpayer-funded student loan dollars on the front end and extracting a lifetime of payments from its student victims.

Schmoke’s exact role at the company is fuzzy. But he began on the academic staff, rose quickly to a management position associated with a particular degree program, and then left in 2012 to take a job in at a traditional, non-profit higher ed institution in Georgia. The scuzzy business practices at DeVry peaked from 2010 to 2015, according to the FTC’s documents.

Schmoke may not have been an actively complicit cog in the profit-mining engine that harvested some $8.6 billion in gross revenues from student loans from 2008 to 2015. He could even have decided to leave when he did after his promotions put him in closer touch with the corporate marketing team responsible for creating the deceptive ads and setting the absurdly high tuition prices DeVry used to enrich shareholders.

But Schmoke as an individual is not really the point. His hiring is only the latest in a string of alarming choices that can only be interpreted as an invitation for-profit schools to dig deeper into taxpayer pockets. The Trump administration has been cuddling up to the for-profit school industry ever since he took office.

During the new administration’s transition, Trump hired for-profit college lobbyist Taylor Hansen as part of the “beachhead” team at ED. Then, the administration quietly retained for-profit college attorney Robert Eitel, without even forcing him to quit his post as a vice president at Bridgepoint Education Inc. A few months later, Education Secretary Betsy DeVos canceled the still-drying “gainful employment rule” designed to block student loan dollars flowing to companies that fail graduates in exactly the ways DeVry did. DeVos also revoked the regulations governing the student loan borrower fraud petitions that Schmoke will now adjudicate in his new role.

With the Trump administration reversing course from its predecessors on so many policies important to progressives, it would be tempting to slot the malignant growth in higher-ed policy into the same narrative. But only a fool would valorize the Obama administration’s handling of predatory for-profit education firms. Republicans may be the industry’s go-to cronies, but its tentacles ensnare Democratic throats too.

An Obama-era investigation uncovered rampant abuses in recruiting and marketing at Corinthian Colleges, Inc., the parent company of industry leader Everest College. The findings eventually ed to the collapse of the company. But as competitor for-profits descended on Everest students with similar pie-in-the-sky pitches, the Obama team worked to ensure that Corinthian could find a buyer — effectively rebranding rather than terminating many of its schools and online offerings.

And despite having found hard proof that tens of thousands of Americans had been duped and locked into crushing debts for worthless degrees, the department initially rebuffed calls to help get Corinthian’s victims out from under their bankrupting loan repayments. The regulations Schmoke will now enforce were born not out of proactive do-gooder impulses at ED, but rather a protracted campaign by radical debt activists.

The student loan repayment strike attracted more than a thousand current and former Everest marks, and galvanized the attorneys general of several states to apply more formal legal and political pressure to the administration. Slowly, reluctantly, DeVos’ predecessors acknowledged that students did have a legal right to have fraudulent debts voided. Still, activists had to make up their own forms to apply for this so-called “borrower’s defense to repayment” relief, because the Education Department had never created a recourse process for such situations.

The Trump team’s erasure of hard-won progress on for-profit college oversight stings. But whether those oversight tools are handled by an industry veteran like Schmoke or someone with shinier progressive credentials, the institutional reality in Washington would be much the same. For-profit colleges are welcome to feed at the taxpayer teat; what changes between elections is only the relative warmth or coolness of that welcome.