At a Senate Appropriations Committee hearing on Tuesday, Sen. Dick Durbin (D-IL) questioned Education Sec. Linda McMahon about student loans.
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00:00I'm Secretary. Since you're the Secretary of Education, I think it's maybe appropriate that we start questioning with a pop quiz. Are you ready?
00:09I never have liked pop quizzes.
00:11I never have either, but I'm going to give you the answers ahead of time. The answers are 8 and 30. 8 and 30. Remember those two numbers.
00:19What percentage of high school students in America attend for-profit colleges and universities?
00:258 percent. 8 percent. Perfect. What percentage of student loan defaults in America come from students in for-profit colleges and universities?
00:36Must be 30. It is. Great. You just aced the test. But the problem is that the difficulty students face becomes a lifetime problem.
00:45Imagine, if you will, first-generation college student trying to pick a place to go to school, inundated in high school with glossy brochures for for-profit colleges and universities,
00:57which promise the sun, the moon, and the stars. The student goes and learns that there are Pell grants available through for-profit colleges and universities.
01:06They hear the promises that if they just attend this school and graduate, there's going to be a good-paying job at the end of the rainbow.
01:14And it turns out it's all phony. Over and over again, these students are being deluded and deceived.
01:22There's much more scam than there is scholarship. There's more hype than there is higher education.
01:27So most of them, or at least 30 percent of them, end up with loans they can't pay back.
01:32They never see that job that was promised to them. But they've got one last place to turn to to try to get their lives back on track.
01:41I've met a lot of these students. Have you met any of them?
01:44I have.
01:44I have seen their stories and heard their stories from them living in their parents' basement because of student loan debt and no college diploma
01:54or a worthless one from some for-profit colleges and universities.
01:57You have a department within the Department of Education for borrower defense. Are you familiar with that?
02:04Yes, I am.
02:05Can you tell me what you understand the borrower defense law to promise?
02:10Well, first of all, I'd like to address how we started the conversation, not the percentages.
02:16But this is an issue, sir, that is, I think you well know, is not just relative to for-profit universities.
02:22We have many of our universities today that are promising degrees and jobs which are not being fulfilled,
02:30even those from very prestigious and elite universities.
02:34The cost of college today is so incredibly high that we have many students who are graduating thinking
02:41that they were going to have a job, that they'd be able to repay their loan.
02:45But the cost of those loans are so high that even if they get that job, it may not, over the course of their lifetime,
02:52would be able to repay that loan.
02:55So one of the things that we have proposed in looking at our FAFSA application forms
03:00is providing information even on FAFSA that would indicate to a student who is applying for a student loan,
03:07hey, take a look at this.
03:08This is the college you're going to.
03:10This is the job that you want, and this is about how much money this job can pay.
03:16And is this college the right place for you?
03:18Are these courses the right place for you to take?
03:21So let's give up front a little more information so that they actually have an understanding
03:27of what their opportunity in the marketplace can be.
03:30Thank you, Madam Secretary.
03:31I want to reclaim my time since it's very limited.
03:34The point that I'm making is there is one brand of college and university
03:37that is particularly egregious when it comes to deceiving these students.
03:42It's for-profit colleges and universities.
03:44Eight percent of high school grads, 30 percent of student loan defaults in that category alone.
03:50It stands out from all the rest.
03:53The point I'm getting to is you're hollowing out the borrower defense agency within your own department.
03:59This is supposed to be the rescue for these students to finally get back on track
04:02and maybe go to a good school one way or the other.
04:05Why would you hollow out the resources there and the people that are enforcing the borrower defense rule
04:10when we have these terrible numbers of exploitation of students?
04:15Well, and my point is that we shouldn't just focus on those schools.
04:19I do know that I totally agree with you.
04:21There are some scam universities out there.
04:23Why would you hollow out the people who are supposed to enforce it?
04:26Because I think we're putting other measures in place, but the scam-
04:29Give me an idea of what you're putting in place that's better than the borrower defense rule.
04:33Well, we just talked a little bit about FAFSA.
04:35It's the education up front.
04:37I'm talking about the victims, the ones who are already victims.
04:40They're in debt by tens of thousands of dollars.
04:43They're living in their parents' basement.
04:45They have no place to turn.
04:46And you're telling me the FAFSA form application is going to help them?
04:51How can it help them?
04:52And that's not in place yet, but I think that's going to be very, very helpful.
04:55Here's the other thing.
04:56Where are our guidance counselors in high schools?
05:00Who are they talking to?
05:01I think that they need to be totally informed, and I think they need to look at the cost of education.
05:07You're cutting the number of counselors in these schools at the same time.
05:11Well, the counselors that are doing their jobs can provide information to these students.
05:16There aren't enough of them.
05:17That's the point I'm making, and the situation is terrible for these students.
05:21First-generation students who are being exploited by these schools, they need your protection.
05:26They need our protection.
05:27They deserve it.
05:28They're doing the right thing.
05:29And unfortunately, you're reducing the number of people to enforce the law.
05:34I yield, Madam Chair.
05:36Senator Kennedy.