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Daily Archives: January 26th, 2020


Teachers Union Lawsuit Claims DeVos ‘Capriciously’ Repealed Borrower Protections

Randi Weingarten, of the American Federation of Teachers, says the message of her organization’s lawsuit is clear: “Protect the students of the United States of America — not the for-profit [schools] that are making a buck off of them.”

Tom Williams/CQ-Roll Call Inc via Getty Images

Updated at 1:13 p.m. ET

One of the nation’s largest teachers unions sued U.S. Education Secretary Betsy DeVos on Wednesday. The complaint: She repealed a rule meant to protect student loan borrowers from for-profit and career-focused schools that graduate them with too much debt and limited job prospects.

Randi Weingarten, president of the 1.7 million-member American Federation of Teachers (AFT), says the lawsuit’s message is clear: “Protect the students of the United States of America — not the for-profit [schools] that are making a buck off of them.”

The 2014 rule that DeVos repealed, known as “gainful employment,” served as a warning to for-profit colleges and any school that offers career certificate programs: If graduates don’t earn enough income to repay their student debts, schools could lose access to federal aid.

Because many of these programs derive the bulk of their revenue from federal student loans and grants, it was a potentially devastating threat. So devastating that, Weingarten says, “the rule worked. What started happening is that these places — not just the for-profits, but anyone who was covered by this — they started cleaning up their act.”

“Declare victory and go home”

When the Obama administration began working on a gainful employment rule back in 2010, some for-profit institutions started to make changes, trying to head off a potential reckoning. For example, Kaplan Higher Education unveiled an introductory, tuition-free period for prospective students to take classes. In a press release, Kaplan said the move would “lower the risk that the federal government lends money unnecessarily to students with a low chance of success.”

And in its 2011 annual report to the U.S. Securities and Exchange Commission, another for-profit heavyweight, ITT Educational Services Inc., captured the fear in the for-profit sector: “Changes resulting from the [gainful employment] Requirements could reduce our enrollment and/or increase our cost of doing business, perhaps materially.”

In other words: Schools were so threatened by the possibility of losing access to federal aid, they started making changes years before gainful employment even became a rule.

“I have said quite often in the last few years that the opponents of the [for-profit] sector should just declare victory and go home,” says Steve Gunderson, president and CEO of Career Education Colleges and Universities (CECU), a membership organization that serves as the national voice for career education schools. “Their message was heard and the sector responded.”

“They just undefined the term”

The first round of official data on gainful employment was released in January 2017; it showed that more than 700 programs had failed to meet the new standard — what the department considered a reasonable ratio of a student’s debt to income.

That same month, Donald Trump was sworn in as president. The following month, DeVos was sworn in as his education secretary. From the beginning, DeVos ignored the gainful employment rule — even after 18 state attorneys general sued her, demanding that she enforce it. In 2019, the department officially repealed the rule.

Dan Zibel, chief counsel at the nonprofit Student Defense, is representing AFT in the new lawsuit.

“When an agency changes its mind and wants to repeal a policy, it has to explain it,” he says. “It has to acknowledge what it’s doing, and it has to explain the new rule.”

But Zibel says DeVos didn’t really rewrite the rule. “This is them simply deleting the entire regulatory structure, not replacing it with anything.”

“They just undefined the term,” says James Kvaal, who helped design the original rule as deputy undersecretary in the Obama Education Department. “Gainful employment had meaning, and [DeVos] took it out. And I just — I’ve never seen that before. I’ve never seen an agency take a term that was in the regulations and just undefine it without replacing it with some new meaning.”

NPR obtained a draft of the complaint, expected to be filed in U.S. District Court. It says, “The Department has acted arbitrarily, capriciously, and not in accordance with law.”

In a statement to NPR, department spokesperson Angela Morabito says, while the department generally doesn’t comment on pending litigation, “[it] will vigorously defend its final regulation rescinding this deeply flawed rule.”

Accountability versus transparency

The term “gainful employment” stems from the landmark Higher Education Act, which divided postsecondary programs into two categories: those that offer a degree, and those that provide “training to prepare students for gainful employment in a recognized occupation.” The law says that in order for these latter, career programs to receive federal student aid, they should be setting students up for success in the workplace.

The problem is, Congress did not define “gainful employment,” or explain how to measure it. It wasn’t until the Obama administration that the U.S. Department of Education created a clear standard.

Though the rule also applied to some nonprofit and public institutions, DeVos has argued that her predecessors specifically used it to target for-profit schools.

In justifying its repeal of the rule, the Education Department argues that students at for-profit colleges are more likely to be vulnerable (i.e. low-income, without a high school diploma, single parents, students of color, etc.) even compared to community college students. As such, the department reasons, “differences in borrowing levels and student outcomes may well be attributable to student characteristics and may not accurately indicate institutional quality.”

In short, the department argues, a student’s failure may not be a school’s failure.

DeVos’ approach replaces accountability with transparency. Using the Education Department’s College Scorecard, a massive trove of school-based data, prospective students will be able to see median debt and earnings for graduates of all higher education programs. It is essentially a policy of caveat emptor — buyer beware. The threat schools now face for saddling graduates with low-paying jobs and impossible debts depends on prospective students doing their own police work, using the College Scorecard, and foregoing schools with ugly numbers.

“Instead of targeting schools simply by their tax status, this administration is working to ensure students have transparent, meaningful information about all colleges and all programs,” DeVos said in a 2018 statement announcing the move to rescind the gainful employment rule.

The department acknowledged that there would be a cost to allowing low-quality programs to continue to receive federal student aid, “especially if doing so burdens students with debt they cannot repay or an educational credential that does not improve their employability.” But ultimately, the announcement said, “the Department believes that the benefits outweigh the costs since all students will benefit from choice and transparency.”

Gunderson agrees: “I really think that what the department has done will turn out to be the most significant public policy to protect prospective students across the board.”

This isn’t the first time DeVos’ Education Department has scrapped or rewritten policies meant to protect student borrowers. The department also dramatically rewrote another Obama-era rule known as “borrower defense.” That rule allows borrowers who believe they were defrauded by their school to petition to have their federal student loans forgiven. When the re-written borrower defense rule goes into effect in July, it will be much harder for students to prove they were misled, and those who do may still have only a portion of their debts forgiven.

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Kind of similar to recent interview with Mike Pompeo or even possibly any interview with TOTUS.

Dilbert Comic Strip for 2020-01-26

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Effects of the much touted Tax Reform, tip of the iceberg?.MA

 

Ben Eisen, Laura Kusisto 14 hrs ago,The Wall Street Journal.

Larry Belardi and Bobbie LaPorte are longtime San Francisco residents, but they are planning to leave California for Nevada next year.

A turning point was the federal tax overhaul that Congress passed in late 2017. The law made it costlier to own a house in many high-price, high-tax areas, reshaping the economics of homeownership in those slices of the U.S.

Two years after President Trump signed the tax law, its effects are rippling through local economies and housing markets, pushing some people to move from high-tax states where they have long lived. Parts of Florida, for example, are getting an influx of buyers from states such as New York, New Jersey and Illinois.

Many people saw their overall taxes go down after the 2017 law was passed. But the law had two main changes making it tougher to live in high-cost, high-tax states, especially compared with lower-taxed options. It essentially curbed how much homeowners can subtract from their federal taxes for paying local property and income taxes, by capping the state and local tax deduction at $10,000. It also lowered the size of mortgages for which new buyers can deduct the interest, to $750,000 from $1 million.

These changes have the biggest impact on a sliver of the population who have high incomes and live in expensive areas. They tend to have white-collar jobs and the ability to pick up and move. Many own their own businesses, work remotely or are nearing retirement.

Critics say the changes have hurt everyone who lives in high-tax states, by taking a bite out of tax revenue. New York Gov. Andrew Cuomo, for example, panned the state and local tax cap last year. “It has redistributed wealth in this nation from Democratic states—we’re also called blue states—to red states,” he said at the time.

The average property tax bill in the U.S. in 2018 was about $3,500, according to Attom Data Solutions, a real-estate data firm. But many residents in New York, New Jersey, Connecticut and California had been deducting well over $10,000 a year. In Westchester County, N.Y., the average property-tax bill was more than $17,000, the highest in the country.

Among the people who are uprooting, many say they had long considered a change. But they saw the tax law as a reason to finally undertake the potentially difficult task of changing their state residency.

“It was another bucket of straw on the back of the camel,” said John Lee, a wealth-management executive and longtime resident of the Sacramento, Calif., area. Mr. Lee and his wife, Tracy, moved their primary residence last winter to Incline Village, a resort community on the Nevada side of Lake Tahoe.

The Lees kept their California home, where one of their six adult children is living. That means they are still paying California property taxes. But Mr. Lee estimates the move to Nevada, which has no state income tax, whacked his state tax bill by 90%.

In the 10 states that typically have the highest property taxes and mortgage interest amounts, including California, New York and Massachusetts, home-price growth dropped right after the tax law passed, according to an analysis by Fitch Ratings Inc.

Home-price growth held steady for the 10 states that typically have the lowest property taxes and mortgage-interest amounts, including Tennessee, Missouri and Alabama.

Other factors affected home prices too, such as an oversupply of high-end homes and rising mortgage rates at the end of 2018. But the tax law played a key role, Fitch found.

Rick Bechtel, head of U.S. residential lending at TD Bank, lives in the Chicago area and said he recently went to a party where it felt like everyone was planning their moves to Florida. “It’s unbelievable to me the number of conversations that I’m listening to that begin with ‘When are you leaving?’ and ‘Where are you going?’ ” he said.

The dynamic is affecting even states typically thought to have low taxes. Mauricio Navarro and his family left Texas last year for Weston, Fla. Neither state collects its own income tax, but Mr. Navarro was paying more than $25,000 annually in property taxes in the Houston area, he said. Texas ranks among the states with the highest share of taxpayers who pay more than $10,000 in property taxes, according to the National Association of Home Builders.

Filling out his 2018 tax returns helped motivate him to move with his wife and two children, said Mr. Navarro, who owns a software-development business.

“It was not that we were struggling,” he said. “It’s that we did some analysis.”

Mr. Navarro is renting but plans to eventually buy a home in Florida. He expects his property tax bill will be lower than it was in Texas.

Some of the most pronounced effects are playing out between states with vastly different income-tax regimes.

California has lost residents to Nevada for years, but that accelerated after the tax law passed. Nevada picked up a net of 28,000 people from California in 2018, according to the U.S. Census Bureau. That is the second-highest year since before the financial crisis.

Nevada home prices rose more than 12% from the end of 2017 to November, roughly double the change in California prices, according to online real-estate company Zillow Group Inc.

Ruchelle Stuart, a real-estate broker in Las Vegas, has tailored her business around people looking to move from California. “The reason people from California don’t mind it so much here is that home is only three and half hours away,” she said.

More movers are on the way.

Mr. Belardi and Ms. LaPorte, who are planning to leave San Francisco, recently bought land at Clear Creek. The golf course development, on the Nevada side of Lake Tahoe, advertises that state income taxes are “zilch.”

The couple said that for years they have been growing tired of state and local politics, as well as the difficulty of running their two small businesses in California. Mr. Belardi does construction consulting and Ms. LaPorte has an organizational development advisory business. The 2017 cap on deductions was icing on the cake, they said. They estimate the move will save them tens of thousands of dollars annually.

“I just hope all the Californians going to Nevada don’t turn Nevada into a California,” Mr. Belardi said.

 

Write to Ben Eisen at ben.eisen@wsj.com and Laura Kusisto at laura.kusisto@wsj.com


We as voters, citizens and people have always felt guarded when listening to political speeches and utterances from ALL elected officials until now. TOTUS has made “his” segment of the population receptive to lies and foundationally flawed statements as fact. It is demonstrated daily by the actions of his cabinet ministers, his aides, the Justice department he has assembled and now the legal team in his impeachment trial. The outcome has  already been stated by ” Botch” McConnell so it has been merely an overt exercise in Governmental malfeasance which serves to cover the misdeeds of the majority party. This is not knock on what people believe but more on what information is given as fact in order to alter what people believe. Mass media and
instant” news has made facts in some cases an afterthought which is then put aside while the “alternate facts” (or lies) come off as true facts. We should evaluate all information as truth or fact with the ears and eyes of  someone receiving a come on by a con game. There are dozens of quotes and statements that sum up how we show evaluate the information we receive, here are just a couple:

Caveat Emptor,  All that glisters is not gold ( Shakespeare- Merchant of Venice).It must be remembered that early 1900’s there was the Ponzi scheme ,exactly what Bernie Madoff did in recent times.

The bottom line here is: Reality shows are not real as indicated by the name “shows” and what we have now passing as government is a “Reality Show”, administered by an inept puppet master whose strings are always tangled.

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